Every four years, as U.S. citizens, we elect a new President, Vice President, and an assortment of Congressional Representatives and Senators. Throughout the campaign trail, one of the most important, if not the top issue at hand will be government spending and budget. As taxpayers, it’s natural for us to want some insight and agency over how the government spends money and what initiatives they have on the horizon.
On top of things like foreign aid, federal welfare programs, etc. the government will also commit funds to the private sector through contracts, whether it be through the GSA Multiple Award Schedule (MAS) program or otherwise. As a government contractor, especially a small business, it’s important to understand how elections can impact spending trends and the procurement landscape overall, so you can maximize your opportunities. Let’s take a deeper look at how a presidential election can affect government procurement.
Of course, we don’t know for certain how this election will impact federal contracting in the long term since the election hasn’t happened yet, but we can identify patterns we’ve seen in the past and make predictions based off the current political climate.
If the incumbent party (Democratic) loses the election, we’ll see a shift in a few areas—budget allocation changes, Executive Orders potentially getting reversed or modified, new orders drafted up, and current legislation delays.
Sometimes we’ll see a pause in legislation that has been in the works as the new party wants to reevaluate, for example, the Cybersecurity Maturity Model Certification (CMMC). When the Biden-Harris Administration took over there was a pause for a few years to reassess all aspects of the regulation and it’s now getting pushed through.
It’s not just about the presidential election, however. It’s also which party will win the majority in the Senate and House. Each outcome brings different priorities, missions, and will drive how funding is allocated. Something we’re seeing right now and can continue to see after this election is thin margins in the House—this can lead to more government shutdowns if an agreement cannot be reached in time.
Traditionally during a presidential election year, we also start to see vacancies in political positions causing decision making to slow down. While this doesn’t necessarily impact ongoing projects, it can lead to delays in new projects and any major decisions that need to be made.
Election years also add a layer of complexity to the federal budget. Since the new federal government Fiscal Year is set to start next week on October 1st, most federal agencies will start the new year off under continuing resolutions. Of course, the budget acceptance will also depend on which party wins. If the incumbent party wins, there will still be some budget disputes, but it’s less likely there will be larger changes or reallocations.
There’s a misconception that depending on which party is elected, the spending will increase sharply or decrease dramatically in several agency budgets, but after evaluating the last 3 election years, we found no major trend other than spending changes related to the pandemic.
However as mentioned previously in this article, there will undoubtedly be changes in spending priorities and initiatives. Both the two major candidates, Kamala Harris and Donald Trump have differing visions on what policies they will push first and how they plan to address our current economic climate.
So, we highlighted some areas we can expect to see a shift in focus depending on which party is elected.
If Harris is elected, she has stated she plans to continue to strengthen clean energy efforts. One major area that could affect contractors is the 2021 Infrastructure Investment and Jobs Act, a $1.2 trillion piece of legislation that spurred the adoption of Electric Vehicles in the federal government. This means if Harris is elected, we expect to see a continued increase in spending for not only Electric Vehicles, but the raw materials, parts, and any related services to vehicles and charging ports.
The defense budget is going to outweigh the civilian budget no matter which party is elected, but Trump has proven in his former presidency and his current plans that he wants to expand the defense budget to rebuild the military. If he’s elected, we can expect to see an increase in Department of Defense (DoD) opportunities as it relates to military spending, but not necessarily abroad. Both administrations contributed to reducing troop presence abroad in Afghanistan.
Small business support is a bipartisan policy, but the vision might look different for contractors depending on who is elected. Harris has stated her intention to grow small business and entrepreneur involvement in contracting by increasing contract dollars available for socio-economic small business set-asides. Trump intends to change certain labor regulations set under Biden administration, which would relax scrutinizing from regulatory parties and possibly extend the expiring provisions for the 2017 Tax Cuts and Jobs Act, giving more tax deductions and breaks for small businesses.
Although it may not seem like it from the debates, there are policies and issues that both Harris and Trump plan to prioritize if they are elected. Let's cover the top two areas we expect to see a focus on regardless of the election results.
One initiative both parties have stressed importance in is Artificial Intelligence (AI) cybersecurity and governance. Harris has a stronger focus on ensuring companies and agencies use AI tools responsibly, while Trump is cracking down on AI cybersecurity. Both have also shown support for AI research and development funding, so we can expect to see AI continue to grow under both parties.
Under the current Biden-Harris administration, Harris has placed an emphasis on U.S. infrastructure, including returning manufacturing to the U.S., creating local jobs to build roads and bridges, and sourcing the materials from the U.S. if possible. Trump has also expressed his intentions if elected to rebalance trade toward domestic production, and to create more U.S. manufacturing jobs.
Both parties in recent years have signed Executive Orders supporting and strengthening the Buy American Act (BAA). Created under President Hoover in 1933, the BAA encourages federal agencies to procure domestic materials and products. It was revised recently to include stricter guidelines for purchasing domestic goods and support the development of domestic supply chains. Right now, the threshold for U.S. made products or goods bought with taxpayer money is at 60% and is anticipated to reach 75% by 2029.
No matter the outcome of the election, we can expect to see an increase in the acquisition of domestic materials and a strict emphasis on regulations such as BAA and the Trade Agreements Act (TAA).
Once the election is over and the next president is inaugurated, you’ll want to start paying closer attention to any new budget changes, Executive Orders, and initiatives to see what opportunities may arise. In the meantime, we suggest you ensure your GSA Schedule is optimized and compliant, so you’ll be ready to respond to any opportunity that comes your way.
If you need help managing your contract or have questions about what you can do to strengthen your presence in the government marketplace, we would be happy to help guide you in the right direction.