The Country Intelligence Report

Navigating the Surge in Government Contracts: Strategies for Fiscal Success in 2024

• Country Intelligence Group Ltd • Season 2 • Episode 48

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Discover what the fourth-quarter surge in government contracts could mean for the fiscal landscape of 2024. Here, we embark on a journey through the intricacies of federal spending and its ripple effects on small businesses. This episode peels back the layers of budgetary patterns and provides actionable insights for those with set-aside contracts, ensuring you’re equipped with the knowledge to thrive in the ever-shifting terrain of government contracting.

Gear up for an engaging conversation on aligning your business strategy with the federal government's fiscal maneuvers. We share expert tips on forging valuable connections with prime contractors and dive into the ways the upcoming election might shape the contracting climate. Whether you're a seasoned contractor or looking to break into the market, our analysis offers a roadmap to successfully navigate the complexities of government budgets and contracts, setting the stage for your success as the fiscal year unfolds.


Speaker 1:

Hello and welcome to the Country Intelligence Report. We are your hosts, Devin Floresak and Terrell Cummings.

Speaker 2:

Today we'll be reviewing the fiscal year 2023 for government contracting in general and also the start of 2024 fiscal year how it's going, and comparing it to fiscal year 2023. What we can expect as far as going forward trends and what else may be taking place.

Speaker 1:

So Devin would you go ahead and kick us off? Yeah, of course, and I'd like to give a shout out to Spencer. You know, obviously Spencer isn't here today, it's just myself and Trell. Spencer unfortunately had to move on from Country Intel, so I just want to give a shout out to him and just thank him for, you know, kicking off the podcast for us and getting us going. So, you know, going forward, it would just be, you know, myself and Trell. But again, you know, shout out, Spencer.

Speaker 2:

You know really appreciate it, man. Most definitely, spencer. Yeah, thank you. Appreciate all you're doing for us, man.

Speaker 1:

Thank you for everything. The other thing, yes, sir. Yeah. So, starting out, you know, fiscal 2023 review. You know what we did was we took a look at the data on samgov, as as we usually do. You know, obviously, that the data there most likely isn't complete. You know it's definitely a good snapshot on where federal spending is at, uh, with data, um, you know. Regarding to, you know how much money they're giving out to contracts and who's winning what. What organizations are spending what. But it should be a decent look into what's really going on.

Speaker 1:

As far as what we saw in fiscal year 2023, we sort of did this review, maybe about a year-ish ago, and what we saw at the start of it was a very slow start compared to fiscal year 2022. But, as the year finished out last year, we actually saw a quarter four spike towards the end of the fiscal year. And, for those that don't know, the government fiscal year starts onober 1 each year and then ends on the end of september, which is september 30th, I believe. Where's the 31st? I think it's 30th. It is the 30th, correct? Yeah, yeah, okay.

Speaker 1:

So, yeah, the the fiscal year so for the government is a little bit different than you know everyone else. Um, so that's sort of our point of reference there, and we're sort of seeing the same thing here, where the start of FY 2024 has shown both a drastic decrease in actions actions as in contracts being awarded and also the amount of money has significantly dropped, and also the amount of money has significantly dropped. So what we can expect here is potentially, as we start ramping up into quarter three and quarter four, over the last couple of years it really has shown that both actions and dollars awarded have been increased over that time period. So for those that are looking out for contracts that may or may not have been awarded yet and they're really hoping to get those contracts awarded, we're expecting some better luck, hopefully towards the end of this year. That's definitely something that we're hoping for as well.

Speaker 2:

And Devin to kind of chime in a little bit there. Think about that quarter three, quarter four. A lot of times people do have money in their budgets as far as that and they need to use that money and to use it or lose it. So they're seeing they're not using that money in their budgets, then they won't get that money, you know, next year for their budget. So they want to make sure that they're going to use that money. So there's contracts that are out there. Typically there won't be one spike in third and fourth quarter because those organizations are trying to use that money in their budget, use every penny that they can, as far as that will perform moving forward. So that's something I always keep in mind when thinking about that.

Speaker 1:

Yeah, definitely more of an emphasis on small business spending and giving out money to more and more people that are businesses that have small business set-asides. But that's something that we kind of saw. Small business had a significant ramp-up in contracts awarded and dollars given in FY 2022. Then there's a slight drop-off in FY 2023, and then there's more of a drop-off in FY 2022. Then there's a slight drop-off in FY 2023, and then there's more of a drop-off in FY 2024. Again, it might not be the best time to be a small business set-aside but, like Terrell said, budget's towards the end of the year. Money needs to get to be spent, so we're hoping for better luck there, Right, and we're talking about small business and small business set-aside.

Speaker 2:

You're talking about those small disadvantaged businesses. So small business designation, any designation, the designations pub zone, certified businesses, and then minority owned businesses, women owned businesses, veteran owned businesses and things like that, as far as those type of designations typically there's, you know, the far as those type of designations typically there's. You know the. I guess either the governor or the kind or the organizations that are winning these contracts are typically trying to get a certain percentage of the work to those businesses, so they don't necessarily want to leave them out completely, but typically they're going to try to hit it. There's at least a quota that they're trying to hit to have small businesses or those disadvantaged businesses be a part of the government contracting or win those contracts and do the work for the government as far as doing that. So that's also something to keep in mind.

Speaker 1:

Yeah, and regarding fiscal year 2024, obviously the congressional budget was just approved I believe earlier this month or last month, I believe earlier this month or last month and you know that might be the cause for, you know, sort of a drop off in, you know, contracts awarded and money given out for the start of FY 2024. As far as you know what the budget is reflecting for its strategic emphasis, you know no shock here, but you know they're prioritizing defense, public health and infrastructure, especially infrastructure, given a lot of the mainstream events that have been going on within the last month or two. So, yeah, it's still a TBD, but we'll see how the end of this year ends up here. As far as small business and innovation, regarding the budget and what the White House has been saying, they are still trying to continually emphasize supporting small businesses and trying to foster new innovation through contracts coming out and they've tried introducing some new actions, but we're not really seeing those actions being reflected in the data from SAMgov. Like we said, it looks like small businesses have not been truly awarded as they have been in the past yet. So let's hope, towards the end of the year, that sort of changes, the end of the year, that sort of changes. Now we'll shift to things that might be standing out as far as the data that we've seen from SAMgov Not a shocker to anyone but the Department of Defense, dod and the Veteran Affairs Organization both consistently top the charts in both actions and dollar spent.

Speaker 1:

It seems like year over year these are two top federal organizations to get involved with with the most opportunities and the most money. As far as the next categories top next categories in FY 2023 and to start FY 2024 are manufacturing, so that's metals, machinery, computer I think I actually deal with electronics or electrical transportation equipment. That's NICS code 31, 32, or 33.

Speaker 2:

Typically, nics codes completely will be those six digits, but they are broken down into a lot more general categories as far as that. So if you were going going to the NAICS website NAICS website and see manufacturing for 31 through 33, you would break those down. It'll probably break those down into further categories as well and you do the four, five and six-digit NAICS codes. Yeah, yeah, that's interesting.

Speaker 1:

And I don't believe we possess 31, 32, or 33, even though we as a company do. We possess a lot of NICS codes, but I don't think specifically we possess any of them, not this time.

Speaker 1:

Another NICS code to take a look at is NICS code 541000. It's the Professional, scientific and Technical Services NICS code and that code and the manufacturing one seem to be sort of both taking the lead in both actions awarded. So contracts are awarded and dollars are given as well. So definitely some industry specific growth there. And as far as you know, looking at small businesses, this seems to correlate well with the overall significant NICS categories, with manufacturing and professional, scientific and technical services, where, for small businesses as well, those two NICS codes seem to stand out. So if you're doing business in those two areas you're probably seeing some very good success right now?

Speaker 2:

Yeah, most definitely. And, like Devin said, looking at those organizations that look like they are typically spending more money on either doing government contracts or not, there is something that where small businesses may want to, rather than take a look and see kind of what their but we know what those budgets are for, maybe fiscal year 2025,. Looking into it, you know, look into the future. As far as that, looking in to see maybe in the past who's won. You know if you're trying to party with a prime or a prime organization, that one, you know if you're trying to partner with a prime organization, that's one contact with them, trying to see kind of where they are, see if they have additional work available or when they're there.

Speaker 2:

You know, try to strategically put yourself in a good place to try to get some of the work that's going to be available out there to those organizations that are weighing these contracts. Even though there has been a decrease, there are still organizations winning the contracts. They are still going to want to give some of the work or percentage of the work to these small businesses. It's just a matter of who has made the relationships more or less on being their partner when it's time to win the contract. So there's something to keep in mind, looking at that as a kind of strategic way to kind of think about how you can get your business in there as far as winning contracts.

Speaker 1:

Yep, yeah, and for times around now, it's very good to be in tune with what is going on as far as spending and certain acts that are being passed. But a certain organization that we wanted to highlight is the Department of Commerce, because they had a very volatile 2023 and then lead into 2024. As far as their 2023, they started out slow in the first couple of quarters, but then they really ramped it up towards quarter three and quarter four of FY 2023. Obviously, the rest of the federal government sort of looked like that and then, similarly, as quarter one FY24 started, there was a sharp decline in both contracts awarded and money given out. Quarter two saw partial recovery. You know again, you know that sort of correlates with what we were seeing with. You know the rest of the government as well, but what you can really do is you can take a look into, you know why this might be happening. So we did a little bit of research on this.

Speaker 1:

As far as the Department of Commerce, it looks like they did have some budget adjustments in FY 2024, where, essentially, they actually increased their budget allocation. They initially requested $12.3 billion, which marked an increase of $1 billion over the last fiscal year, which I thought was kind of interesting, and this might be because they were sort of looking back at quarter four FY 2023, and they thought, hey, we might need some more funds here if we're really wrapping up this work. But it does sort of contrast with the amount of money that they've given out, and the actions as well, to start the year. So, when you're taking a look at what types of organizations you're involved with with the federal government, it might be good to start with, for example, the Department of Commerce. As you can see, they requested a budget increase and they got it from the government, but they haven't really utilized those funds yet. So they might be a good highlight and we might be able to find some similar organizations that sort of follow the same lens.

Speaker 2:

Yep agreed and you should go out there and see those budget adjustments, just like Doden did research on. You should go out there and see within their budget where the increases took place and maybe you can match up your capabilities to whatever their budget adjustments have been made and see if there's something out there to be on the lookout for those if RIPs that may be coming down the line for FY 2024. Or, excuse me that $12.25, excuse me.

Speaker 1:

Yep, yeah, and even though, like we said before, in general, even though there might have been a significant reduction in contracts awarded and dollars to start the year, there might be a tightening of spending, but as we come up towards quarter three and quarter four, we're hoping that ramps back up as it has in the last couple of years. And to finish out with our sort of predictions for the rest of the year, you know it's probably going to be pretty volatile, you know, as we've seen before, fy23, fy2022, they both started sort of started out slow and both ran up into end of the fiscal year. So, like we said, we're we're sort of expecting the same thing here. I am curious to see, though, you know, because, like I said, I said with, with the start of fy 2024, there was definitely a lot less actions and and um, you know contracts and money given out compared to the start of 2022 and 2023. So I wonder if that means that there's going to be less money given out overall once it starts ramping up.

Speaker 2:

Um, I guess we'll see, yeah that'll be interesting to see, especially with the election coming up and everything. I'm not sure how that's going to affect everything and whatnot. You know as far as the fourth quarter and everything there. So we just never know how it's going to impact everything. So we'll be interested as far as that, to see what does happen for sure, yeah, yeah, especially with the election coming up.

Speaker 1:

And that might be a good way to lead into our next podcast here where we'll be looking at the election and how that might impact federal spending for the next year and impact us as a small business in the federal contracting space.

Speaker 2:

Yeah, most definitely. It'll be interesting to talk about that and see how that works out and how that does affect us in the federal contracting space and these reviews that we'll be having that we just had just now. We're going to have them quarterly. As far as the numbers and the trends, some of them you can keep track of on your end and we can help you in doing so. If you need assistance doing that, please let us know, please reach out, please do so and we can help you out for sure. Until next time, devin, thank you for everything, thank you for the research. We appreciate the knowledge that you've given and we'll see you right next time.

Speaker 1:

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