“Exercise caution in your business affairs; for the world is full of trickery. But let this not blind you to what virtue there is; many persons strive for high ideals and everywhere life is full of heroism.” – Max Ehrmann, “Desiderata”
Now that we’ve made it to 2018, we can all take a deep breath and calmly exhale. Well, at least for a minute. Though 2017 was a year filled with incongruity, controversy, and general chaos within government, the world did in fact carry on. However, the discord continued into the new year. As recently as yesterday, a three-day government shutdown ended as Republicans and Democrats continue to haggle over immigration policy. There is seemingly no end to the struggles, as the partisan divide continues to grow deeper and deeper. According to a recent article in the Washington Post on the federal outlook for 2018, “the lack of a predictable annual budget is a ‘grossly inefficient way to operate’ and makes it very difficult for companies that sell to the federal government… The serial adoption of continuing resolutions to fund our federal government rather than federal budgets has impeded the ability of businesses to plan or expand with confidence.” (Read more HERE in the Washington Post)
It’s tough to overlook the difficulties that occurred in 2017, and the conflicts that arose. But from a federal contracting perspective, let’s take a look at the year with tunnel vision. There were some fairly positive outcomes in 2017 for government contractors as a whole. According to an analysis by Bloomberg Government, “Federal contract spending broke the half-trillion dollar barrier in fiscal 2017, its highest level since fiscal 2012, when the federal government spent $522 billion on unclassified contracts. The trend suggests that efforts to slow federal discretionary spending with the Budget Control Act that began imposing annual spending caps in 2013 may be softening.” (Read more HERE). And further in Bloomberg Government’s 2018 Outlook, “Overall, fiscal 2017 was a positive one for mid-tier federal vendors, which posted 9.1 percent year-over-year revenue growth along with an increase in the number of vendors, market share, and average company size.” (Read the full report HERE)
Looking forward to 2018, there are some significant changes that federal contractors need to be aware of and prepared for in order to succeed once again. Take a look at some of the major legislation and compliance changes going into place right away:
1 – Revenue Recognition Standard, ASC 606: “The FASB provided this framework for businesses to recognize revenue more consistently. The standard’s purpose is to eliminate variations in the way businesses across industries handle accounting for similar transactions. The lack of standardization in financial reporting has made it difficult for investors and other consumers of financial statements to compare results across industries, and even companies within the same industry. The effective dates for the new standard are December 15, 2017 for Public Companies, or December 15, 2018 for Nonpublic Companies.” (Read more HERE in the WJ Technologies Blog)
2 – 2018 NDAA: “One of the major changes in the fiscal year 2018 NDAA, Section 811, is the increase in the dollar threshold for the submission of certified cost or pricing data. Currently, the Truth in Negotiations Act (“TINA”) threshold is set at $750,000. However, Section 811 of the fiscal year 2018 NDAA includes a provision that increases the threshold up to $2,000,000.” (Read more HERE in the Cherry Bekaert Blog)
3 – Tax Cuts and Jobs Act: “Both the rate cut and tax system model change figure to bode well for federal contractors and especially the large, publicly traded government IT and professional services firms.” (Read more HERE in Washington Technology)
4 – NIST 800-171 Compliance: “The good news is that despite the seeming mandatory language of DFARS section 252.204-7008 that a contractor will “implement” the 110 controls in 800-171 “not later than December 31, 2017”(1), Undersecretary Lord stated that “the only requirement for this year is to lay out what your plan is… The bad news is that a plan must be more than just planning to comply. Secretary Lord indicated that there is a need for a “template” against which a contractor can “just report [its] compliance to it.” (Read more HERE in The Daily Telescope)
5 – The Modernizing Government Technology Act of 2017: “Enactment of the law as part of the 2018 National Defense Authorization Act (Public Law 115-91) will change the way government will buy information technology products and services in 2018.” (Read more HERE in Bloomberg Government’s “Five Trends That Will Shape Federal Contracting in 2018)
For more information and education on the federal landscape, follow the JAMIS Prime Insights Blog regularly for updates. Or alternatively, take a look at the JAMIS Webinar Series HERE.
