Government spending in government-wide acquisition contracts (GWACs) is increasing, demonstrating a continued shift in buying. This opens the door for technology companies to partner with Govly and land government contracts.
How we got here
The U.S. government has never been known to be a ‘fast-paced operation’ when it comes to spending on various agency requests on goods. Any company looking to do business with the government knows that it can be a frustrating process with lots of red tape and hoops to jump through. Even if a company can get approved for a government contract (which may take years), competitors can still challenge it, which can put it into a one-to-two year review cycle before final approval. The whole process can be maddening.
Not surprisingly, this is intentional.
The government wants to have checks and balances in place to ensure they can limit corruption through nepotism while simultaneously driving competition as much as possible. Historically, this has been fine. If the U.S. Army puts in a request for a tank, knowing that they can expect to receive it within the next couple years, they can plan their budgets and inventory ahead of time accordingly. However, this becomes significantly more complicated and problematic when technology is involved. The pace at which technology advances outpaces the relevance of the request for the goods. If it can take anywhere between one to three years to get, say, computers, both the hardware and software can be completely outdated by then, rendering the goods pretty much useless. This is especially relevant when it comes to technology like cybersecurity.
There are already measures in place to mitigate these risks and have been for the past thirty years when in 1992 NASA recognized the need to expedite information technology procurement. Government-wide acquisition contracts (GWACs) were launched with Solutions for Enterprise-Wide Procurement (SEWP) as a pilot project that gave NASA and other government agencies a lot more autonomy over scrutinizing and selecting vendors and spending their budgets.
After Congress passed the Clinger-Cohen Act in 1996, it cemented GWACs into law and the Office of Management and Budget was designated to monitor the effectiveness of agencies' IT investments.
Fast-forward to today. Not only have GWACs been a huge success in helping government agencies get the IT support and technology when they need it, but it’s grown significantly over the past thirty years. Moving forward into this next spending cycle, it looks like the trend in increased government spending on GWACs will continue and even outpace spending growth through other government processes. This means more money on the table for IT companies that have goods and services that meet the needs of government agencies, which includes more opportunities for small and medium businesses to compete for contracts.
However, before we get more into that, we should first take a look at defining the GWACs, as the program has grown beyond just SEWP contracts.
Know your GWACs
GSA
The General Services Administration was founded in 1949 to support and manage the operations of federal agencies. The GSA is one of the big ‘catch-all’ buckets for all things government budgets including procurement, buildings and real estate, and fleet vehicle management.
The GWACs within the GSA related to IT are MAS IT & OASIS and OASIS SB, VETS 2, STARS II, Alliant 2, Complex Commercial SATCOM Solutions, Enterprise Infrastructure Solutions, FSSI Wireless, which cover a lot of ground for potential contracts. However, the GSA GWACs are less popular contract avenues because the GSA has more red tape than some of the other GWAC contract vehicles.
CIO-CS
Operated by the National Institute of Health Information Technology Acquisition and Assessment Center (NITAAC), the Chief Information Officer – Commodities and Solutions contract is a contract vehicle that can be used by a federal civilian or Department of Defense agency to procure IT solutions and services from a list of pre-qualified vendors at below-market prices.
Also including the CIO-SP3 and CIO-SP3 SB small business contracts, the majority of CO-CS opportunities are for healthcare-related IT products and services, making it more of a niche contract vehicle than GSA or SEWP.
SEWP
The NASA Solutions for Enterprise-Wide Procurement is the most popular because it circumvents a lot of the red tape of the GSA contracts by pre-vetting solutions providers and has a much broader footprint than CIO-CS. The entire Federal Government is allowed to leverage the SEWP contract vehicle because of NASA’s designation as an Executive Agent.
Bonus Round: IDIQ
Indefinite delivery/indefinite quantity contracts are not technically GWACs because they’re not exclusively GWACs. IDIQs allow for an indefinite quality of supplies over a specific period of time and are used for on-call services or products that cannot be accurately forecasted. They should be thought of as a type of subcontract that helps to define the parameters of the contract, and thus can be part of either GWACs or traditional government contracts.
The dramatic shift in spending
It would be a bit of a hyperbole to say that there’s a truly dramatic shift in spending. However, there is definitely an increase in spending, especially for the tech sector, and a higher percentage of that increase is being allocated to the GWACs. While inflation and population growth play a part in increased spending YoY, neither can entirely account for the significant increase in IT budget requests from various departments in recent years and into the future.
Gartner reports that 2022, “government IT spending is forecast to total $565.7 billion,” which indicates a 5% increase from 2021. Gartner also believes that “government IT spending is forecast to increase across all segments except internal services and telecom services,” and that “XaaS (anything-as-a-service) will emerge as the new area of investments as governments scale digital transformation initiatives.”1
Also, according to Deltek’s Federal IT Market Forecast Projects Spending Trends from 2022 to 20242 the “DoD's cyber budget request is at historic highs, growing from $9.8B in FY 2021 to $11.2B in FY 2023. The requirement for DoD components to adopt a continuous authorization to operate (CATO) approach on all cloud systems – to enable both real-time continuous risk monitoring and active cyber defense capabilities – will help pave the way for zero trust architectures.”
Additionally, Deltek reveals that “Military departments are increasingly integrating AI/ML capabilities into warfighter missions, often leveraging OTAs. Spending on OTAs for AI/ML projects rose to a new high…with the growing investment in AI/ML, DOD’s new Chief Digital and AI Office (CDAO) is tasked with providing remedies for recognized weaknesses in AI governance.”
So, this brings us to the crux of this article, which is why the government is shifting to allocate a higher percentage of overall resources into GWACs, especially SEWP.
One word: speed
As stated above in the first section, it’s all about speed to market. GWACs focus on cost savings, innovation, and a streamlined process. They emphasize category management and Best-in-Class designations for vendors who have earned the designation. They offer increasingly competitive rates that drive competition. NASA’s SEWP started at 2.6% in 1993 and has dropped to the current rate of 0.34%.3
With the speed of technological advancement, data growth, and constantly evolving cyber threats, government agencies must be fast enough to keep up as well. To do so, they have to be effective and efficient with their resources and ensure that they are utilizing up-to-date technology and digital security practices to avoid falling prey to cybercriminals. Ransomware is especially concerning with government entities across the country already falling prey to attacks. Just think of the Colonial Pipeline hack in May of 20214 that brought a major gas pipeline to a standstill and left a quarter of America without access to gas for a number of days, and how something like that could infiltrate an entire electrical grid or military access codes.
Government agencies need contract vehicles that remove the red tape and streamline the process to match the speed of evolving technology. They can’t afford to wait two-to-three years. GWACs are really appealing because of their nature, so it makes sense that, especially for tech, government agencies would shift spending heavily into these contract vehicles.
How to take advantage of this dramatic shift
While this should come as welcome news for IT vendors, gaining access to these lucrative government contracts still isn’t easy and straightforward, even with the reduction of hurdles through the GWACs. This opens the door for more competition among companies providing IT solutions to the government. Although the already preestablished vendors won’t necessarily welcome the competition, the increase in budgets also provides new opportunities for vendors with innovative tech that bring more effective solutions. A larger marketplace naturally lends itself to access to better ideas.
According to the same Deltek study referenced above, “IT priorities in the IC [intelligence community] include artificial intelligence, cybersecurity, data management, cloud computing, big data analytics, quantum technology, modeling, and simulation, augmented and virtual reality, and partnerships with industry and academia to enable IC mission fulfillment.” There’s a lot of opportunities within these emerging technologies for non-established IT vendors to get a foot in the door.
Additionally, it’s not just the tech itself. The Deltek study predicts that diversity and innovation are the cornerstones of building out the IC workforce, however, the demand may outpace recruitment, opening opportunities for contractors to fill workforce gaps.
If you are a technology company that’s interested in selling to the U.S. Government, or a technology company that’s already selling to the government, the Govly application and leadership team are prepared to help you accelerate your business. We help businesses that want to sell to the U.S. Government by providing the insights and access to partnerships needed to do so, and assist businesses that already sell to the government by centralizing and filtering public and private opportunities into a single location that fosters B2B collaboration across the supply chain.
We’d love to talk to you.
- https://www.gartner.com/en/newsroom/press-releases/2022-06-13-ww-govt-it-spending-forecast-2022
- https://iq.govwin.com/neo/marketAnalysis/view/Delteks-Federal-IT-Market-Forecast-Projects-Spending-Trends-from-2022-to-2024/6621
- https://fcw.com/acquisition/2021/10/the-growing-importance-of-gwacs/259216/
- https://www.techtarget.com/whatis/feature/Colonial-Pipeline-hack-explained-Everything-you-need-to-know
