The Budget Deal May Mean a Payday for Small Government Contractors
The budget agreement approved by the House of Representatives on Thursday could free up more money in government spending--and mean that government contract businesses will see some extra cash coming their way.
The two-year budget, which also is expected to pass in the Senate, raises domestic and defense spending, eliminating more than $60 billion in spending cuts while not raising taxes. Repealing the sequestration cuts from early 2013 means government agencies will have more to spend. Considering that the U.S. government is the biggest purchaser of goods and services in the world--spending an estimated $500 billion annually, 23 percent of which goes to small businesses--this could be great news for small government contractors.
Many small contractors lost business during the spending freeze and the October government shutdown. "A lot of our contractors have been getting pushback from the government under the sequester this year. This is an enormous opportunity for small businesses," says Lourdes Martin-Rosa, who owns a business that does project management and event planning for government clients. Martin-Rosa is also the adviser on government contracting for American Express OPEN, which provides financial services for small businesses and offers programs that help them land government contracts.
The biggest piece of the contract budget will go to defense. IT and fiber security will receive the second-largest amount, followed by construction, training programs, and pharmaceuticals.
Other small contractors are taking a wait-and-see attitude about the budget, which would provide $45 billion in sequester relief next year and another $18 billion in 2015.
"It is hard to tell until the budget bill is passed. It will still take a few more months for the government customers to figure out procurement strategies and directions," says Michael Lin, the CEO of Farmington Hills, Michigan-based LinTech Global, which provides enterprise software consulting and IT security for federal agencies and commercial enterprises. "But we think this is a positive direction."