How to manage in an uncertain budget climate

Chris WiedemannBy Chris Wiedemann, consultant

It’s safe to say that, over the last few years, industry and government have both gotten used to a certain amount of dysfunction in the appropriations process. We haven’t had a full package of 12 appropriations bills since 2008; some combination of omnibus appropriations and continuing resolutions (CR) is the new normal.

However, even by those standards, this fiscal year has been rocky – a series of short CRs, followed by the first government shutdown since 2013. In the end, that shutdown lasted less than a day, as Congress passed a CR funding the government through Feb. 8.

This is good news in that our customers have appropriations again, and can keep the lights on for the next three weeks. If you’re lucky or were working on closing deals before funding expired on Jan. 19, those contracts may close during this CR. Unfortunately, there’s a downside to the deal: Without getting lost in politics, there’s a very good chance that we’ll be right back where we started when this current appropriation period ends.

In the short term, that means the best we’re likely to be able to do is hold tight. Short-term CRs are difficult environments to sell in, even when agencies have reason to believe that Congress is likely to come up with full-year appropriations when they expire. In the current climate, the odds are high that our customers are going to do the bare minimum to keep their lights on, but almost certainly won’t engage in any strategic sales conversations.

Longer term, what happens after Feb. 8 is an open question. The likeliest outcome is another (likely longer-term) CR, but an omnibus bill – or even another, longer shutdown – are distinct possibilities. You’ll want to keep an eye on Hill negotiations because the outcome will dramatically affect the approach we need to take with our sales activities for the remainder of the fiscal year:

  • If we see a CR, either short-term or for the remainder of the year, the best approach is to circle the wagons and support your existing customers. It will also be vital to work with them to understand their requirements from last year. In many cases, there are significant gaps between what agencies were budgeted for last year and what the new administration included in this year’s budget request – and if our customers are working with last year’s appropriations and requirements, they’re going to need to get creative to meet this year’s needs.
  • On the other hand, an omnibus or some other flavor of new appropriation would open the floodgates, since our customers would be dealing with a very compressed fiscal year – essentially trying to get a year’s worth of acquisitions done in six months. Make sure to target legacy system modernization efforts, since those are a major administration priority and are likely to be the first targets of FY18 expenditures.

Of course, we could always have another shutdown – and if it happens again, all signs point to a longer one. In that case, all bets are off, and we may have to prepare for disruptions that are more significant to our business.

Want even more guidance on what’s going on in the market? Learn more about what immixGroup’s Market Intelligence organization can do for your public sector strategy.

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