Impact of Covid on Federal contracting

As 2021 starts, coronavirus cases are up and it seems that coronavirus will continue to impact small business for some time to come. These impacts are felt by nearly all small businesses, including federal contracting personnel. Spending by civilian agencies of the federal government was at an all-time high in 2020. Many of these purchases were COVID-related, and COVID-related expenses will continue to dominate federal spending in 2021. 

The largest areas of spending are expected to be on vaccines and technology to support telehealth and telemedicine. Spending is also expected to increase for technology initiatives that support the military, such as unmanned satellites, cybersecurity, and artificial intelligence. 

Other federal contracting trends to expect this year include: 

  • With the increase in remote-work capabilities, federal contractors can opt to hire qualified workers from around the country. Wages in Northern Virginia are among the highest in the nation. Some contractors will be able to lower payroll expenses by hiring employees from areas where wages of lower. This may lead to lower overall wages for those companies. 
  • With more employees working from home, contractors may be able to downsize office space or give up their leased spaces altogether. This will decrease overhead costs and lower indirect rates. 
  • Contractors who are successful in lower wages and overhead will be able to offer more competitive pricing to the government, which may allow them to win more contracts. 
  • Federal agencies are putting more emphasis on meeting contracting set-aside goals. This is good news for women-owned and minority-owned businesses, as well as businesses that are HUBZone certified. 
  • In-person networking opportunities will continue to be limited. This will make it harder for small and mid-sized contractors to meet small business liaisons and make connections with new agencies. Those who take advantage of virtual opportunities are likely to find new opportunities. 
  • Increased regulations and compliance requirements may create barriers of entry for small government contractors. 

If you need help navigating the federal contracting world, the University of Mary Washington SBDC and our resource partners can help. The UMW SBDC can assist you with registering your business for state and federal procurement opportunities and in applying for certifications. We have resource partners who can provide guidance on identifying agencies to target in your business development efforts, developing capabilities statements, networking and building relationships, pricing, and many other aspects of government contracting. 

To get started, please fill out our request for consulting form or if you are already a client, please email your consultant.