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Understanding the 2011 Federal budget and what it means for small businesses

Understanding the 2011 Federal budget and what it means for small businesses

Published: May 4, 2010

Ther;s a guy I work with- Ray Bjorklund. Really smart guy. H-s the guy who takes thousands of lines of federal budget information, digests it and dissects it, and comes up with a complete rundown' industry by industry and sector by sector' of how much money the government has available to spend on federal contracts.

Ra's also a glass-half-empty kind of guy. So, when he found that the'contractor addressabl' market' money available to pay contractors for existing and new work' for fiscal year 2011 is about $36 billion less than it was in FY 2010, he had words of warning for contractors.

'm a glass-half-full kind of guy. When I heard that the contractor-addressable market for fiscal year 2011 is about $36 billion less than it was in FY 2010, my first thought was: Hey, it's still a $720 billion market, so how can we help?

More than ever, people selling into the government need guidance in order to locate the best opportunities. That's my goal today - to help you, the small-business owner, find your best opportunities in government based on the details of the FY2011 federal budget.

A Flat Budget, with Opportunities

The U.S. federal government has mapped out a $3 trillion budget for GFY2011. Of the $3 trillion GFY2011 budget, $720 billion is contractor addressable. That figure is down five percent from last year, and is expected to remain relatively flat through 2014.

Despite this decrease, there are three areas that are seeing growth and represent opportunity for the contractor community:

  • Oversight of the Financial Industry. While most of this opportunity will be within the Department of the Treasury, there are new agencies being formed to help oversee the financial industry. There is real money here - worth contractor consideration. In fact, small niche players in organizational development or the financial management domain might be well-positioned to help launch new sub-agencies.
  • Support for Troops. There are three areas here that will provide the most opportunity for contractors: 1) taking care of active duty military; 2) taking care of veterans, and 3) improving war materiel through reset and replenishment.
  • Infrastructure Security. This area encompasses information security as well as physical security - from protecting the government cyberspace to improving the levee system in Louisiana.

The most growth expected in any one area of competency will be blue collar and operations and maintenance services, which is expected to grow 10 percent across agencies, especially in the Department of Defense.

Overall, small companies will be in a good position to help government with a range of problems.

Small-Business Advice

Regardless of what business you're in or what agencies you're pursuing, trying to get a piece of a smaller pie will require a reassessment of your current business practices.

First and foremost, small businesses will need to be more aggressive and flexible in teaming and alliances. Take opportunities to partner with companies that might otherwise be competitors. Better for both companies to get a slightly smaller piece of the pie than to have a third party come in and take the whole piece.

More collaboration will be a reality. That said, keep track of your accounts and finances to ensure business partners don't step on each other's toes.

Our glass-half-empty guy might say that the upcoming fiscal year may be a challenge for some contractors. I say those prepared to compete will win more business. It can be a learning experience.

Learn to find new areas of opportunity, and new partners. Consider repositioning or remarketing your services or products to fit into the new Federal budget priorities. Increase your flexibility, and try thinking outside the box for new ways that you can secure government business.

Bill Gormley is president and CEO of Washington Management Group and FedSources, and chairman of the Coalition for Government Procurement.

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