New Leadership, New Challenges

Over the Thanksgiving holiday, I had the pleasure of eating turkey dinner with the assistant to the Speaker of the House from South Carolina. For him, he said, the New Year would involve showing the freshmen the ropes. (By "freshmen," he refers to new staff.)

Training the newcomers on South Carolina's ethics policies--among the strictest in the country--will top the agenda. Politics will never be perfect, he told me, but South Carolina does its best to keep its nose clean. I couldn't help thinking results in November might have gone differently had the federal government done the same.

But what's done is done, and a month after elections turned the Bush administration on its ear, the Republican and Democratic parties struggle to find some common ground.

At the same time, contractors anticipate the fallout, figuring that the shift in power could lead to more conservative spending on IT initiatives and increased scrutiny. Given that the Democrats won control of Congress and the House, largely thanks to a platform of ethical change, that's a fair assessment. The big question is just how much the fallout will hurt.

The shift in power could pose some challenges for contractors in the short term. For one, the private sector must bid farewell to Tom Davis, arguably one of industry's greatest advocates on The Hill. Of course, Davis was easily re-elected as Congressman of Virginia, but he will no longer be chairman of the Government Reform Committee.

His expected replacement is the former committee minority leader, Henry Waxman of California, who worked with Davis routinely in the past, but will likely set different priorities. Where industry's interests fall on the list remains to be seen, but chances are they won't be as far up for Waxman as they were for Davis.

What will be top-of-mind for both the committee and Congress will be cleaning up Washington. While that agenda is the best thing for the country as a whole, contracting will probably be the first area to experience a crackdown. Knowing what might have stayed under the radar a year ago won't fly in this environment; agencies will practice far more discretion when awarding dollars. So sharpen those sales pitches and figure out a compelling formula to demonstrate return on investment.

Increased discretion in spending is good in the grand scheme of things, but it will certainly result in program delays. At the same time, while the departments of Defense and Homeland Security enjoyed victories with the recent passing of appropriations bills, Congress warned that it will expect more cost justifications and program reviews. That, too, will drag out the awarding of contracts.

Playing directly into this is the Clean Contracting Act of 2006, introduced in October by Democrats from the Committee on Government Reform.

No doubt, the bill will be a top-line item for Waxman, resulting in such positive changes as a limit on the length of noncompetitive contracts that avoid bid requirements because of "urgent and compelling needs," increased competition in multiple-award contracts so eligible contractors are given a fair chance to bid on task orders, and minimized spending on no-bid contracts, which has more than doubled under the Bush administration.

In addition, the bill proposes a ban on monopoly contracts, thereby limiting tiers of industry players by allowing no more than 65 percent of work to be subcontracted, and minimizing cost-plus contracts that provide contractors with little or no incentive to control costs. Contract oversight and transparency would be enhanced, conflicts of interest eliminated and a definite expectation of ethics established by industry and government alike.

Again, that's good news on the whole. But solution providers big and small can expect processes to change, opportunities to shrink--at least in the short term--and sales cycles to potentially lengthen even more.

So Republicans won't be the only group to feel some pain as new terms get rolling. The days of Jack Abramoff are behind us, but his legacy certainly lives on.