State of the Union 2016 – Potential Impacts on the Federal Contracting Community

Published: January 13, 2016


President Obama’s State of the Union address on Tuesday provided his long term vision for the nation, rather than the typical laundry list of administrative initiatives for the current year. The president is hoping that in his final year, Congress can work together on “bipartisan priorities like criminal justice reform, and helping people who are battling prescription drug abuse.”

His address centered around four big questions:  

  • How do we give everyone a fair shot at opportunity and security in this new economy?  
  • How do we make technology work for us, and not against us, especially when it comes to solving urgent challenges like climate change?  
  • How do we keep America safe and lead the world without becoming its policeman?  
  • How can we make our politics reflect what’s best in us, and not what’s worst?   

Reading between the lines we can attempt to predict the impact of some of Obama’s short term initiatives and long-term visions on the federal contracting community.   

The potential upside for federal contractors:  

  • Easier, more affordable access to higher education and increased training will provide employers with a larger, better trained labor pool.  
  • Obama’s desire to give startups and more small businesses a voice, could lead to additional small business contracting opportunities with the federal government.  
  • Biden’s appointment to head the new national effort to cure cancer will likely lead to more funding and contracting opportunities with NIH.  
  • Efforts to move away from “dirty energy” and to transition communities and employees who rely on fossil fuels to work on “building a 21st century transport system,” could provide opportunities for heavy construction and IT contractors.  
  • The president’s commitment to continue to protect the American people and fight terrorism may provide opportunities for defense contractors. These initiatives could also lead to additional cybersecurity opportunities for contractors.   
  • As part of Obama’s vision to overhaul the world of politics, he also wants to modernize voting and make it easier.  This may lead to internet voting platforms and solutions built and supplied by the contracting community.   
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes. 

The potential downside for federal contractors:  

  • Obama’s call for higher wages in the form of equal pay, increasing the minimum wage, and paid leave may negatively impact companies’ profitability.  
  • Changes to tax codes and other regulations in order to benefit working families could adversely impact large corporations and large federal contractors.  

The President’s FY 2017 Budget Request, due for release on February 9th, will bring to light many of the proposals and initiatives mentioned in the State of the Union address. 

For detailed budget information and federal contractor impacts, watch for Deltek’s future analysis of the President’s FY 2017 Budget Request in the coming weeks.