Will the American Rescue Plan and American Jobs Plan Mean a Windfall for Federal Contractors?

In recent weeks we have seen roughly $4.5 trillion in new federal plans focused on stimulating the U.S. economy, rebuilding infrastructure and helping agencies address urgent needs, from COVID-19 pandemic response to cybersecurity. This is in addition to the $3+ trillion in federal FY 2021 discretionary budget spending and the trillions of dollars in previously provided pandemic and stimulus funding, some of which is still being expended.

Considerations for Contractors

Federal contractors are naturally interested in contract opportunities that will stem from new congressional stimulus bills and Biden Administration infrastructure spending plans. Still, savvy vendors know how to sift through things like American Jobs Plan (AJP) and the American Rescue Plan (ARP) to identify what constitutes actual from potential funding and how to separate imminent IT contract opportunities from those that will take time to materialize. 

Here are some thoughts to consider when evaluating the opportunity potential within the AJP and ARP.

American Jobs Plan

Biden’s $2 trillion American Jobs Plan (AJP) focuses primarily on U.S. infrastructure projects covering roads, bridges, water systems, and the electric grid, but is also presents his proposals for a wide variety of other priorities, from clean energy research and development (R&D) and high-speed Internet to quality housing and labor union expansion. Of particular interest is the $100 billion Biden is requesting to expand high-speed broadband infrastructure across the country and $180 billion to advance U.S. leadership in new technologies, such as artificial intelligence, biotechnology, quantum computing and others.

• Conclusions: The AJP is currently a proposal to Congress and will require the time it normally takes for Congress to appropriate funds. Some items may be funded with stand-alone appropriations similar to previous stimulus bills and some may be funded within FY 2022 agency budgets (which could take up to nine months from now to materialize.) Some elements may never be funded. Whatever the case, we are looking at weeks-to-months for things to progress, unless Congress moves at an atypical pace.
• Recommendations: Assess the AJP for areas where your company may have contracting opportunities and monitor for progress the relevant congressional appropriations committees that have jurisdiction over those areas. Consider that a majority of funding may pass to states in the form of grants and evaluate your firm’s ability to compete and perform in those market segments.

American Rescue Plan

In contrast to the AJP, the $1.9 trillion American Rescue Plan Act of 2021 (ARP) passed by Congress provides real funding to numerous federal agencies that is already hitting the ground. Further, the ARP provides at least $2 billion for federal agency IT and possibly much more embedded in wider efforts.

Cybersecurity: One of the larger pools of funding is $650 million designated for the Cybersecurity and Infrastructure Security Agency (CISA) to conduct cybersecurity risk mitigation activities in the aftermath of the SolarWinds and Microsoft Exchange events. In addition to contracted operational support services, CISA may look for additional cyber tools. It is also noteworthy that CISA leadership is on the record saying that this additional $650M in operating funds is only a portion of what it needs to meet its cybersecurity mission.

Technology Modernization Fund (TMF): Of special interest to federal IT contractors is the $1 billing in new funding for the government-wide TMF. In its few years of existence the TMF has been used for relatively small agency-specific projects to update their systems. However, the timing of the $1 billion influx is noteworthy in that it comes in response to the latest cybersecurity incidents. In fact, Biden’s original $9 billion request for the TMF was to “help the U.S. launch major new IT and cybersecurity shared services at CISA and the General Services Administration and complete modernization projects at federal agencies.”

• Conclusions: Cybersecurity firms that have a current play within agencies in helping address the immediate remediation and risk mitigation efforts may already be working on opportunities. Yet, recognize that by some reports $150 million of CISA’s $650 million will go toward agencies’ updating the security of their Microsoft cloud deployments. As for the $1 billion in new TMF funds, it is very likely that a significant portion of the new TMF funds will go to multi-agency cybersecurity efforts and other government-wide initiatives. Other projects that fit with Biden Administration priorities are also likely to receive consideration.  Contract award may be made through designated Best in Class (BIC) contracts or vehicles that present the path of least resistance for agencies to expedite the work.
• Recommendations: Investigate your agencies-of-interest immediate cybersecurity-related needs that they may have vis-à-vis the latest remediation efforts. Preposition for Office of Management and Budget (OMB) government-wide cyber efforts (i.e. the anticipated White House cyber Executive Order), of which elements have been reported in the media. Anticipate potential changes to TMF processes coming from GSA and the TMF board that may impact the types and criteria for which projects may be funded. Investigate and identify your agency’s unfunded priorities lists to identify potential TMF project candidates. Assess your firm’s competitive position on BIC contracts or other agency-preferred vehicles.

In the overall evaluation of the opportunities presented by huge, multi-trillion dollar federal stimulus initiatives, it is critical for a firm to have the market discipline to temper the immediate excitement that surrounds these initiatives to objectively assess and anticipate where the true opportunities lie.