The Government Marketing Forum Fall Event New Administration Impact
Friday, November 21st, 2008
On Monday, the Government Marketing Forum hosted its final event of the year. The subject was the impact of the new administration. The speaker was Stan Soloway, President and CEO of the Professional Services Council, the principal association representing the government professional and technical services industry. Soloway, a long time DOD executive, was most recently the deputy undersecretary of defense (acquisition reform) and concurrently, the director of the Defense Reform Initiative. As such, he was able to offer some rich insights into the environment the new administration is coming into, and what we can expect in the first few years of an Obama presidency.
According to Soloway, three key issues that will have enormous impact on the priorities of the new administration are spending, the demographics of the civil service, and Obama’s political appointees’ and how they will shape policy.
Spending: The incoming administration is going to face major spending challenges, coming into office at a time when:
- 62% of the current budget goes toward mandatory spending, and that is expected to increase by seven percentage points in the next four years. This could have two potential outcomes,?? greater scrutiny of non-discretionary programs to identify opportunities for cost savings, and either flat or only incremental increases in spending on discretionary programs.
- There’s nothing in the economic forecasts to suggest that revenues are going to grow at the same pace as spending.
- Security spending, particularly spending on wars, will keep up at its current pace for at least the next three years. (Though some funding may be shifted from Iraq to Afghanistan.) The bottom line is that a withdrawal from Iraq may not yield the massive cost savings that some expect.
Demographics: There are currently twice as many government employees over the age of 50 as there are under the age of 30. Even with delayed retirement, the graying civil service will eventually hit many agencies extremely hard. In order to mitigate the upheaval, the new administration will likely pursue a combination of investment in human capital, as well as greater collaboration with government contractors to provide the support and technologies that will replace the departing employees.
New political appointees: With a record number of political appointments to make, the more than 3,000 appointees that will be joining the government represents the biggest transition of any new administration. While only a few of those appointments have been announced to date, we can likely expect an Obama administration to be younger and more technologically savvy than any previous administration. This could have a huge impact not only on agencies’ efforts to modernize, but also on the agencies organizational structures and operating silos. Some are predicting that an Obama administration will be less compartmentalized, and will seek greater intra- and inter-agency collaboration than its predecessors did.
Regardless of your role in the government market or which agencies you serve, Soloway’s presentation offered a lot of food for thought for the government services market on what to consider and prepare for as we enter the new year with a new administration.
