What will 2018 mean for government contractors?

Articles, Contractors |

The world of government contracting naturally comes with a certain amount of financial instability. Thankfully, many experts predict that 2018 will be a good year for the contracting field. Plenty of people assumed the numerous government shutdowns would be disastrous for contractors, but that turned out not to be the case. In fact, something close to the opposite happened: Congress approved a spending plan that included a huge budget increase for the Department of Defense, leading analysts to speculate that much of this money will be spent on contractors. 

According to the Washington Post, the current budget, which lifts the 2013 sequestration, should increase Pentagon spending by 13 percent. Some analysts believe that money will be spent on the innovation or modernization of the Pentagon's (and other government offices') IT infrastructure. Such an update is long overdue and would bring the U.S. government more in line with every other industry. 

Furthermore, this type of spending would take advantage of D.C.'s substantial tech base. Last year, real estate company Cushman & Wakefield identified D.C. as the third-best tech city in the nation – right behind San Jose and San Francisco/San Mateo. Clearly, there's a lot of opportunity for these businesses to profit from the anticipated spending. 

As for the specific type of tech progress the government will invest in, it seems nothing is off limits. Speaking with the Washington Post, John Wood, CEO of data security company Telos, noted that the government is quickly switching to cloud-based software. Meanwhile, Deloitte Consulting Managing Director Michael Isman predicts automation, digital reality and blockchain data storage will all catch the government's interest. 

An image of the Pentagon with text reading, "The Pentagon is expected to increase spending by 13 percent thanks to the recent budget."The new budget could be great news for government contractors.

What tech contractors must consider

Last year, the government purchased fewer tech services as new appointees adjusted to their positions. Now, as the administration settles into its second year, such growth will likely pick back up.

Unfortunately, this means contractors will presumably become more attractive targets for data breaches. Theft of a single contractor's data could have huge, irreversible consequences.

What's more, these companies are no stranger to breaches. A report from BitSight, a cybersecurity firm, revealed 4.3 percent of technology contractors reported at least one data breach over the past two years. Such attacks often take months – possibly even years – to detect, and many are never discovered at all. This means that there's a possibility that more tech companies have been hacked than the report suggests. 

"Not only can these breaches often affect government and private sector employees, they may expose data that is fundamental to national security," wrote the authors of the BitSight report. 

Because of the potential for increased spending coupled with the threat of data breaches, tech contractors must be more committed to digital security than ever before. Not only will doing so keep sensitive information private, but it could give these companies a leg up against their competitors. 

One way contractors can get ahead is by using less common or accessible service providers for hosting, domain and email services. Amazon Web Services and similar cloud companies are a favorite of tech companies in all sectors, meaning data thieves expect them to hold tons of valuable information.

That said, even if contractors don't change vendors, they must take other measures to prioritize security. 

Government spending in 2018

While the anticipated tech spending is still just a prediction, it stands to reason that tech contractors will benefit from the increased budget. That said, competition will grow more fierce, too, meaning businesses must bring their A-game to secure government contracts.