Election Year Alert: How Federal Elections Influence Contracting Trends

Federal elections represent pivotal events that can profoundly shape government contracting trends for years to come. As a new administration takes office, it brings with it a distinct set of policy priorities that directly impact where federal dollars get directed across industries and domains.

The outcome of these high-stakes political battles dictates shifts in policies, budgets, and regulations that ultimately redesign the contracting landscape. For businesses operating in the government contracting sphere, it’s crucial to understand and anticipate how election results can open emerging opportunities or radically reshape the playing field.

Shifting Policy Agendas Realign Spending Priorities

Each new president enters the Oval Office with a defined agenda rooted in their administration’s core principles and policy aims. And these overarching priorities profoundly influence what issues and initiatives receive funding priority for the next four years.

The nonpartisan Center for Strategic and International Studies (CSIS) illustrates this dynamic well. Their analysis shows that under leadership prioritizing climate action, we could see a surge of new renewable energy contracts as the government doubles down on solar, wind, and other clean power sources. CSIS Analysis

However, an administration emphasizing deregulation may instead funnel contracting dollars towards traditional fossil fuel development and extraction. As CSIS explains in their report “How the Energy Transition Will Rewire the World“, this shifting energy focus alone could catalyze a comprehensive economic evolution impacting manufacturing, transportation, mineral extraction, and more. CSIS Report

The takeaway is clear – businesses must closely monitor policy platforms and priorities, as they dictate where agencies will direct spending and solicit contracts. Getting ahead of these trends allows companies to strategically position themselves for emergent opportunities.

Budget Restructuring Shifts Contract Funding

Of course, new priorities and policies aren’t worth much if they lack budget resources to back them up. Federal elections also significantly impact how agency budgets get allocated year-over-year based on the administration’s goals.

The Congressional Budget Office’s economic projections underscore this link between electoral outcomes and contract spending. Their long-term fiscal outlook forecasts rising federal deficits over the next 30 years driven by swelling mandatory program costs like Medicare and Social Security, even as tax revenues inch up gradually. Congressional Budget Office

This trajectory suggests that with budgets getting squeezed, agencies may face increased scrutiny over discretionary spending that funds government contracts. They will likely prioritize projects critical to national interests and those promising high ROI from every dollar invested.

Contractors should pay close attention to these evolving fiscal realities, as the budgetary constraints or expansions for different agencies and sectors will open some contracting lanes while closing others. The most innovative, cost-effective solutions will have a competitive edge in this environment.

The Regulatory Reset Button

In addition to policies and budgets, each new administration also has the power to rewrite the regulatory landscape through executive orders, officially reshaping compliance requirements and processes.

For example, Biden’s federal construction executive order mandates project labor agreements for large contracts over $35 million to enhance project quality and working standards. This sought to streamline management and empower labor, but also introduced new contracting rules that impact competitiveness for these projects. Executive Order on Project Labor Agreements

Conversely, past Republican leadership took a decidedly deregulatory approach like Trump’s “2-for-1” policy that sought to eliminate multiple existing regulations for every new rule put in place. This embrace of deregulation aimed to reduce administrative burden and spur business growth by easing compliance constraints. Executive Order 13771

Regardless of partisan ideology, the precedent is clear – election results have direct impacts on the regulatory environment surrounding procurement processes, disclosures, set-asides, and other contracting requirements. Companies must stay agile as the goal posts continually shift.

Strategizing for an Election Cycle

Given the multitude of impacts federal elections can have, businesses should take a proactive, strategic approach to preparing for these cycles well in advance. Leveraging tailored market intelligence can inform scenario planning to model various outcomes and realign strategy appropriately.

The experts at Deltek advise contractors to analyze key trends and leverage historical data to “formulate robust, adaptable approaches that align with the government’s evolving needs” following elections. Their research shows optimism is high, with 62% of contractors expecting increased post-election revenue powered by strategic initiatives. Deltek Report

To capitalize on this upside, contractors should focus on:

• Strategic partnerships and capture initiatives to pursue new funding sources.
• Investing in business development for priority areas under new administrations.
• Prioritizing cybersecurity and compliance readiness for evolving requirements.
• Taking scenario-based approaches to forecasting changes and realigning capabilities.

Additionally, partnering with specialized recruiting agencies can provide a competitive advantage through this period of change and uncertainty. These collaborations allow contractors to focus on core operations while benefiting from the agency’s expertise in talent acquisition strategy, candidate screening, and efficient hiring at scale.

By taking decisive action to analyze, strategize, and invest for multiple scenarios, companies can stay ahead of the dynamic shifts precipitated by the transfer of power in Washington D.C.

Conclusion

Federal elections are pivotal disruption events that substantially reshape policies, budgets, regulations, and priorities across the government contracting ecosystem. While this injects uncertainty into the market during transition periods, it also presents lucrative new opportunities for companies willing to adapt.

The key to thriving is anticipating and preparing for these changes well in advance. By monitoring policy positions, budgetary projections, and regulatory shifts, contractors can position themselves to capitalize when the new administration’s agenda takes shape. Those that successfully align their capabilities and strategies with evolving needs will gain a decisive competitive edge.

Leveraging strategic guidance, market intelligence, and specialized talent partnerships will be critical for businesses navigating these volatile cycles. Those that evolve proactively will be best positioned to lead the way through the next era of government contracting.