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Understanding the government contracting landscape and which trends to watch will help you position your business to take advantage of emerging services and keep up with the industry. As you work to develop a long-term strategy for business growth, staying ahead of your competition requires analyzing and predicting these trends.

In addition to keeping up with industry news, looking ahead to FY2020 and anticipating government spending will pay off down the road. This article discusses four trends in federal government spending you will want to watch closely.

1. The Continued Advancement of AI Technologies 

Artificial Intelligence (AI) is not a new technology at this point. AI continues to evolve as machines perform increasingly complex tasks such as driving cars and predicting global economic trends at levels equal to or better than the most skilled human beings. 

Now more than ever before, government agencies are seeing the potential applications of AI. Innovation in AI drives much of what we’re seeing in increased I.T. spending by federal agencies. The growing toolkit of AI promises to reinvent almost everything the government does from education to health care to national security and defense in 2020 and beyond.  

For government contractors specializing in the tech, cyber, digital, or telecommunications markets, it’s crucial to be plugged into this trend. When it comes to business growth, you can’t go wrong if you follow the data. In particular, these data signals are noteworthy:

• Around 1.3 billion hours could be freed up through automation in the U.S. Federal government.
• The estimated growth rate for spending on AI technologies by central governments around the world is 44%, which is faster than AI spending in consumer services.
• 84% of U.S. public sector executives cited data privacy and quality as the biggest challenge for AI adoption.
• 68% of respondents to one survey (Deloitte-NASACT) reported staff would be provided more training in AI and cognitive technologies.

2. The Rise of Data and AI Ethics

With the advancement of technology, the government will play a bigger role than ever when it comes to managing the ethical complexities of this new “industrial revolution.” In addition to being the “owner” of an enormous amount of data, citizens will continue to look to government to regulate corporate data use. 

As machines collect more and more information from us, the government and industry need to prioritize privacy, equity, and transparency. Using the Internet, Internet of Things, and sensors, machines can track an astonishing amount of data from individuals—everything from sleep habits, to location movement, to every keyboard click can be stored.

For government agencies seeking to formalize their ethical standards around the risks inherent in using algorithms, there is a growing need to contract with emerging technology consultants to help sort through these thorny issues. In many ways, the U.S. Federal government is playing catch-up to other nations here:

• 107 countries have passed legislation to protect citizens’ data and privacy.
• More than 91,500 complaints were received by the Data Protection Authorities under the EU General Data Protection Regulation (GDPR) legislation since its implementation.
• The UK Government launched a Centre for Data Ethics and Innovation with a £9 million budget.

3. Prioritizing Air and Missile Defense

In March of 2019, the U.S. Army published the Army Air and Missile Defense 2028. This document provides the Army’s vision for air and missile defense. By 2028, the AMD force aims to provide commanders with a flexible, agile, and integrated air and missile defense program. This AMD program will be capable of executing operations in multiple locations and supporting unified land operations. 

One of the biggest changes this new program calls for is the modernization of radars and radar systems. This means government contractors in this space should be on the lookout for opportunities to showcase new technologies and to build prototypes. 

4. Legislation Watch: FY 2020 National Defense Authorization Act 

With the Senate passing its version of the bill in June and the House subsequently passing its version in mid-July, Congress is getting closer to the passage of the 2020 National Defense Authorization Act (NDAA). This legislation is an annual spending authorization bill that lays out how the DoD should spend its budget. 

Although challenges remain in reconciling differences between the two bills and getting the President’s signature, potential changes relevant to government contractors include commercial items, data rights, and cost or pricing data. This article provides a detailed rundown of the provisions that could go into effect as soon as October 2019. 

Here are a few key points:

• The House bill would create a pilot program within the DoD to encourage engagement with commercial technology companies through the Small Business Innovation Research Program and the Small Business Technology Transfer Program, which are conducted under the Small Business Act, 15 U.S.C. § 638 (Sec. 878).
• The House bill would amend 10 U.S.C. § 2306a, frequently referred to as the Truth in Negotiations Act or “TINA,” in several important respects that would make it easier for the government to obtain a contractor’s cost or pricing data. 
• The Senate bill requires the DoD to review how it decides to use fixed-price contracts to support its acquisition objectives to ensure that its decisions are strategic and consistent (Sec. 806).
• The Senate and House bills would each require the DoD’s Office of Small Business to set performance goals and would expand the definition of “Disadvantaged Small Business Concern” (S 1790, Sec. 841, H.R. 2500, Sec. 881). 
• Both bills also would permanently authorize the DoD’s Mentor-Protégé Program, which is intended to increase the participation of small businesses by encouraging mentorships with DoD contractors.

How will government contracting trends affect your business?  Our world-class experts have insight into how to manage and capitalize on current and future government contracting trends. Connect with us and let’s get you on the pathway to phenomenal growth!