THE FUTURE IS MADE IN AMERICA
The Biden-Harris administration since coming into office has declared that contracting and grants are central to America’s economic recovery. That they are to play a vital role in furthering their priorities in clean energy, renewing infrastructure and bolstering R&D.
The executive orders proposed by Biden within his first 100 days optimistically signal the government’s continuing reliance on the private sector.
Here’s an overview of what government contractors can expect in the years to come:
- An ambitious plan to rebuild infrastructure at a massive scale
President Biden has issued a proposal dubbed the American Jobs Plan to invest about 1% of America’s GDP over the next 8 years. Over USD 2 trillion are to be pumped into infrastructure, R&D, and manufacturing. Here are the highlights:
- $621 billion on revamping transportation
- $115 billion on fixing and building bridges, highways and roads
- $85 billion on modernizing public transport systems
- $300 billion on bolstering American manufacturing and supporting small businesses
Rebuilding America
President Biden is clear that this massive exercise will be done using American taxpayer money and through the creation of American jobs.
His priorities include:
- Increasing American industrial capacity and strengthening domestic supply chains
- Executive order strengthening the federal government’s Buy American rules
- Closing loopholes in waivers to Buy American rules in contracting
- A new Office of Management and Budget position to oversee
For American contractors and small businesses, this is a win on many fronts. Not only is the Federal Government obligated to purchase more from them but Biden has also changed how domestic content is measured and defined for qualifying products.
He has raised minimum thresholds and set up a system that will now help connect American manufacturers to those tenders upon which waivers have been proposed. This means that American contractors can now compete for those contracts also which were earlier granted immunity from the Buy American rules.
If Biden’s proposals are passed through Congress, contractors can expect a volume of contracts and RFPs that would be huge. It has been made clear that the bulk of this agenda would be deployed through government contracts and grants and that federal contractors would be invaluable in providing support at scale.
Here’s what contractors can expect as massive opportunities in construction:
- Modernizing over 20,000 miles of highways, roads, and main streets
- Repairing 10 most economically significant bridges and 10,000 smaller bridges
- Building and maintenance of more than 2 million homes, government offices, schools, federal buildings and hospitals
- Construction of water treatment plants and clear water infrastructure
- Replacing 100% of lead pipes and service lines for water
What contractors should look out for:
- Increased scrutiny as has been with Democratic governments
- More oversight in federal procurement
- Increased pressure for prosecutions under False Claims Act and Foreign Corrupt Practices Act
- The granting of Subpoena powers to inspectors general for rooting out unethical conduct on the part of contractors
- Increased urgency to comply with TAA guidelines
Construction contractors should begin building stronger ties with their state procurement agencies and offices as the bulk of these contracts will happen through them.
Given the bulk of contracting that might open up in this sector, they can also expect heavy competition to follow. This is the time to ramp up marketing on GSA and update price lists. Work that GSA edge!
- A vigorous push toward clean energy
On Jan 27, 2021, President Biden signed the executive order on Tackling the Climate Crisis at Home and Abroad. The Climate agenda is now at the forefront of the nation’s foreign policy and national security planning.
This means massive opportunities for government contractors working in the areas of green energy and automobiles. Biden plans to achieve a carbon-free electricity sector by 2035 and zero-emission vehicles for government fleets at the federal, state, local, and tribal levels.
Here’s a brief version of the extensive opportunities that are to follow:
- USD 174 billion to be spent on electrifying federal vehicles
- Building a nationwide network of over 500,000 EV charging stations
- Electrifying a portion of the yellow bus school fleet
- $16 billion to be spent on plugging oil and gas wells, abandoned mines and replacing ageing pipelines
- $35 billion on clean energy R&D to re-establish the US as a clean energy leader
- The construction of over 1.5 million new energy-efficient homes
Biden has also proposed the setting up of an Energy Efficiency and Clean Electricity Standard (EECES) to oversee the pursuit of these goals.
While contractors can look forward to major opportunities in the above sectors the EECES also means an increase in environmental standards that they will have to comply with. Price preferences can be expected for those that follow climate-friendly processes and products. The impetus on government agencies to reduce emissions will trickle down to their contractors as well.
What contractors should look out for:
- A pause on new drilling permits on federal lands and waters could lead to a stop
- A decided bias against traditional fossil fuel exploration and drilling
- New opportunities in solar and wind infrastructure and electric auto
- A $15 minimum wage for workers on federal contracts next year
Clean energy and auto contractors can expect vigorous competition given the scale of contracting that is to follow in electrifying the nation and the federal fleet at all levels.
This would be a good time to keep your local and federal contacts on capitol hill close.
For clean energy contractors now is a good time to push your R&D team to achieve breakthroughs. Biden’s government will be looking to invest in climate-friendly research and innovation.
- Claiming global leadership position in R&D
In an effort to boost America’s economic growth President Biden is pushing for R&D investment in technologies of the future. He plans to advance US leadership in critical technologies to compete with foreign powers including China.
These investment proposals include:
- Total investments in R&D up to $180 billion
- $50 billion to the National Science Foundation to advance computing
- $15 billion in demonstration projects for clean energy
- $46 billion in federal purchasing of nuclear research
- $50 billion in expanding industrial capacity
In line with these proposals, contractors can expect significant opportunities in the revamping and rehauling of research infrastructure in America.
Opportunity areas for government contractors in R&D will include:
- Clean energy technology, energy storage, carbon capture, and rare elements separation
- Semiconductors, advanced computing and communications and quantum computing
- Nuclear reactors, fuel and industrial capacity building
- Biotechnology and biofuels
It is understood that the Defense Production Act will be used heavily in the rebuilding of US supply chains. Contractors can expect a crackdown on collusive bidding and increased audits for Contract Compliance.
What can also be expected is unpriced GSA schedules and single requirement RFPs.
Overall contractors can expect a move away from total project pricing at the schedule level to task order pricing from the GSA. The arduous negotiations for “fair and reasonable” hourly rates with contracting officers might become a thing of the past.
Another crucial point contractors need to keep in mind is that their NAICS codes on applications listed on SAM need to match the business activity codes reported on their income tax returns. BidFortune can help you discover new opportunities and help at succeeding at federal contracting. Their deep search and forecast tools along with comprehensive data coverage are invaluable assets in maintaining and winning contract pipelines.
While the scope of these proposals is now dependent upon Congress’s approval it is clear that federal grants and contracts are mechanisms vital to the nation’s work and the furthering of this administration’s priorities.