An Interview with Alan Chvotkin

Note: Alan Chvotkin is the EVP and Counsel of the Professional Services Council (PSC).

OCI:  Why has the volume of proposals dropped during 2015?

Alan Chvotkin:  For four years in a row, government spending on the purchase of goods and services is down year-over-year, although not uniformly across all areas. For example, IT spending is up a little in FY 15, primarily related to cyber.  There is greater use of task orders under existing contract vehicles and the budget uncertainties of the prior year pushed a lot of RFP releases to the right. That agency uncertainty is not a factor for FY 15 since every agency but DHS received their appropriations in December 2014 and DHS got their appropriations in March 2015. I expect the final numbers for discretionary and contract spending in FY 15 will show that the downward trend either halted or slightly reversed.

OCI:  How are the FY 2016 appropriations shaping up?

Alan Chvotkin:  Congress will almost certainly have to enact one or more Continuing Resolutions (CR) at the start of the fiscal year. Discretionary spending will be roughly flat based on the predetermined levels in the Budget Control Act (BCA). However, the president’s FY 16 budget is 10%, or $78 Billion, higher than the Budget Control Act allows to provide more spending for both civilian and DoD agencies and to eliminate sequestration. The congressional budget plan would match the president’s defense number but significantly reduce domestic spending to remain within the BCA caps. When the dust settles, my best guess is that there will be a small compromise, with a slight increase in spending for both civilian and defense agencies. Further, because of the special budget treatment it gets, the overseas contingency operations accounts will be the pressure relief valve to help both parties meet their respective agendas.

OCI:  When will we see appropriations for FY 2016?

Alan Chvotkin:  I don’t expect to see FY16 “regular” appropriations until late November or early December and thus I expect that we will have another year of “cliff hangers” through November.  We may see a series of CRs between October and Thanksgiving.  Everyone is hoping that the congressional leadership and the White House will come up with a compromise.

OCI:  What about the debt ceiling?

Alan Chvotkin:  The debt ceiling will probably be reached in late fall but I don’t see it being a significant issue in the discretionary spending debate.  Every time the GOP tries to make it into something more, the president stands his ground.  The issue of an actual default is so unpalatable that it isn’t any leverage as a bargaining platform.  Congress will raise the debt ceiling by a small amount.  Since tax revenue has been strong and mandatory spending slightly lower, the government has been able to manage its way under the current debt ceiling since last year.

OCI:  Will there be a renewal of sequestration?

Alan Chvotkin:  I think there will be a one-year adjustment for FY 16.  There is likely to be a slight increase in defense and civilian agency funds.  The conservatives in Congress lack the clout (and the votes) needed to produce a different outcome.