It’s no big secret that the federal government is currently mired in a difficult budget situation. In light of reduced tax revenues, the financial strain of simultaneous wars and an increase in people seeking assistance due to the down economy, the federal government is operating well in the red and looking wherever possible to trim costs.
In an effort to curb increasing costs and get the budget situation under control, President Obama’s budget request for fiscal year 2012 mandates a 5-year freeze on discretionary spending.
In a recent post on the Corporate Growth, Capital Style blog, ACG National Capital member, Carl Grant, discussed how the National Capital region’s economy, with nearly $400 billion in economic output, has remained strong despite the country’s struggling economy. The area’s government contracting and vendor community have been a major contributor to that economic prosperity, which means that this proposed discretionary spending freeze could have significant ramifications to that industry and the region’s economy as a whole.
Deltek Information Systems recently did a study to determine what the impact of spending cuts could be on the government market and regional economy. The analysis found that due to ongoing budget issues and proposed spending freezes, one particular area, architecture and engineering (A&E), is slated to only grow 3.9 percent by 2016.
The A&E services included in the analysis consisted of construction and facilities related engineering services such as civil engineering, electrical engineering, mechanical engineering and environmental engineering, as well as architecture services such as structural design and interior design.
Despite the downturn in overall spending, the report found that certain trends and mandates within the federal government could provide new business opportunity in the A&E industries for companies prepared to address them. Some of these mandates and trends include:
- Energy efficiency and renewable energy mandates
- Mandates to dispose of excess real estate
- Federal adoption of telework
Although the economic outlook for the government-focused A&E community in the National Capital seems dim, companies prepared to compete for business generated by federal mandates and trends like those listed above can continue to grow and succeed.
Deltek is sponsoring a Webinar on August 30, 2011 about how companies can stay competitive in this market. Registration for the Webinar is available on the Deltek site. Also, the report is available to download by clicking HERE.