Tim Ward, Principal at The McCormick Group Inc., recently had a Q&A session with Emily Mekinc from the Washington Business Journal about sequestration and the government contracting market. Mr. Ward, who has been at Arlington-based executive search firm McCormick Group since 2000, specializes in searches for operations, technical and business development executives for government contractors.
What are the impacts of sequestration on hiring/recruiting of federal contractors? We are certainly seeing changes in hiring patterns. The key driver is the overall uncertainty in the market. Many companies are unsure if contracts will even be extended. As a result, we’re seeing fewer companies creating overhead, indirect positions. In many instances, they’re consolidating or eliminating what are essentially positions that don’t result in direct billing.
Are federal contractors holding positions open? They are in many instances. I would say that in addition to the impacts of sequestration, “lowest price, technically acceptable,” essentially doesn’t challenge the contractors. It doesn’t promote innovation. There’s no incentive. If you’re innovating, oftentimes that carries a higher price tag. Companies are really having to look at expenses. I’ve seen companies moving away from traditional 401(k)s and certain health plans to trim costs.
What trends are you seeing? One trend is companies are making the strategic decision to remain a small business, than officially becoming a large business with smaller margins and more competition. As far as positive trends, there are several areas of potential growth. Merger and acquisition activity is one. The larger integrators are looking at enhancing their business. For example, companies are cutting back traditional weapons development and increasing M&A activity to get into cyberwarfare and C4ISR
What is the effect of sequestration on private sector nongovernment hiring? I would say indirectly, there’s much talk about the huge influx of baby boomers retiring out of the government. That will have a direct result on openings across the private sector, when those positions open up in government. What’s happening with sequestration, there is a slowdown in the number of baby boomers retiring. That will have an impact on private sector hiring. The lobbying industry is seeing a little bit of an uptick too. There’s always a need for strong business developers, even in a climate where companies are scaling back. People with a strong network in a particular area of government are still in demand. There’s still hiring, it’s just not as widespread as we’ve seen. Big companies are sitting on very large amounts of cash, so they’re going to hire better talent. They’re more willing to take a financial risk to do that to better position themselves down the road.
To contact Tim Ward, go to | Tim Ward
TMG’s Take is a regular e-mail advisory produced by The McCormick Group. The company’s Government Contracting group combines the expertise of our knowledgeable consultants to help government contractors fulfill all of their recruiting needs. TMG’s Take covers topics across the spectrum of the government contracting industry, including business development, proposals, contract management, cyber security, compliance, R&D, technology, and finance. Please direct all inquiries to Brian McCormick, Executive Vice President at (703) 841-1700 or bmccormi@tmg-dc.com.
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