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The consolidation of large contract vehicles is going to dictate a lot of deals that happen in the government services space moving forward.
As Jon Yim, a director at aerospace and defense investment bank KippsDeSanto & Co. noted in a recent blog post, the General Services Administration is looking to shrink the number of its contract vehicles from about 5,000 to 4,000. This was done to ease the workload because contract awards have raised dramatically since the turn of the century but the workforce hasn’t.
“They just don’t have the personnel to manage all these contracts,” said Lee Doughterty, a government contracting attorney at Tysons Corner-based Offit Kurman. “It’s just expensive to manage contracts and compete contracts and the less often they have to do it, the more efficient.”
This has implications for buyers in defense M&A because now it pressures them to raise more scrutiny over potential acquisitions that are heavy on contracting vehicles and task order but light on prime contracting positions from full and open competitions.
Yim told me that a good illustration of this issue comes with the Technical Acquisition and Business Services Support (TABSS), a contract vehicle with the Department of Homeland Security that provides DHS with program management and other engineering, technology, and financial support services. In July, DHS announced that it would roll TABSS into the larger One Acquisition Solution for Integrated Services (OASIS) vehicle.
Read more: Government contract vehicle consolidation to shape M&A environment
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