Washington is making decisions now that could reshape competition and investment across government

Terry Gerton Rulemaking is keeping a lot of people busy these days, and the comment period just closed on a counter UAS rule that would implement the Safer Skies Act provisions. I know PSC was actively engaged in that. What did you all tell government regulators?

Jim Carroll What a great question, Terry. We’ve certainly heard from so many of our member companies. You know, I will say it’s interesting how services have evolved over the years and how Professional Services Council has evolved along with it. And the services that not just involve people in seats and includes technology and certainly the drones and especially the counter drones is in that category. And that’s why we had so many member companies who were interested in this topic. Certainly, everyone understands the idea of safer skies. It is an absolutely appropriate way to think about this issue. It’s certainly one of the ways that the government, it seems like, we have to be able to respond and protect the skies, protect people on the ground, major sporting events, as well as just major everyday occurrences with the federal government. One of the concerns that companies raised was about how the proposed regulation on safer skies would negatively impact the ability to do testing, the R&D side of this and being out in the field and some of the prohibitions we think were unintended consequences of the research. And sometimes the proposed regulations, as Terry, and you and all of our listeners know, sometimes proposed regulations don’t really propose something that is either workable or that they understand the net impact. We think that was part of it with this one. They didn’t mean to knock out research and engineering testing capabilities and down that line. And so we really wanted to explain that to them that we needed to be able to aggressively test that would get it to market faster, more economical, and really be able do some amazing things. And Terry, I know you’ve seen, and I’m sure many of your millions of listeners have seen some of the technology and the counter space that is just remarkable that these companies, and I think we’ll talk about this, but regardless of size, they are able to do some pretty amazing things.

Terry Gerton Well, let’s switch to that size question because another rulemaking that’s drawing a lot of attention involves SBA’s proposal to redefine who’s considered a small business. So as it’s considering changes there, from your perspective, what do you think they’re to accomplish with these changes?

Jim Carroll You know, that’s really the million dollar question, and there’s been a push for many years to help the middle market, the emerging companies, the companies that are graduating from the small category in the next code to, you know, that medium sized market, there’s an opportunity to address that here. And we think a desire to do that. The issue that we’re looking at, or we’re hearing from our members is, what is the actual impact of this? Just like some of the safer skies, there are some negative parts to this. And we’re hearing from a variety of members, the good and the bad. And so, you know, there’s, a lot of the large companies don’t have strong feelings one way or another. And, you with 400 member companies of PS Council, you know some of large companies do not have as significant view on this as a middle or small company. And then for the middle we like to say emerging because at the Professional Services Council we try to make our smalls emerging and our emerging large and the large extra large. It’s the opposite of the RFK diet. And so what we’re hearing from some of those companies, the mid size is that this would either allow them to stay in the small category or if they’ve graduated to come back in. But then we’re from some of the small companies that this would really damage, if not completely threaten, their ability to compete in this space. And so we’re collecting comments now. And it’s interesting, we’ve participated in several meetings up on the Hill. We’ve been talking to the administration. We had a member only call of our 400 companies. We had 200 plus members on the call with us. And we are submitting comments based on our membership. But I think there’s an impact here that we’d be interested in hearing the perspectives of other companies. And it’d be interesting for us to get, if anyone, your listeners, any of the companies out there are not members of PSC, we’re curious as to how they think it impacts their business. And I invite them, they could send us an email at policy@pscouncil.org. That’s pscouncil.org. I really think this would be interesting to sort of hear what everyone has to say.

Terry Gerton Jim Carroll is the CEO of the Professional Services Council. Jim, before we leave this topic, it’s interesting to me that the large businesses, you said, don’t have a big concern here because it seems like the changes in the size could impact competition and teaming relationships. Do you see that on the agenda here?

Jim Carroll Yeah, I didn’t mean to paint with a broad brush. We’re hearing from some big companies that are absolutely interested. But across all three sizes, the small, emerging and large, there are some who are happy about it and like this, and so it really is a big group. And I also think it depends within the companies that do business with the federal government, it depends if you’re primarily a defense company, if you’re primarily an international services company, I think really sort of colors their perspective on the significance of this issue. And it’s just fascinating that this reg was dropped without a lot of notice. We knew a size standard evaluation was coming, but it appears from everything we’ve gathered that the Hill did not get a lot notice. The White House did not get a lot of notice. It’s really originated within the SBA. And again, going back to some of what I said at the beginning of our conversation, did the SBA really mean to do this? Did they understand the impact and what are they trying to get from this? And we want to work with the SBA and, you know, the rest of the administration to implement this in a way that is fair for all involved.

Terry Gerton Well, as industry is commenting on these long-term policy changes, it’s also watching Congress make some immediate decisions about funding. And for the first time in a while, we have a continuing resolution that will cross fiscal years before we actually get to the fiscal year. From your member’s perspective, what’s the practical significance of having that, I’ll use my air quotes here, funding certainty?

Jim Carroll Yeah, funding certainty until there isn’t certainty. So we have three months of a CR. And what it shows is a bipartisan recognition that elections are coming up. And that shutting the government down is bad for everyone. Regardless of politics, it’s an awful look to have a dysfunctional D.C., I’ll say. I don’t want to limit it just to one of the sectors in D.C. And so I think everyone recognized they wanted to kick this past the elections. But try to handle this, you know, before a new Congress comes in, in January. I think everyone saw this coming, it was no surprise that we’ve got a CR at the last minute and in order to do this. But it means that there is a limited window of certainty at existing levels. And I think the outcome of the election will have a great deal of impact on, you know, what actually gets implemented in December before January comes and we have that new congress. So I hate to be the pessimist, Terry, but I’m worried that we’re not going to have a white Christmas, that it’s going to be drudgery to either not have the government working or not have some certainty for these companies to know exactly what the opportunities are to provide services.

Terry Gerton And what kind of decisions does that mean your companies will continue to defer?

Jim Carroll A lot of it will be in the R&D, which is critical. We talked about that at the beginning, again, with the counter drones and the other technology, is that they are not going to push. They won’t have the ability, with the responsibility of the large companies to the shareholders, to the companies that are PE-backed, the authority to really sink a lot of money into future work, into future capabilities, until there’s some certainty that we know the direction that the budget is going to take. And it’ll be interesting to see what OMB does and it’s interesting to sort of see how some industries and some government administrations might be getting more funding than they even have asked for and so it’ll be a very interesting December maybe January. You know, I think we’re in for it. There’s no question Labor Day is over, Terry.