In Conversation with Al Chiogioji, President, MELE Associates, Inc.
2023 was a year of economic turbulence, global uncertainty, and continued international and domestic political discord that was but a preview for what could come in 2024.
With the impending U.S. presidential election, the federal reserve’s continued battle to stick a “soft landing”, active supply chain disruptions in the Middle East and lingering supply challenges from the pandemic, and the technological acceleration of artificial intelligence and cyber threats, 2024 will be a very challenging year, particularly for small and midsize businesses (SMBs) operating in the government sector.
MELE Associates, Inc. is a family owned and operated business that has been in business since 1993. The company’s long-tenured leadership team has navigated its fair share of economic, political, and global uncertainty across its more than three decades of success serving federal, state, and local governments.
MELE CEO and Chairman Mel Chiogioji, President Al Chiogioji, and other veteran MELE leaders have seen it all and carry a collective historical knowledge that is rare among SMBs in the government contracting space. This institutional history and long record of successfully navigating change empowers the company to remain adaptable to an ever-evolving contractor ecosystem.
As SMBs cautiously slide into what will be a turbulent 2024, MELE’s President Al Chiogioji shared his observations for SMB leaders preparing to navigate what is likely to be a year of significant uncertainty.
2024 is potentially the most consequential election year in recent memory and its outcome will yield two starkly different policy outcomes. What can smaller federal contractors do to best prepare for what comes after the 2024 election?
As always, the presidential election results can have a dramatic effect on the contracting environment. Who controls Congress, the Senate, and the presidency will determine the challenges faced by contractors. I think the major issue that contractors will face will be the opinions of the candidates on whether the government should expand or contract. And whether anyone elected can push their agenda through and make it a reality. This will also be a part of whether the government will be able to pass the budget on time. Continuing resolutions and government shutdowns are a challenge for any contractor. However, we have been dealing with this budget uncertainty for the past several years (regardless of who was president).
Different agencies will either expand or contract based on which presidential candidate gets elected. If your company is well-positioned and is lucky enough to be supporting programs that expand, then there are less pressures to be managed. However, if your programs are to be cut, that brings other issues into play. (e.g., can your company be viable in the face of any type of revenue decline?) If control of Congress is split between the two parties, or if majorities remain very tight, there always exists the possibility of a budget standoff or shutdown. The main thing that smaller federal contractors can do to prepare is to try to ensure that they have sufficient cash on hand, or the ability to borrow funds to make sure that they can stay in business.
One of the biggest challenges in the last few years has been a company’s ability to manage cash flow. This is not a challenge exclusive to government contractors. However, as most government contractors are suppliers of contract employees, the fact remains that meeting payroll and accounts payable requirements are the biggest challenge that they face. Especially if their contracts are subject to a government shutdown. Cash flow is the key component in ensuring the viability of a company.
It also behooves any company to have the policies and procedures in place so that their employees know what to expect from a government shutdown. You do not want to have to make these decisions on the fly.
The Department of Defense is pushing to launch its new CMMC (Cybersecurity Maturity Model Certification) in 2025, which reflects a wider push by federal agencies to increase IT/cyber security among its partners, including those categorized as SMBs. What steps can smaller contractors take now to prepare for CMMC in 2025?
DoD has been trying to launch CMMC for the past few years with little success. They can’t seem to agree on the standards they wish companies to meet. And since cybersecurity threats change daily, it will still be a challenge for them to move forward.
Unfortunately, this whole program is a problem for small to medium sized companies. To meet these potential standards, there is a large burden in hard (equipment, consultants, vendors, etc.) and soft (internal paperwork, policy and procedure creation, documentation) costs that are major challenges to businesses that generally lack the ability to pay for these added costs. The first time that DoD tried to roll this program out, they got tremendous pushback from the SBA (Small Business Administration) for these reasons.
At MELE we decided to implement best practices for cybersecurity (some of which are CMMC requirements) within a reasonable cost. We will tackle being fully CMMC certified when it becomes apparent that they will put this in place and will start including CMMC in contracts (which I believe in its present form will not happen by their deadline).
Reputable sources like GovWin IQ have cited cybersecurity, artificial intelligence, and supply chain as three key trends/areas that will have significant impacts this year and beyond. Which of these areas do you feel will have the most impact on SMBs in the near term and why? Which might have longer term implications?
I think the level of impact of these areas on any company will depend on the type of work they perform and the clients of the company in question. Cybersecurity plays a role in all companies; however, it plays a bigger role in companies that must meet CMMC requirements due to their clients being from DoD. Supply is and has been an issue with certain companies for a while, but as above, it will impact a manufacturing company on a larger scale than say a company that provides support services.
What other trends/areas of interest should SMBs pay particular attention to as we move deeper into 2024?
As I mentioned earlier, solid cash flow is the key. Regardless of how the economic and governmental outlooks change, access to cash is usually the determining factor on whether a company is successful and viable. There have been companies with the greatest ideas in the world that have failed due to a lack of capital. Moving into an uncertain 2024, the best thing any company can do is to put in place instruments to ensure that cash is not an issue.