Federal Cybersecurity Contractors Whiplashed By Uncertainty

A halt on new contract awards by the federal government’s top procurement agency has thrown vendors into confusion, raising concerns about its ripple effects.

The General Services Administration in a Jan. 24 memo to all contracting officers called a pause “effective immediately, and until further notice” to “permit the new leadership to understand key acquisition actions, commitments and approaches and help direct any needed course corrections.” The memo outlined exceptions for emergency obligations and spending through the schedules, GSA’s government-wide contract vehicle that facilitates various IT transactions for federal agencies.

The pause came as President Donald Trump froze federal funds in a hardline stance against diversity, equity and inclusion. Trump rescinded on Wednesday a memo freezing spending on federal loans and grants after state Medicaid websites went down as a result, but at least one federal agency has issued blanket stop-work orders for institutional support contractors.

Federal contracting experts warn that widespread confusion created by the freeze and sudden backtracking have left vendors in chaos – although they say the GSA pause is unlikely to cause lasting harm to the U.S. federal cybersecurity market.

White House announcements are “definitely causing confusion” among cybersecurity contractors and officials unsure whether they can continue issuing funds, said Deltek senior research analyst Deniece Peterson. GSA did not respond to a request for comment.

The new administration’s criticism of federal cybersecurity agencies – especially its apparent hostility toward the Cybersecurity and Infrastructure Security Agency – could further deter cybersecurity vendors, particularly among small businesses, Peterson told Information Security Media Group.

“There is a lot of confusion going on and it’s having a direct and indirect impact on cybersecurity,” Peterson said, stressing the need for clear security exemptions that allow federal contractors to continue dispersing funds for critical cyber services.

The Professional Services Council, a leading industry group, also called for more guidance on what’s permissible in federal contract spending. The group reportedly said it was also discussing the impact pauses in federal payments could have in conversations with administration officials.

The Department of Defense said Tuesday that its contacting activity is not affected by the White House limits on financial assistance. “The department continues to award new contracts to fulfill validated mission needs,” it said.