Just beginning my career in federal consulting and im curious about how M&A works in this space. Can companies sell their awarded contracts/task orders? Or if a firm is acquired do their contracts automatically become absorbed by the acquirer? Given the new administration and changes made to Set aside contracts im surprised there’s not more consolidation with large firms acquiring small firms who rely on this kind of work.

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Seems like a good hedge for SMBs who will have to compete with large firms with greater resources and good value for a large firm who thinks they can continue to win recompetes and option years.

No you cannot sell your federal awards.

Yes, typically the awards get absorbed by the acquirer but it’s not automatic, I believe there’s stipulations and opportunities for the awarding agency to review; the FAR is very specific on this so you want to know this by heart.

Purchasing firms for set asides is a huge gamble. For example, there’s a very real possibility that the SBA is gutted in the near future and awardee designations like 8A, minority/native/veteran/women owned are effectively deleted and their contracts cancelled. See below for reference. If we take into consideration what the administration believes “illegal discrimination” to be, those SBA designations certainly fall under the DEI umbrella and are at risk.

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Do you think Bain would want to dump more cash into Guidehouse for acquisitions when it’s starting to look like they might take a loss on their initial investment? I seriously doubt Bain’s investment thesis was buy this company then see a bunch of their contracts get terminated.

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