Sequestration, the $1.2 trillion poison pill that the Congress and the White House built after last year’s Supercommittee failure to find agreement on cutting the nation’s budget, might become a colossal hangover for the nation on January 3, 2013.

It could also, however, create business opportunities.

At first, agencies will rush to cut costs wherever they can, and contracts will be discarded in the process. Heads, budgets and tears will roll. After the initial carnage, though, agencies will be left searching for ways to accomplish their missions at even lower prices, with smaller staffs, and with increased scrutiny.

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Savvy contractors have always sought to find new innovations in their products and services. If sequestration comes, they may have to find ways for their customers to succeed with fewer resources.

Sequestration will dictate a new set of rules — rules that could start a new era of innovation.

Here are several places where GovWin analysts believe we might see renewed entrepreneurial efforts at finding better solutions for government’s problems:

  • Mobile First, Laptop Last: The government’s move to the cloud not only created a solution for storage, it also created a new way for the government to do its work on the road. Laptops are still the dominant device used for accessing data, but laptops have a higher maintenance and replacement cost than mobile devices. New, secure mobile devices can easily be swapped, and information moved with a single sign-on. Plus, without USB ports, mobile devices close a major security loophole — thumb drives.
  • Less R&D, More Off-The-Shelf: Contractors in the Defense sector have always created technologies for the Department of Defense (DOD) that eventually moved into the commercial sector. That cycle, however, could reverse under budget pressures. We’ve already seen evidence of this, with the Army testing the battlefield applications of smartphones. In a post-sequestration world, tweaked commercial devices could be less expensive for DOD than inventing something completely new.
  • Drone X: Drones help keep American soldiers out of harm’s way, and the market for drone development is growing, despite the downward slide to a new fiscal normal. Cost-minded innovation here could not only reduce price but also improve drone technology. Drones, in the end, could accomplish the same tasks as more complex weapons systems, at much lower prices (we’re looking at you, F-35).
  • Centralized Cybersecurity Software Development Kit: Ever wonder why a government with so many agencies has multiple approaches to how it does cybersecurity? A new initiative to create a robust, standardized set of tools for both secret and public-facing agencies would not only decrease costs, but also drastically improve on America’s digital wall. It would give secure networks added security, and allocate the best minds and problem solvers to solving and preventing threats under a single program structure. Sure, IT initiatives that cross agencies are rare – but with the Federal Risk and Authorization Management Program (FedRAMP) standardizing the government’s approach to the cloud, they’re no longer unthinkable.
  • Penalties for Bid Protests: In a down economy, bid protests (claims that one contractor was given unfair advantage over another contractor) rise significantly. A recent trend toward more protests, though, has increased the cost of business for contractors, delayed agency missions, made contracting officers scared to innovate, and standardized a bad business practice. Placing a greater burden of proof on the protestor, or finding a way to penalize unsuccessful protestors for frivolous protests, would decrease costs and ensure that honest protests receive their due process.

That’s just a handful of ideas we can see coming from government contractors. Sequestration, should it come, is still roughly eight months away. That’s plenty of time for inventive contractors to outthink the competition and offer up cost-saving ideas to increasingly worried agencies.

As eight months’ worth of sequestration panic news unfolds, the savviest contractors won’t be biting their nails. They’ll be doing what they’ve always done, polishing off their best ideas and picking up the phone.