Navigating Uncertainty: Workforce, Contracts, and Tax Season

Original broadcast 2/16/25

This week on Fed Gov Today with Francis Rose, we take a deep dive into three major challenges facing the federal government. First, we examine the changing landscape of the federal workforce as agencies implement voluntary resignation and early retirement offers. Next, we explore the turbulence in government contracting, where stop work orders and unpaid invoices are forcing companies out of business. Finally, we look at the state of the IRS as tax season opens, assessing the agency’s progress in improving taxpayer services while grappling with ongoing operational hurdles. With expert insights from key leaders in government and industry, this episode unpacks what these developments mean for agencies, contractors, and taxpayers alike.

The Future of the Federal Workforce – Challenges and Solutions

As federal agencies navigate workforce reductions through voluntary resignation and early retirement offers, uncertainty looms over employees and HR professionals alike. In this segment, Jeff Neal, Principal at ChiefHRO and former Chief Human Capital Officer at the Department of Homeland Security, and Sydney Heimbrock, Chief Industry Advisor for Public Sector at Qualtrics, break down the implications of these workforce shifts.

Heimbrock emphasizes the importance of clear communication in mitigating employee anxiety. HR professionals must ensure that employees understand their options while maintaining engagement across agencies. Transparency is critical to preventing misinformation and uncertainty.

Neal highlights a major risk in voluntary workforce reductions—losing top talent. Employees with marketable skills and confidence are more likely to take the offers, potentially leaving agencies with staffing gaps in critical areas. He stresses the importance of strategically exempting mission-critical positions, as demonstrated by the Department of Veterans Affairs, which has excluded over 300,000 positions from these reductions.

Looking ahead, agencies must leverage data-driven workforce planning to anticipate future skill needs and prevent disruptive talent shortages. HR leaders should focus on retaining employees in essential roles and ensuring a smooth transition for those affected by workforce changes.

Key Takeaways:

• Communication is Key: HR professionals must provide clear guidance to employees amid workforce reductions to minimize confusion and anxiety.
  
  
• Risk of Losing Top Talent: Voluntary resignations often attract high-performing employees, making strategic exemptions critical.
  
  
• Data-Driven Workforce Planning: Agencies must analyze future skill needs to maintain operational effectiveness during and after workforce reductions.

Uncertain Times for Government Contractors

The federal contracting landscape is facing turbulence as stop work orders, unpaid invoices, and financial instability create significant challenges for vendors. David Berteau, President & CEO of the Professional Services Council, and Jerry McGinn, Executive Director of the Baroni Center for Government Contracting at George Mason University, discuss the implications for contractors and federal agencies.

Berteau outlines three major issues plaguing contractors: stop work orders that halt ongoing projects, uncertainty over contract terminations, and unpaid invoices totaling over $700 million. This financial strain is pushing some companies out of business, exacerbating concerns about the stability of the federal supply chain.

McGinn highlights the broader impact of these uncertainties on the defense industrial base and the federal IT sector. While the administration seeks to modernize federal technology spending, contractors face difficulties navigating shifting priorities and funding constraints.

Both experts emphasize that despite these challenges, opportunities for growth and modernization still exist. Companies that align their resources with emerging government priorities, such as defense and border security, may find new contract opportunities even amid the uncertainty.

Key Takeaways:

• Stop Work Orders Are Disrupting Vendors: Uncertainty over contract terminations and delayed payments is forcing some contractors out of business.
  
  
• The Defense and IT Sectors Are in Flux: Shifting priorities in government spending create both risks and opportunities for contractors.
  
  
• Adaptability is Crucial: Contractors must align their capabilities with evolving government needs to remain competitive.

IRS Prepares for Tax Season – Progress and Challenges

As the 2024 tax filing season kicks off, the IRS continues its efforts to improve taxpayer services and reduce processing delays. Jessica Lucas-Judy, Director of Strategic Issues at the Government Accountability Office (GAO), discusses the agency’s progress and ongoing challenges.

The IRS has made strides in processing electronic returns efficiently, with 98% of e-filed returns completed on time last year. However, persistent issues with paper returns remain a major hurdle. The agency’s goal was to process paper returns within 13 days, but the average processing time stood at 20 days.

Lucas-Judy also highlights the IRS’s efforts to enhance transparency, such as launching a web page that tracks the receipt dates of taxpayer correspondence. However, this initiative falls short of providing estimated response times, leaving taxpayers uncertain about when they will receive a resolution.

To address these challenges, the IRS must improve hiring and retention, integrate in-person and online services, and develop a more comprehensive communication strategy. While the agency has made progress, sustained improvements will be necessary to enhance taxpayer experiences and reduce backlogs.

Key Takeaways:

• Electronic Processing Is Strong, but Paper Remains a Challenge: While e-filed returns are processed quickly, paper returns continue to face delays.
  
  
• Improved Communication is Needed: The IRS has taken steps to increase transparency, but taxpayers still lack clear expectations for response times.
  
  
• Hiring and Retention Are Critical: The agency must maintain a stable workforce to handle both taxpayer inquiries and return processing efficiently.