Return-to-office policies may bring potential federal workforce challenges

An already competitive market for talent could get more cutthroat in fiscal 2024 as the Biden administration continues to press for federal employees to return to the office, according to one analyst.

In spotlighting the contracting outlook for the current fiscal year, Kevin Plexico, senior vice president of information solutions for Deltek, said Thursday that the ongoing push to bring employees back to the office is likely to continue through the election year, adding competitive pressure on federal agencies contractors to retain talent as a result. 

“This could have a big impact on the competitiveness of government jobs, versus those same people working in the commercial sector, and I think that also poses a challenge for government contractors as well,” he said.    

The issue of federal return-to-office policies emerged as a hot topic this summer, with White House Chief of Staff Jeff Zients calling for an increase in in-person work in August, and the Office of Personnel Management requiring better data on telework usage last month. 

Meanwhile, Sen. Joni Ernst, R-Iowa, accused federal workers in September of committing “fraud” for allegedly teleworking from lower-cost areas while collecting higher locality salaries, but citing a pre-pandemic inspector general’s report from 2016 as an example. 

This comes as the Government Accountability Office last week called for standardized benchmarks for federal office space utilization after finding that, on average, 17 federal agencies use 25% or less of their headquarters office space.  

Plexico said that pressure comes as low unemployment and fundamental shifts in the workforce environment raise the stakes on employees jumping ship for the private sector to retain some of the telework benefits they gained during the pandemic. 

“There’s been a lot of conversation in Congress and in the Biden administration about getting government employees back into the office,” he said. “And, of course, if the government employee goes back, you can bet that the contractors that support them are also going to be required to go back into the office. And this, I think, does pose potential issues for the contracting community as you are competing for talent with commercial companies that are maybe more flexible with where people work.”

Those challenges come alongside another tenuous budget battle in Congress, as the current continuing resolution is set to expire in two weeks. 

With the House and Senate still far apart in each chamber’s appropriations legislation and funding levels, Plexico said it was likely that another stopgap bill would emerge, possibly lasting until January or maybe April. 

He added that any potential budget deal would likely end up adhering closely to the 2023 Fiscal Responsibility Act in the spring to head off a debt ceiling default.

“I think 2024 is going to tie off roughly to what that debt ceiling legislation agreed to, which would be increases to defense spending and some decreases in civilian agencies, probably to the tune of 5 to 10%,” he said. “Typically what we see is the longer the appropriations take to get done, we’ll see agencies hold on to their money pretty tightly…and that pushes a lot of money towards the end of the fiscal year.”

As a result, the longer Congress takes to come to a budget deal, the more likely agencies' spending will be shallow early and furious by the fourth quarter, something Plexico said fiscal 2024 is shaping up to be.