Chaos, Change, and Opportunity in Federal IT

"Chaos." "Change." "Opportunity." Three words that surfaced in a room full of federal contractors when asked to describe today's government IT environment. Sean and Brian unpack what's really driving the disruption, from RIFs and FAR overhauls to FedRAMP changes, the Anthropic supply chain risk designation, and the brain drain hitting agencies like NIST. They dig into the structural changes reshaping how government buys and builds technology — OTAs gaining momentum, Golden Dome's six-month IDIQ award turnaround, and CDOs finally getting real budget authority to break down data silos. Then they pivot to where the real opportunity lives: $50B in federal IT contracting in Q4 FY25, $13B for autonomy and AI at the Department of War, mission Genesis investments at DOE, and the massive energy build-out required to keep pace with China. Brian gets smart on Markdown files.

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RESOURCES MENTIONED IN THIS EPISODE

Federal AI Policy & Executive Orders
- OMB M-25-21 — Accelerating Federal Use of AI through Innovation, Governance, and Public Trust
- OMB M-25-22 — Driving Efficient Acquisition of Artificial Intelligence in Government
- Executive Order 14179 — Removing Barriers to American Leadership in AI
- America's AI Action Plan
- AI.gov

NIST AI Standards & Frameworks
- NIST AI Agent Standards Initiative (launched Feb 17, 2026)
- NIST AI Risk Management Framework
- NIST AI 600-1 (Generative AI Profile)

Acquisition Reform & Contract Vehicles
- FAR Overhaul (Revolutionary FAR Overhaul)
- GSA SEWP V extension and SEWP VI updates
- Missile Defense Agency Golden Dome IDIQ
- Other Transaction Authorities (OTAs) — DAU guide

Department of War / Defense AI
- DoD Chief Digital and AI Office (CDAO)
- Defense Innovation Unit

Department of Energy
- Mission Genesis

Workforce & Learning Resources
- freeCodeCamp
- Anthropic's Claude documentation (markdown skills & agent files)
- Model Context Protocol (MCP)

The Hosts & Show
- Swish 
- GIST360

CONNECT WITH US

Got an idea for a future episode? Want to be a guest? Let us know.

Brian Lake - blake@swishdata.com

Sean Applegate - sapplegate@swishdata.com

Subscribe wherever you get your podcasts: Apple Podcasts, Spotify, or gist360.com.

Transcript

One Word For Federal IT

Brian Lake 0:00

Picture a room full of some of the sharpest minds in government technology. Individuals who have spent their entire careers navigating this market. Someone posed to the group a simple question. Describe the current state of government IT in a single word. The answers that came back tell three completely different stories. Many said chaos, others said change, and some said opportunity. So who's right? Here's the thing. All three views are completely valid. It really boils down to which lens you're looking through, and those that will truly succeed need to have the clarity, the strategy, and the nerve to hold all three views simultaneously. That's what this episode's about. So to get into chaos, map the change, and identify where the opportunity actually lies, you know what we have to do. Let's get down to the gist of it.

Markdown Meets Modern AI Work

Brian Lake 1:02

All right, Sean, welcome to the show. It's great to be back, Brian. Yeah, man. Well, listen, I gotta be honest with you. So you and I talked last week about markdown files. And I gotta be very honest. I didn't know what they were, right? I'm a dumb marketing guy. That's part of the reason we have this podcast is try to explain things that some of us don't understand, dig deeper. And last week you educated me about markdown files. And since then, no joke, I've had three separate conversations with separate people about markdown files and talking about how do you integrate them in a lot of this new AI coding, how you can do this VIBO coding, the codex that's going on. And from my perspective, how do you build these markdown files with personas so you can really be very strategic about how you're identifying people you want to market to with different messages? So thank you for that. You know, I know that's not what we're here to talk about today, but I just wanted to let you know that this dumb marketing guy really appreciates the insights you give us. So let's get to what we're want to talk about today. So tell the folks at home why we're talking about chaos, change, and opportunity today.

Why Chaos Change Opportunity Coexist

Sean Applegate 2:08

Sure. So maybe a week and a half ago, I'm sitting at an event at TD Cynics with a bunch of other federal system integrators and a few partners, technology partners and providers. And doing the introduction, the uh moderator, leader for the day asked us to introduce ourselves and use one word to describe today's federal environment. Right. Federal technology environment. Yep. And the uh I happened to be the second person to go. The first person said chaos. Okay. And that struck me very directly. Um as the the old marine intel analyst, I like to look at things balanced and fair, right, and look at both the pros and cons. I chose the word change very purposely. Okay, because there's a lot going on, but you need to navigate the change. And look, there's some good, there's some bad. Right. Take advantage of it. Uh as we made our way about halfway around the room, somebody said opportunity, and the room lit up. And not that everybody else said opportunity, but some did. But his lens, he looked at it through, was all about how do I turn lemons into lemonade at the simplest level. Because look, wherever there is chaos or change, there are likely market opportunities, but you have to look for those things explicitly and laser focus go after them. A lot of that comes down to uh territories and timing and perspective. But just complaining about those things or or being reactive to the chaos is not great. You're not gonna you're not gonna win and uh deliver value to the mission by just complaining about it. Sure.

Brian Lake 3:42

I mean, and I guess unless you've been living under a rock, this probably these three words probably shouldn't be surprising with all of the doge-driven workforce reductions, the rifts that have been going across agencies, um, the level of budget uncertainty. We had the logist shut down in the government last year. Um, CISA has seen a lot of senior leaders being then leaving the organization. We're seeing signals that the FAR is being overhauled, reevaluating uh the FedRAMP process, and then just not even again, it's gonna be part of our conversations across the whole podcast about the the impact of AI in the space and programs like 8A coming under scrutiny. But I mean, even as we're you know talking about today, I mean, it's it's how do we unpack each of these buckets and really look at them with the hard truths that are along with them and then really think about ways and strategies moving forward. So let's get

Chaos: Signals Worth Taking Seriously

Brian Lake 4:35

into the first one. Let's talk about chaos. You know, pretending that it doesn't exist isn't gonna help anybody. Let's let's think about what's the real and what's really noise and how do you kind of rise above that? Because we've seen programs be canceled, not just paused, canceled. Uh contractors who've been working in some of these agencies for years just saw their entire business models get upturned. We've seen a significant reduction of the government workforce, as mentioned. We've seen with these with these vacancies in these agencies, it runs the risk of slowing down that execution of that mission or longer review cycles that are required. Um, and as we're recording this call, obviously the biggest 600-pound gorilla in the room is anthropic being labeled a supply chain risk and the implications of what that means for the across the federal government and then the contractor community that supports it. And obviously, DHS is still shut down and not funded. I mean, it's a lot. There's a lot to unpack here, you know? It's just another Thursday, bro. Another Thursday. I mean, I I I can't. I'm just happy that when when when when DHS, when the funding lapsed and they said TSA pre-check is going away, I'm I'm happy that that got reversed. That's all I can say. Yeah.

Sean Applegate 5:56

You know, nobody likes taking their shoes off if you if you invest in a pre-check. You paid the what $78 wherever it is, or $75. I'm all to not take your shoes off and go through the airport correctly.

Brian Lake 6:05

100%. I mean, listen, $85 five years, it's a hell of a deal. And uh and like I think I think I said I saw it's 40% of the flyers go through TSA pre-check, but I have enough problems taking off my shoes now. So I certainly uh I don't I don't want I don't want to have to I want to keep going through. I want to fly through. I have a very, you know, I have a distinct schedule. I order my Starbucks right before I hit the TSA pre-check line. By the time that I'm through the TA TSA pre-check line, I'm at the Starbucks, coffee's waiting.

Sean Applegate 6:39

Well, talking about caffeine to deal with chaos. So when you think of chaos in the government, let's let's unpack this a little bit. That's what we're here to talk about, right? So when you think of things, as we've launched the the new, was it North American AI Innovation Lab, nail, and we're responding to the NIST Casey RFI, which is about agentig security. Sure. Yeah, we've we've put a number of I'll say machine converted a number of things to machine readable format and sent them back to NIST to be used on the public website for things like the NIST AI 600-1 controls, which there's like 200 plus controls. It's a lot. Um I was on an ATARC meeting last week working group, and I mentioned that uh I was a little frustrated that we sent this back to NIST several months ago and we requested they put it on their website and share it back out to the industry because we we can't do that, but we thought it'd be useful for all of the government practitioners to take a multi-hundred page PDF with a lot of language in it and give them a machine readable spreadsheet or CSV to go, hey, how am I doing against those controls? And uh Henry uh Sinkowitz is in the ATAR group, former DISA CISO or AO, effectively, and he's he's now retired teaching at Georgetown as a professor in a number of courses on on these things. And he said, you know, Sean, it's not that they're ignoring you, it's that they're likely don't have the staff to deal with it. They've had a bit of a brain drain, right? Things like Dr. Ron Ross retired. Yep. Some other folks took the uh fork in the road path. And uh unfortunately they have a ton of really complex technical work to do and they have to prioritize where they spend their time. And look, you know, they can't do it all. They have to pick what they're gonna do and where they focus. And that that's a bit of navigating the change in their perspective. And I'm excited they created the North American AI Innovation Lab. I think it's amazing for America. But some of the simple things that you maybe would just expect the basics to get done maybe won't get done by some of these agencies in the future, just because of they've got to pick and choose what they do and how they do it. And if somebody's nobody's in the job even to look at the email that came in or surface the request, then we need to be a little bit more patient. Now, from a chaos perspective, I think it's important to look at this both from the government side and the industry side. So when you think of the industry as a whole, both government and the commercial side, if you're a government individual and there's a lot of change in your department or a lot of chaos, let's say people left, they've turned over, there's gaps in roles. Think about whether you're going to step up as a young professional, maybe a mid-career professional, to take on more responsibilities, more work. How do you do that smarter? Can you, for example, kick off an AI use case, do a little bit of citizen development, or learn a few new skills like markdown language files and agent skills and maybe a little JSON and make yourself 20, 30% more productive or make your team that much more productive, right? So those are some things when we think of opportunities. I think we're going to see a lot of that um across the government. But at the end of the day, if you're a small government solutions provider, much like ourselves here at Swish, um, you know, a lot of our peers lost half of their work in early 2025 and were stuck going, what do I do? You know, and then in many cases, they're letting their friends and and and family members lay them off and they have to go find another job, right? They're very personal impacts when you think of chaos. And I think a lot of us have navigated that and have gone out the other side in many cases, and and hopefully they're now understanding the new lay of the land, the change. How have the rules changed? How do they navigate those new rules? And they'll continue to change. Good example, we have the far overhaul being done today. Right. A lot of contracts folks are understanding like, what is that? How do I navigate it? What are the unintended consequences trying to predict those things? Or running up legal bills with our contract lawyers to get new answers and stay ahead of those things when things get really gray. Right. And we're just not don't have a good gut check.

Brian Lake 10:15

I mean, to the government's credit, too, they're they're asking for input and feedback from industry on a lot of these changes as well. So it's not just necessarily being done in a vacuum. Trevor Burrus, Jr. Absolutely not. And I think how do how do how do government contractors make sure that they're staying in front of this, providing that feedback to make sure that their voice is heard and have a voice in this change?

Sean Applegate 10:36

Yeah, absolutely. I think the big thing is leverage the relationships you have, and that's a bit of the change you have to navigate, knowing who's in the government still, build new relationships with people that are now in different roles that they weren't in before. Keep in touch with the folks and maybe transitioned out if they're still in the industry side of things on the on the commercial contractor side. And I would say the biggest thing I've found valuable is being active and involved in those working groups that are joint government industry working groups, things like ATARC and ACTIACT or GBEF or others. FC is a great one in the Department of War. So you're there in the trenches, fighting the mission, solving the problems and providing value for whatever organization you're aligned with. And ideally, when you think of navigating the change and transitioning to opportunities, you're going to meet some new people, you'll find some new opportunities. There will be new budget money to be spent, new problems to solve, but tomorrow's problems are going to be different than today's or yesterday's projects. And that's a lot about modernization, new approaches, and really a bit of the boardroom change that's come to the government and that's kind of overruling what we've previously seen as bureaucracy. Bureaucracy is anti-change in a lot of cases. It's very much about rules and following the rules. And I think we're finding those rules are changing rapidly. People need to learn them, and they learn how to have to learn how to navigate the new environment, which is, again, very much about innovation speed of the mission or relevance and driving change. Change is important.

Brian Lake 11:59

Do you think are government contractors, and I know many of them are doing this now, and I'm sure we're not saying anything that either they're not already doing or thinking about, but how how do they either audit their current risk in this new environment? Uh, what do they need to be looking at and specifically thinking about to ensure that they can navigate the chaos?

Sean Applegate 12:21

Yeah, I think as a business owner and shareholder, the first thing is understand where you have concentrated business. So understand how to diversify. Many of us have managed our personal investment portfolios, like your 401k. You might have a mutual fund or you may have individual stocks, but you need to diversify those things because the stock market goes up and down and it's unpredictable. Uh business is a lot like that. As a small business, a very small business, in many cases, you have one customer or one project. You know, try to get the a couple new projects, a few more people, broaden your skill sets and relationships, build trust, and ideally eventually capture your second client, a different organization. When you do that, think about what are the right markets to go into that are in favor today, that have budgets and have needs. And how do you go from one client to two, to three, or four? And a bit of that may be getting on a team and bidding with a large and being a trusted small business. Right. Some of that may be a small business where you find a couple teaming partners and go capture as a prime a new vehicle, get some past performance eventually. And then you've got a little bit more reputation on contractual past performance to win new business. And I would say the other thing is you have to build skills. We see this just this yesterday, NASA and GA is it OPM announced launching NASA's tech force, much like the U.S. Tech Force. Hey, we need new skills for taking on the mission of space. Some of those are deep engineering skills. If you're a business owner that doesn't have a lot of technical skills, nothing's stopping you from going to freecodecamp.org and learning how to do some basic markdown programming or a little bit of automation, or maybe go take a uh an agentich class that's for free from uh you know any number of providers. They give away the training. Yeah. But it is time. And look, time is is one of those finite resources we all have to manage. Um you may need to do a little bit of that on what we call hero hours, right? After after hours when uh you're not billing to the client.

Brian Lake 14:11

Or we just as you and I call just a normal working day. Plus, which you're right. I mean, so upskilling the workforce, I think that's a really great piece piece you're pointing out. I think there's, you know, and and we're and we're kind of bleeding change and opportunity into this conversation as we go. But you know, with this brain drain, I mean, you know, you're getting a lot of people that have some substantive experiences working with agencies coming out into the private sector now. So really thinking about how to like bring some of those people into your into your world, having more conversations, get that try to get some of that knowledge transfer about ways to navigate and work and work with the government further. So but that's being one thing. So we talked about chaos, and I'm glad

Change: Acquisition Speed And OTAs

Brian Lake 14:53

we did. Um, but let's dig a little bit more into change specifically. I I I feel that a lot of this change is structural, it's intentional, and even necessary. I think some of the things we're seeing we have been talking the ch that the change that is happening, we've been talking about for 20, 30 years, right? I know we've talked about this previously, the, the, the, the tearing down of the data and information silos. Uh, we've been starting to see that happen. So talk to me a little bit about the this administration's goals and what does that mean for the community as a whole.

Sean Applegate 15:32

Yeah, I think one of the first things, obviously, is making acquisitions easier. That's one of those goals. And that we've talked about the far overhaul. Uh, you know, we'll soup six will hopefully get awarded sometime uh down the road, but they just extended to Soup 5. So there is a clear path to buy IT products on Soup. Yep. Uh the more traditional way. So that's not going to uh expire here in a few months, which is great. So that was that was exciting to see. And then I think we also, if you look at Department of War, especially the use of OTA's other transactional authorities is certainly in full swing. And that's exceptionally valuable for young startup companies on the commercial side to engage with uh federal government where they need to do design work that's very unique and custom and then do the follow-on technology sales. There's some clauses in the far that prevent you from being paid to design something for a customer and then competing for the broader operational side of that business later because you get an unfair advantage based on the follow-up. You built it, right? So I think navigating OTAs is a is something that's not necessarily new in the last year, but I think the volume of those OTAs being delivered seems to be growing. And there's an appetite, especially with Department of War, to use those effectively to move quick and work with, again, non-traditional defense contractors. Right. So it comes down to speed, right? And innovation, right? When you what you're really trying to do is get to really effective engineering firms that are maybe much more rapid and cost effective to build things that are that are very valuable for different missions and use cases, and think a little bit more outside the box. When you think of it, we've talked about the lean culture in the past, but take a lean approach, very efficient, very maybe agentec-based workloads in some cases, but there's not a lot of overhead and they can adjust and change very rapidly. Right.

Brian Lake 17:15

I mean, this idea that we can change the acquisition process, some of these contracts, it's years. It takes years from the solicitation to the award. And I know that we were one of the ITES 4H awardees, but that that that's been going on that award process has been four years, three years.

Sean Applegate 17:34

And as a small business, you spend a lot of money, hundreds of thousands of dollars on a pursuit like that. When you think of your team's time and real cost, and maybe third-party BP contractors to assist you potentially as well. So and then and there's award fees you maybe need to pay afterwards if you if for those consultants that you might have had assistance from.

Brian Lake 17:54

I mean, not even real costs. Not even the money associated. The landscape of what that award is trying to accomplish can significantly change in four years. Thinking about like the technology landscape and the evolution that's happening and the speed and scale of innovation that's happening, you don't have that kind of time to be competitive as an as a country.

Sean Applegate 18:11

Trevor Burrus, Jr.: Yeah, and to get back to change and some good change, um, you know, the the we also the Missile Defense Agency award the Golden Dome IDIQ. Yeah. That was from start to finish six months in comparison to ICS 4H. So when you think of change that's happened, nobody would have imagined that getting delivered to the to the people that bid on it and done in six months. And they would have assumed there'd be a million protests and it didn't happen and it moved pretty fast. There was there was one other use case, I forget the other contract. It was uh a civilian agency did a similar IDIQ at large scale. And again, theirs for start to finish was about six months. So this shows kind of the change that's happening within contracts is very real for some of these very large IDIQs. That doesn't mean there isn't still a ton of competition once they do the award. I think a golden dome where we're close to a thousand awardees or maybe a hundred awardees. I don't remember the exact number. We'll work out the details later. One of our you know, one of our good friends, uh Titania Solutions Group, call out to them, was an awardee on that. So we were really excited for their award. And they're a scrappy small business doing cool stuff and drones and um automated software testing and some interesting stuff in satellite design work that's pretty, pretty unique. So it's nice to see a small scrappy firm with you know just over 100 employees be able to capture a prime contract on Goldendome.

Brian Lake 19:22

And I think a lot of and I think we're gonna see a lot of this change being driven by AI, right? I mean, the ability to be more productive, to do things faster. If we talk about the protest even kind of landscape, you should be able to now quickly with AI tools, the government should be able to run through is your protest valid? Did you actually meet the requirements? I mean, the ability to kind of self-certify and to do a lot of work. So talk to me a little bit about AI policy and a lot of the changes that are coming with that, with that.

AI Policy And Data Modernization

Sean Applegate 19:55

Yeah, absolutely. So there's certainly a number of solicitations on AI with acquisitions within both policies and governance. You could look at OMB Memorandum 2521, Executive Order 14319, which talks about using AI systems where they need to be neutral, explainable, accountable. And that's where things like evaluating your systems as a government uh organization matters. And there's a number of frameworks for doing that, um, both open source and and paid platform and components to do it at scale. But those are things if you're a CDO, you need to be able to audit that. It needs to be around and embedded in your governance. Um then if we look into you know some of the more recent things around like AI action plans, you know, they've got 90 plus actions they're outlining across three major pillars for organizations to own. And some of those things are going to be owned by a CDAO, some of those may be owned by your CISO or your CIO or an application team. So yeah, I think that the good thing is if you've got a great generative culture that's moving really quick and wants to do amazing things, you've got some clear things that are really focused on innovation and productivity and mission velocity, not just make it secure. Now, security certainly needs to be an important part of that. So if you're if you're not doing red teaming or putting detailed guardrails in place or understanding your threat framework or the threat model for your LLM systems, your agents, those things are important as well. So don't forget to do those things. But again, involve your security team in those designs, leverage their expertise. They might have some tools you can do to make your life easier. So you don't have to build your own custom guardrails, for example.

Brian Lake 21:27

Right. And we think about change, you and I it might have spent about three years ago, we did a we did a round table with a bunch of, I don't know if you remember this or not, um, because we weren't at Swish at the I wasn't at Swish at the time. But we did a round table with a bunch of CDOs and CDAOs, and they were talking about their, you know, kind of the charter that they're given, their responsibilities, and the conversation was all about how do we get get our data within our agencies into a place where we can standardize it, we can make sense of it, we can make action, make it actionable. And by the way, we have no budget. And now in a short period of time, these agency CDOs and CDAOs have an enormous amount of even their responsibility has grown significantly, and they have been given a lot of budget authority and a mandate to go and do this.

Sean Applegate 22:20

Unfortunately, they now have a mandate. They need to do it and they have budget, so there's no excuses. Right. I will say on the the presidential presidential management agenda, we data unlocking the value of the data from the silos was called out explicitly at the top of the top, right? And so I think that's one of the biggest challenges we often face is there's lots of data, it's lots of places in large geographically spirit organizations. Just discovering the data can be challenging. So it's been exciting to work with some of these CDOs and CDOs to help them map out their data, identify the silos, and then get that data unlocked, whether that's doing data integration work or synchronizing a database to a cloud data lake, or maybe getting that data out and moving in real real-time data with things like data meshes. So think things like Kafka, for example, where we can then build event-driven applications that move things from a once-a-date sync or a once every 15-minute sync that's very tightly coupled to a loosely coupled event-driven architecture that has real-time, you know, less than one second type decisions. And those are the same architectures, but you're used in a cloud, commercial cloud environment with things like Uber and Lyft and Netflix for 10, 15 years. It's not really that new in commercial, but it is a takes an enormous amount of collaboration, governance, uh cooperation at the application level and the data team level to pull that off. And it's exciting to see those things that have been in place. And again, cutting-edge government org has been doing this for about five years, from what we've seen. Some of our principal architects were involved in some of that redesign work and and still are. And so it's been really exciting to see where where they started, you know, maybe five or ten years ago and how far they've gone.

Brian Lake 23:53

Right. And we'll and we're gonna get I'm gonna put a pin in on you know the we've talked a lot, we talk a lot about the government as a boardroom now and the enterprise or the commercial sector deploying solutions and then being able to take advantage and realize the benefits of that. We had always talked about how the government is such a laggard, right? And we're seeing that gap shrink further and further and further. So it's really exciting. And then we'll talk about that a little bit later on the show. But on that note, talk to me about when I think about this change and that's been occurring. Obviously, there's been a lot of focus on the workforce leaving, taking the fork in the road, being riffed. A lot of those are being driven by typically a lot of senior employees that are either close to retirement that are just saying, I'm gonna, this is my opportunity, I'm gonna move on. But one of the things that I think about when I think of this government IT environment, and we've been talking about this my whole career, is legacy tech debt. And that enormous amount of money and a disproportionate amount of budget and funding is maintaining old legacy systems, Frankenstein systems that have been pushed, pulled, you know, cobbled together to try to run extraordinarily critical missions. The theme has often been well, the people responsible for that, that, that infrastructure have been either, you know, they see retirement on the horizon. And the idea of modernizing or trying to bring new solutions into the ecosystem has been met with resistance because I don't want to learn something new. I don't want to deal with the program. But so we're seeing all of a sudden that maybe Doge inadvertently removed a lot of that resistance. So talk to me a little bit about the new workforce or the workforce that has exists and the mandate and charter that they've got now.

Sean Applegate 25:42

Yeah, look, we we on average, we have a younger workforce now. We have workers that probably have a very direct, grew up in a digital world and have clear expectations on what we can do with technology and are doing commercially with a great customer experience with either personal applications or maybe commercial COT solutions are used in a commercial life before they came into government. Right. And so I think there's a lot, there's a there's a fresh appetite for change, and we're seeing that with a lot of the application modernization efforts. The other thing, too, I think, is is some of the government leaders we've we work with have done a really great job of building platforms, whether that's load-code platforms or leveraging good proven designs with platforms as service or software as a service frameworks. So I think their ability to move quicker with less investment and more focused business rules, for example, without all the technical challenges underneath, allows those new, those younger employees to potentially build things themselves. We're seeing this in Department of War, where a lot of young enlisted members being ran through software boot camps. Sure. They're learning to code on Appian or ServiceNow or some other similar load code platform and build their own workflows. And uh, you know, the CIO of the Army, uh Mr. Garcia Garcia spoke a few weeks ago and on I think it was on uh uh Jason Miller's, you know, asked the CIO, and he talked explicitly about hey, if we don't have a lot of people using an enterprise application, if there's five guys using an app or eight guys using an app, or or maybe it it exists and they have logins, but they don't actually use it, right? Let's just turn it off. Right. Why are we spending millions of dollars on this? And if somebody screams, we can build it in a low-code platform again, but look, let's not go spend. And this was a this I think was the real number. You said they were spending like eight million dollars a year on an application that when they turned it off, nobody even noticed. So that when you think of budgets, that's about using your budget wisely. And as somebody that fills the CIO role for for our small business, yeah, 100 plus employees roughly. Um I I have a very finite limited budget. So, you know, I can I have to use that money wisely. If you're the CIO of the army with a huge budget, you have a fiduciary duty to spend the taxpayers' money effectively. And I think those are really bold decisions to take that if we looked at that, you know, and made that decision five or ten years ago, I'm not sure it would have been met with the same level of enthusiasm as it is today in the Army.

Brian Lake 28:02

Yeah, I mean, listen, the mantra change or die hasn't been more real today than it has ever been before. And the and the organizations that can be positioned to help these agencies with this change are truly going to win. So all right. So listen, we've we've been through the chaos, we've mapped the change.

Opportunity: Budgets Autonomy Energy

Brian Lake 28:19

Let's talk about the word that frankly is probably the most exciting and perhaps the most misunderstood opportunity because there's real money, there's real technology, and obviously there is a real demand if you know where to look. So talk us like walk us through some of the numbers and what you're seeing.

unknown 28:35

Yeah.

Sean Applegate 28:35

So at a high level, we have federal own IT contracting spinning record levels. Sure. So it's not shrinking. It it still is a big number. Or we're talking, I think it's something a range of fifty billion dollars in Q4 fiscal year 25 alone. And so when you extrapolate that out, that's that's a that's it's a lot of dollar bills. It's a lot of cash. So it's a big market. And there's lots of money to go around. The change is, hey, that money's being spent and concentrated in certain places, whether that's Department of War, when you look at a very large budget for autonomy and AI, that's something around $13 billion. And and when you look at the cyber budget in correlation, right, they're almost the same size these days. $16 billion in cyber. It's a lot of money being spent on autonomy and AI. And those things are gonna give us a lot of leverage, and I think scalability as an organization, and we need to do that to to pace China at the pace in a global economy where it is extremely competitive. And a lot of those investments, when you look at those civilian agencies, or could be invested in things that are going to help us grow. And you think of um Genesis, Mission Genesis with Department of Energy putting a lot of money in new energy innovations. How do we produce electricity? That is the new oil for AI. Without energy, we can't run massive data centers of AI compute, for example. And to be honest, China is significant magnitudes greater in producing electricity over Europe and America combined. There was just 40 percent more of the energy.

Brian Lake 29:58

Yeah, there was just a recent report that said that they've they brought on more uh megawatts. Is it megawatts, gigawatts? It's big watts. Big watts than and than the entire world by a factor of like 10x over the past five years. And it's they are far outpacing.

Sean Applegate 30:15

Yeah, so it's you know, those are those are changes they they chose to make in their country and and they're paying paying off in probably lots of places where look, electricity is important for the tech industry. If your electricity is extremely high, running clouds, running data centers, running GPUs just cost that much more. So look, there are there will be regions in America where electricity is cheaper than others, and you'll probably see outsized investments in data centers there. Or maybe eventually Elon's gonna be launching GPUs in the sky, compute in the sky, which is gonna be awesome. I'm I'm gonna wait.

Brian Lake 30:46

We're we're gonna have at least one podcast talking about data centers in space because I'm super, super excited about this concept.

Sean Applegate 30:54

But now, yeah, and again, all the spin is not in AI, right? So there's a lot of spend on infrastructure refreshments, things like networks, switches, storage and compute. Those things aren't going away. They do need to be spent wisely. And so I think understanding the workloads uh in the environments that are changing and to really design those things appropriately for the new norm in a cloud-first world, more mobile, um, and supports getting data from point A to point B or doing edge processing intelligently and more and more using and integrating with operational technology, where if we get into physical AI eventually, which are driven through IoT frameworks, we have to be able to do regional edge compute. So we'll be able to collect the data regionally through things like real-time streaming telemetry and meshes. We have to be able to process it locally for rapid decisions at the edge that are very resilient and survive and operate in digital environments if we need to, or for deployed scenarios. Um, and then get that data shared out at a global level back to the, we'll call it the flagpole. Well, I'd like the fighting hold of the flagpole analogy as a Marine. But you have to get that data back to the flagpole eventually so that the the commanders and the headquarters can do what they need to do with it. It's all about uh well you know s reducing the kill chain, right?

Brian Lake 32:08

Is that what they say? Speeding. Well, we're gonna just move it on the phone. You could talk about just accelerating the oodaloo. Accelerating the kill chain. Accelerating the oodaloo. Fantastic. Well, put put yourself for contractors that are trying to help um, you know, work with the government through this. You know, how do you put themselves how do they put themselves into their government counterparts' shoes? What are your some of your thoughts on that front?

How Contractors Earn Government Trust

Sean Applegate 32:32

Yeah, at the simplest level, put put your Yeah, have empathy for them. Right. Again, spend time with them, listen to what they say, ask them questions that are very relevant, and truly listen, actively listen. They will tell you what their challenges are, they will tell you what their needs are, and then help them solve those. It's it's it is not more complex than that. But to do that, you have to have a relationship with them. And that's part of navigating the changes. There's probably some new leaders, some new people. They may have leaders above them. You know, the operational environments change a little bit. You have to understand it. And again, that starts with listening and having empathy first. So that's a really important thing to take. Again, we uh had a to take a sidestep on the story. Our our uh chief solutions officer, Chris Bonicki and I were in the uh uh our favorite local bar the other night. One of our We can say it American Prime. Yeah, American Prime and Tyson. Jim, we love you guys. And uh one of our former contract officer representatives came in and uh I hadn't seen her seen her since she had left the government. Right. But um she she instantly was full of smiles to see us. And one of the things she said that struck real struck home was she goes, Hey, when you worked with us when I was on the government side, you were it were were rare and that you you cracked you you cracked the relationship and you you really figured us out and you were very valuable. But she said you were one of the few that we trusted to work with because you delivered real value is is it basically to boil it down. But it was great to see her in her role before and work with, and we love supporting that agency. Sure. And it was even more impressive to see her make her transition to the commercial industry, provide value back to the government so that all the knowledge and the expertise she has is being put to use to keep growing and work supporting the mission within the U.S. government, but not necessarily with the same agency that she came from. But you know, that's value that she and the knowledge she's built still is around and being leveraged for success.

Brian Lake 34:18

Aaron Powell At its core, like what are the things that contractors need to do to build that trust?

Sean Applegate 34:24

Yeah, I I would say show up and uh run demos, run proof of values, go build some things and and show it, right? Don't tell it. And so there's a lot of people that can talk about it. But at the end of the day, when you you need to show up, you have to prove it works, you have to put a business case around it. And more and more these days, I think you have to be able to measure the business case with real data. Right. Whether that's workforce productivity times, cost savings, rationalizing software. So you don't need 10 different boutique bespoke applications, you can put it on a single platform, reduce costs, consolidate it, and run it with 10% of the people you ran it with before. Yeah.

Brian Lake 34:58

I mean, I think I've talked to a few people, both within our company and beyond, that when it comes to if you build that trust with your customer, that you will solve problems. If you're on the OEM side or you're on the integrator, the VAR side, or your services or solution provider, and your customer has a problem, whether it's your solution or not, help them solve that problem. Help them work through it. And if you can get that, it's gonna go a long way to help building trust with that, with that government agency.

Sean Applegate 35:27

Right. And be flexible. At the end of the day, right? You you you need to put the customer first, their scenario first, adapt to them, be be very customer-centric. Yep. Um and so look, not not everything's a nail. So if if you have only a hammer, sure, you you you probably don't want to be driving, you know, trying to drive screws with a hammer. It doesn't work real well the mission matters totally.

Build Your 2026 Survival Playbook

Brian Lake 35:46

So let's land this plane. We've talked through the chaos, we've talked through the change, we've talked through opportunity. What does the 2026 playbook actually look like for practitioners that want to be um on the right side of all three? I think when I think about the need to hold all three of these perspectives simultaneously, is that you have to acknowledge the chaos without being paralyzed by it. Know where the disruption is concentrated, have contingency plans, map that change, as you mentioned, right? Study the far overhaul signals, understand the AI policy mandates, position your capabilities against new mission priorities, um, figure out if you have an uh where your diversification is within certain types of agencies, and then really try to pursue all of these opportunities systematically. Don't wait, wait for the chaos to settle before acting. So act now, be proactive. But give me five kind of very clear paths for folks that are trying to hold all this together to build their own playbook to be successful in this environment.

Sean Applegate 36:54

Sure. Yeah, I think the first thing is diversify. Whether you're a government manager, IT leader, make sure you have great partners in industry that you can rely on and trust, not just one. And so I think diversifying both your providers from the government perspective. And if you're one of those providers of technology or services or solutions, consider you know, am I if I'm a small business, do I have a single customer? Are they in favor with the administration or not? What's their funding look like? How do I diversify both my clients or or maybe the types of work I do within the same the same clients because they're gonna have different budget line items you can navigate between departments at least. Uh when you think of IT with the CIO versus the CISO versus a CDAO, for example, or the mission. So if you have a lot of concentration, um you you need to think about how do you diversify that. And that that takes time. It doesn't happen overnight. So be patient. Two, um, make sure you're using those contract vehicles that are available. And that maybe means you need to either add additional categories on the prime vehicles you have today. You need to make sure you're pursuing new vehicles. And in places where maybe it's a new agency you don't know really well, you might need to swing for the fences and put a put some bids out and get some additional vehicles in place. Again, that money spigot doesn't turn on overnight, but it gets you a license to hunt. And in many cases, if you're if you're very small, that means maybe just engaging more large FSIs and getting on their team, or maybe a scrappy, you know, up-and-coming small that needs some scalable support from a trusted provider. Again, getting back to having empathy for your customer. If your customer is a another systems integrator, they appreciate great smalls and do amazingly good work at a fair price. Uh three, get smart on AI. Go go take some courses, learn, learn what a markdown language is or what are called agent skills these days, how to structure the file structure and go play with it. And uh you know, don't be scared. It's not that hard. No subtlety knows how to type it. Oh, Brian, you're you're on top of it. You're killing it. Uh but try some new things, right? Try some things out, learn some new skills. Look at I'm a big fan of continuous improvement that normally comes with continuous learning. And look, in my case, it means continuous mistakes. Um it's okay, right? If we if we if we all were nobody's perfect. We all make mistakes. We just don't talk about them a lot in the public. But it's but it's okay to not be perfect, right? That's how we learn. Uh four, focus on delivering great outcomes that matter for your customer or the mission they support and align with them. The other thing I would say is make sure if you do some great work, make sure it's known. Yeah. Get your customer to talk about it, get a reference from them, use them to your advantage. Or if you're a government leader, make sure that if you do amazingly good work, you you expose it in the organization so people know about it. One of the great things we did recently, Brian, you're you were part of this. We took the federal AI use cases for 2025 and we're we're aggregated up in a few places, and we put those on a nice searchable form on our website. So if you go to swishdata.com, browser the resources, there's a federal AI use case table, and you can keyword search any of the columns we allow and then click into the details of the federal use case, which they provide a lot. They're just it's hard to navigate a CSV file on GitHub. So we just made it easier to navigate. But that is a great example of you know making sure that things get documented, they get exposed, and your peers can learn about that. Whether that's sharing inside your organization in a limited, you know, sensitive environment or maybe sharing it publicly, um, especially if you're a new young leader of GS15, you know, punching your ticket and building your personal brand is important. Yeah. And then five, let's bring this thing home. Invest in relationships before you need them. And that's important. So if you're if you're you know in that middle management role, go spend some time in industry with government leaders, government managers, or technical meetups. If you go to meetup.com, it's one of my favorite websites as an engineer. Go find birds of a feather like you, where you can go hang out with them after hours, learn a few things, get to know some new people, and you'll probably uh you know not only you know meet a few friends, get a few drinks or uh free hors d'oeuvres or dinner, but you're gonna make yourself smarter and more competitive in tomorrow's world.

Closing And How To Reach Us

Brian Lake 40:57

Sure. Well, we we've talked a lot about three words. So we're gonna leave it at that. Obviously, great conversation as always. So much opportunity in this space right now. It's a very exciting time. I'm excited to be part of it. I know you're excited to be part of it. So uh for those that are listening, you know, lots of info and resources are gonna be in the show notes. Let us know what we missed. Uh, if you've got other ideas and insights, or if you want to talk about ideas for future shows, send us an email. Our emails are in the show notes. For other activities of future events, other things going on in the space, go to gist360.com. Uh if you see Sean or I in the uh TSA pre-check line, say hello. Talk about markdown files with me. I can have a conversation with you now. But otherwise, have a great day. Thanks, Sean. Thanks, Brian. Take care, everybody.