It's Good to Be King: Riding Out Bad Times in the Government Contracts Profession
“Is there anything you wanted to accomplish that you haven’t?
No. I am everything I wanted to be. I have done everything I ever wanted to do.... I would be pleased to live this life and do what I do…forever. But I have no need to improve upon it.”
—Robert Parker, speaking as Spenser, a Boston detective.
Let’s return to a topic we wrote about back in April 2020 , when we posted a blog entitled “How We Learned to Love Government Contracts Law.” See https://www.awrcounsel.com/blog/2020/4/22/how-we-learned-to-love-government-contracts-law?rq=government%20contracts. There we discussed how we came to be government contracts lawyers – specifically, the resilience of the practice area in difficult economic times. The world of government contracts just plugs along, good or bad times, steady as it goes, and provides shelter from the storm.
We made those observations as the country looked into the eye of the pandemic storm last April. For most of my clientele, I think the observation proved true. It is good to be a government contractor during turbulent economic times, and good to work for a government contractor. Of course, no observation is universal. If you operate government food services which was closed, or are a travel agent for government contractors, or arrange large government conferences, or manage National Park Service concessions, you surely will take exception to my complacency. The impact of the pandemic in government contracting was widely uneven, just as was the case in the private sector. But those situations were the exception, not the rule for government contractors.
How do I know this is the case? While back in October 2020, a new Exchange Traded Fund (“ETF”) debut. It is called the EMLES FEDERAL CONTRACTORS ETF and it trades under the symbol FEDX. The prospectus states the following objective: “The investment seeks investment results that correspond, before fees and expenses, to the price and yield performance of the Emles Federal Contractors Index….” The top three holding are General Dynamics, Northrop Grumman and L3Harris, all large defense contractors, although it has 22 holdings in all including IT services, biotechnology and real estate investment trusts. I used to maintain a “watch list” for stocks, but now when I find a security that I am interested in monitoring, I just buy one share, since there is no trading fee, and that is what I did with FEDX some time ago. Since November 2020, FEDX has been on a gentling upward climb from $23 a share to more than $28 a shore. I own a whooping one share, so I am not giving you any investment advice. But I am observing that large government contracting is on a stable and slightly positive upward path. It might provide some ballast in a highly unstable world. Its no GameStop to be sure, and it is not going to attract the stick it to the man investors at Wall Street Bets. But if you want a steady eddy investment, it is worth a look.
Of course, if you work in government contracting, your job may be safe from some of the cross currents that are rippling through our economy. But for that same reason, it may be in your interest to diversify your assets. The legendary Fidelity fund manager Peter Lynch says to invest in what you know; but don’t just invest in what you know. The classic investor mistake is to put all your funds in your own company stock because that is what you know best. Ask the Enron employees how well they knew their own company.
I am a government contracts lawyer. I have been such for 38 years. I don’t have any hobbies. This is what I am and what I know. Like Mr. Spenser above, I would be pleased to live this life and do what I do forever. And in uncertain times like today, I remain thankful for the career choices I made as a young man.