Contracting Outlook — Is it the Worst of Times?

Budget cuts, steep competition and the economic downturn are hitting contractors hard. That means that the window of opportunity is getting harder smaller. So what is the outlook for government contracting?

Lisa Dezzutti is the President and CEO of Market Connections.

Market Connections conducted a national online survey of 272 federal government contractor business development and marketing professionals on the key areas of expected revenue change, top opportunities in the market, key elements of the capture process, strongest marketing initiatives, marketing budgets and challenges, as well as positioning for contract success. For a link to their full survey click here.

Dezzutti told Chris Dorobek on the DorobekINSIDER program why now is such a difficult time for contractors.

“I have been at Market Connections for 16 years and before that I was at GTSI for 8 years and now is the most challenging time for government contracting,” said Dezzutti, “the hits just keep on coming. But you know what this market is resilient.”

3 Big Spots of Growth: Cybersecurity, Cloud Computing and Health IT.

The 7 Big Takeaways from the Market Connection Report:

  1. Many still expect revenue growth. Nearly two-thirds (62%) remain optimistic and project at least some revenue growth in 2012. Two in ten (19%) are expecting revenues to remain flat.
  2. Opportunities abound. The top three areas of focus for contractors over the next 12 months are cyber security (45%), Cloud Computing/SaaS (35%) and Healthcare IT (33%).
  3. Contractors with higher win rates are more likely to assess opportunities early. Winning contractors identified three key activities: early opportunity assessment (91% versus 78%), developing a capture team (75% versus 50%) and using color team reviews (82% versus 58%).
  4. Thought leadership works. Contractors with higher win rates used more thought leadership marketing materials (65%) than those with lower win rates (44%) in 2011.
  5. Trade shows and conferences still viable marketing tools. Contractors continue to attend larger tradeshows/conferences (72%) and smaller events (59%).
  6. Reaching government decision makers is a challenge. Contractors report reaching government decision makers and personnel as the biggest challenge (52%), followed by aligning sales, marketing and product/service development objectives and strategy (46%).
  7. Relationships are a key to success. Nearly one-third of contractors say they are positioning their companies for success in the federal market by focusing on building relationships with new agencies and potential teaming partners, as well as modifying their messaging to be more relevant to government’s current needs.

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Jaime Gracia

Small businesses have it even tougher, as access to the customer and building the relationships are more challenging. Although some agencies have very high-functioning OSDBU offices, many are not properly staffed and add little value.

Telling me to go to FedBizOpps is not helpful. Teaming and subcontracting is the key, but will shrinking opportunities, comes fewer models for small business success and long-term growth.

Very difficult market indeed.