Top 4 Findings From the 2024 Clarity Government Contracting Study

June 04, 2024

Deltek’s Clarity Government Contracting Industry Study, the widely respected source for industry benchmarks, is out now. This annual comprehensive report explores departmental challenges, identifies key issues and examines industry sectors to provide benchmarks and trends relevant to all companies involved in selling to the government.

In its 15th year, Deltek Clarity offers incredibly detailed insights for government contracting professionals. This year's study found that the majority of respondents (54%) reported growth in sales revenue from the government market, up from 49% last year.


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Inflationary pressures have eased since 2023, and while still a concern, government contracting firms have remained positive in 2024. According to the composite Government Contractor Confidence Index (GCCI), sentiment is within a percentage point of the highest levels seen in recent years, both pre- and post-pandemic, reflecting respondents' optimism for their company's and industry's prospects. This year, the GCCI calculates to 142.8, which represents a slight decrease of less than 1% from last year (144.0).

With economic conditions moving in the right direction, government contractors need to stay focused on positioning themselves for future success. Here are four key findings drawn from the survey responses of government contracting industry peers to help continue this positive momentum:

1. The Rise of Artificial Intelligence

This year, artificial intelligence (AI) has emerged as one of the top investment priorities among survey respondents aiming to increase efficiency, reduce operational costs and save time. Over a third of respondents (34%) ranked AI among their top three focus areas, surpassing cybersecurity and business automation. Approximately 80% are already using AI to optimize internal operations (35%) or plan to do so in the future (45%). Companies are using AI tools to augment, automate, accelerate or simplify ongoing process optimization efforts to address industry challenges, such as talent retention.

2. Small Business Challenges

Small businesses (under $20 million in revenue) reported lower rates of growth overall compared to their larger counterparts. Fewer expect growth next year compared to larger businesses, although more than half are hopeful for growth in 2024. Based on this year’s results, it appears that many small businesses may not be aware of programs available to them as part of the administration’s small business agenda. Nearly half of small businesses (46%) say they are not taking advantage of small or disadvantaged business programs that are at the center of small business policies. Although program requirements can potentially be a barrier to entry, small businesses can benefit from understanding how to fully utilize the available programs.

3. Diversification Strategies Prioritized

With inflation continuing to impact the cost of goods, many government contractors have identified diversification as a key strategy. Almost half of respondents (46%) indicate that their company plans to offer a more diversified set of products and services, which is more than double the rate of any other strategic shift. Another 20% plan to transition their current government business toward the commercial sector. These diversification strategies are driving the positive sentiment on growth in 2024.

4. Business Development Pressure

Increased competition is the top-ranked business development (BD) challenge for businesses of all sizes. BD professionals feel significant pressure to maximize face-to-face opportunities—the second highest-ranked challenge—to educate and learn from government buyers. In response to these challenges, these teams are increasingly concentrating on more effective opportunity identification (81%), developing pricing-to-win strategies (77%), and exploring teaming opportunities (71%) to enhance overall effectiveness.

On the positive side, respondents have noted improvements in other challenges, such as limited business development resources, which have become less pressing compared to the top issues. In fact, 56% of respondents expect their business development investment to increase this year.


“I think inflation is still having a bigger impact than expected this year. Businesses were looking at more potential growth than what they were able to sustain profitably on what they were paying for their people and services. The cost of doing business isn’t getting any less. It’s getting more.”

– Teresa Moon, Business Development Director, Parabilis


Despite continuing headwinds from a tight talent market, inflation and other challenges, the government contracting industry experienced high growth rates and profit margins in the previous year and continues to be positive with expected growth throughout 2024.


Insights and Trends from the 2024 Clarity Study

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