10 Hotspots in 2024 State & Local Government Contracting – High Growth Products and Services

As the state, local and education (SLED) government contracting market returns to a more normal state, there are specific areas of products and services experiencing high growth rates in terms of government bids and RFPs.

Our analysts supporting Deltek’s GovWin IQ government market intelligence solution are experts on SLED contracting and have developed a special feature on the fastest-growing areas. This feature is derived from our annual 10 Hotspots in State & Local Government Contracting for 2024 report, which identifies the top 10 fastest-growing industry niches within the state, local and education (SLED) marketplace based on our review of over 4,000 types of products and services.

State and Local Government Contracting Market Returning to Business as Usual

2024 is projected to mimic 2023 in terms of economic uncertainty and SLED spending patterns. SLED governments still have some stimulus left to rely on for 2024, giving them a reasonable amount of confidence in current and near-term government procurement needs. This year’s 10 Hotspots reflect SLED governments focusing on core essentials that prioritize safety, community development and digital innovations.

The 10 Hotspots are associated with four major themes that are widely acknowledged in current society, government and the business world.

Investing in Community Well-Being

Communities need more support than ever before. This is being reflected in governments' increased investments to make sure they are protected through various means such as disaster preparedness and response, looking after the finances and legal needs of the government, and ample first responder access.

Upgrading Infrastructure, Facilities and Education

As state and local government infrastructure ages, governments are making strides to repair and renovate aging infrastructure and underutilized facilities. As well, in a continued effort to mitigate learning loss resulting from the pandemic, states are upgrading public schools with specialized educational software.

Funding a Green Future

The push for conversion to efficient and renewable energies continues as states ramp up their sustainability commitments to relying less on fossil fuels for energy. Meanwhile, as a direct impact from the pandemic era, public outdoor spaces for parks and recreation have seen a resurgence in interest and need throughout the country.

Navigating Cloud and Drone Innovations

The need for cloud service providers is speeding up at a faster rate amongst governments as they continue to digitize their data and processes and prepare for the introduction of generative AI to workplaces. At the same time, drones and robotics are being utilized increasingly in innovative ways for a wide variety of use cases.

This year’s trends come as no surprise as a significant portion of them are driven by the heightened demand for various services and resources stemming from the pandemic. Governments are now actively investing in these critical areas to enhance community well-being. Additionally, states are responding to recent events by bolstering cloud services, legal and tax support and infrastructure improvements. We’re witnessing a resurgence of efforts that were momentarily stalled during the early 2020s, including the transition to renewable energy sources and the revitalization of aging infrastructure.

Measuring Recent State and Local Government Contracting Growth Rates

The report highlights the 10 Hotspots for 2024 in terms of growth rate. These hotspots, listed in the chart below, represent regions where market opportunities are flourishing and their performance stands out.

To identify and select the 10 Hotspots for 2024, our research team first analyzed all 4,000+ of our Smart Tags that automatically track demand for bidding opportunities by very specific industry niche areas. We then assemble clusters of related fast-growing tags to measure and properly capture growth for meaningful trends in certain categories.

We analyze year-over-year percentages, comparing them against the fairly slow overall market growth rate for 2023 that was well under two percent in the state, local and education (SLED) market. While the average growth for the entire market was slow, several niche products and services experienced significantly faster growth rates during the year.

To qualify as a “Hotspot,” growth must surpass mere “above average” performance. It should also align with current market trends. With this criterion in mind, we narrowed our focus to the strongest and most impressive performers. We also excluded fast-growing categories with a limited volume of opportunities.

Further State and Local Government Research

Along with the 10 Hotspots that our state and local research team produces every year, GovWin’s seasoned analysts track the SLED market each quarter and offer predictions for its future trajectory. By examining the entire scope of industries and governments in SLED government contracting and adding expert analysis to the AI-backed data tracked in the GovWin IQ platform, we ensure companies selling to SLED governments have everything they need to stay ahead of the competition.

Click here to learn more about GovWin IQ, or click the link below to download your copy of GovWin’s report covering trends from the early part of 2024 in state and local government contracting.