The data is in! Hundreds of government contractors have spoken, and a comprehensive snapshot of the market has emerged. The 12th Annual Deltek Clarity Government Contracting Industry Study is now available to access, and it is brimming with benchmarks, from trends and challenges, to key performance indicators and insightful experiences. Wonder no more about what’s on the minds of fellow contractors in the market.
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12th Annual Deltek Clarity Government Contracting Industry Study
What is the Clarity Study?
Each year, Deltek surveys how government contracting firms of all sizes conduct business – address day-to-day business needs and functions, measure performance, identify tools and resources, overcome challenges and compliance hurdles – to formulate a baseline for the Clarity Government Contracting Study. The resulting report is a unique and trusted resource that helps performance-minded businesses identify areas to improve operational efficiency and effectiveness, help set business goals, inform business development strategy, and better understand how they compare to their competition.
The survey collects information on the functional areas of:
- Business Development
- Finance and Financial Compliance
- Project and Risk Management
- Human Capital Management (HCM)
- Contract Management and Procurement
- Information Technology (IT) and Cybersecurity.
2020 Was an Eye-Opening Year
Like so many other markets and industries, those in government contracting had to reevaluate their businesses to adapt to the needs of a country dealing with the COVID-19 global pandemic. A record amount of discretionary appropriations were released in 2020, and of this overall increase in federal spending, 53% was due to the U.S.’s COVID response.
Though some companies found themselves directly benefiting from the spending increase with fast revenue growth during this time, others found themselves in deemphasized areas, which put a premium on strong pre-existing customer relationships to keep operations solvent. New strategies for networking and diversifying products, services and markets were crucial to keep afloat, as were investments in operational capabilities and information security to support a fully remote workforce.
All in all, contractors reported only a slight dip in confidence that they can grow their public sector sales over the next 12 months. As seen in the Government Contractor Confidence Index illustrated within this year’s Study. Also highlighted are the more specific ways the pandemic impacted the day to day and long-term function of businesses.
2021 Industry Trends & Benchmarks
12th Annual Deltek Clarity Government Contracting Industry Study
A Preview of Important Industry Insights and Indicators
More than half of the government firms surveyed indicate that investments in business development resources is a top priority for the next 12 months. Seventy percent (70%) believe government sales will increase in 2021, specifically in professional services, aerospace and defense, healthcare and architecture and engineering/construction. Though overall win rates were flat compared to the previous year, increased competition in the market at both the federal and state and local levels has business leaders rethinking their strategies and pursuing different avenues to identify new opportunities.
Finance and Financial Compliance
Smaller businesses felt the financial impact of the pandemic more acutely than their larger counterparts. Increasing profitability and continuity became the focus for many financial leaders, as did predictability of financial performance. With a median profit margin declining to a level not seen since sequestration in 2014, and more than half of respondents expecting an increase in the cost of compliance, supporting organic topline growth has proven vital.
Project and Risk Management
Staying on or ahead of schedule was problematic for project and risk management leaders in 2020. Potential reasons for this include headcount reductions and a shift in priority toward business continuity in response to the pandemic, which left many firms with inexperienced project managers operating with insufficient software tools and inadequate management procedures. Accurately forecasting project scope continues to be a struggle, as does tracking key performance indicators, both of which could be remedied by installing properly trained talent.
Human Capital Management
Unsurprisingly, more than a third of human capital management leaders list managing a distributed workforce as a top challenge for 2020. An emphasis on greater collaboration and the assistance of technology were at the core of how most businesses navigated the necessity of remote work for every employee. With so many contractors anticipating revenue growth, the already competitive market for top talent has the potential to become even more heated. The upside of shifting to a blended workforce post-pandemic is that geographic limits on attracting qualified candidates should lift, providing more opportunities for companies to find the best fit talent for each role.
Contract Management and Procurement
Contract management and procurement fell down the list of priorities for many businesses in 2020. Reductions in headcount and the need to integrate financial aspects of projects into project management tools and key performance indicators (KPIs) challenged leaders. As did inexperienced project management professionals in need of additional development and more sophisticated tools. Lower headcounts mean many organizations shifted focus for contract management and procurement teams from optimizing strategy to cash flow-oriented KPIs to keep the business moving.
Information Technology and Cybersecurity
As with other areas of government businesses, maintaining continuity became a top-tier focus for information technology (IT) leaders. With most employees being directed to work from home during the pandemic, and the implementation of government mandates like Cybersecurity Maturity Model Certification (CMMC), data and system concerns became priorities one and two for many IT teams. IT professionals also turned heavily to big data and data science (80%) to aid with continuity and cybersecurity; a good indicator of where future investments will be made.
Complete Clarity Industry Study Available Now
The 98 pages of this year’s Deltek Clarity Government Contracting Industry Study are filled with statistics and insights that document everything from the continuation of challenges and trends from previous years to the unprecedented market and business pivots brought on by COVID-19. No other resource reviews the benchmarks and key performance indicators of as many internal business verticals or how they work together over the course of the contract lifecycle like Deltek Clarity. See how your business compares by accessing your copy now.
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