The Top State, Local and Education Government Contracting Growth Areas for 2022

The state, local and education (SLED) market analysis team at GovWin has recently published the latest edition of its annual report covering the top areas of growth in the SLED market. The brand-new 10 Hotspots in State & Local Government Contracting for 2022 report, now in its 8th edition, reveals areas where SLED government bids and RFPs have been growing at particularly high rates.

To provide a look at the types of growth areas found in the report, we’ve put together an infographic highlighting the top 10 areas of government contracting in 2022, which you can download below.

Read on for a summary of the top 10 growth areas and other findings contained in this year’s report.

State, Local and Education Governments Rebuilding and Returning to Normal Operations

While last year’s Hotspots report focused more on purchases related to dealing directly with the pandemic, this year’s report mainly focuses on the “after effects” of COVID-19 and how the state, local and education (SLED) marketplace is starting to transition back to normalcy.

In order to identify and select the 10 Hotspots for 2022, 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.

Major Themes in SLED Government Contracting for 2022

Over the years we’ve noticed that the kinds of themes emerging from our Hotspots research will often roll up to a few general high level topics like “efficiency in government operations,” and “meeting special needs that would otherwise fall through the cracks” and that happen to have a lot of support (or recent legislation) backing them.

The 10 Hotspots are associated with seven major themes that are widely acknowledged in current society, government and the business world. Those seven major themes that emerged for 2022 are:

• Inflation: One of the most pressing worries of the pandemic, including for government, has been the return of high inflation and its negative impact on purchasing. This is addressed by our #1 hotspot of “Managing Inflation in Building Costs.”
• Automation: By 2021, the labor market disruptions from the pandemic encouraged a greater use of machines to replace certain human tasks, as described in the “Relying on Robots & Drones” hotspot.
• Planning: With the more immediate “crisis” mentality of 2020 over, the SLED market has transitioned to longer-term planning, forecasting and “solution seeking” consulting, as seen our hotspot of “Positioning for Long-Term Success.”
• Workplace: Between the initial furloughs and greater use of remote workers, the pandemic has altered the government workplace in several ways. Our hotspot for “Enabling the Hybrid Work Environment” covers the trend of governments buying more computer equipment for home and on-premise work, while our “Addressing Operations & Staffing” hotspot touches on the challenges of hiring and retaining staff.
• Well-Being & Equity: Experts agree the stress of the pandemic has negatively affected personal well-being and equity. This theme can be seen in several hotspots including 1) growth in counseling and substance abuse programs in “Strengthening Mental Health,” 2) the focus on protecting women and minorities from violence in “Promoting Equity & Inclusion,” as well as 3) the increased focus on healthy lifestyles noted in “Designing Parks.”
• Education: School districts have been responding to the fact that the disruptions caused by a season of remote learning negatively impacted student learning and growth. Our hotspots of “Closing Learning Gaps” (including various student improvement-related areas) addresses this trend.
• Environment: The ongoing concern for sustainability and protecting the environment can be seen in two hotspots. “Adopting Green Fleets” examines recent growth in electric and hybrid vehicles. “Designing Parks,” in addition to the health benefit, was boosted based on the recent focus of using these parks and greenbelt areas to help mitigate climate change through, “carbon sequestration.”

Measuring Recent State, Local and Education Government Contracting Growth Rates

The 10 Hotspots for 2022 were determined based on their growth rate from 2020-21. These Hotspots ranged widely in growth rate, from the tenth-ranked Hotspot of Relying on Robots on Drones at 21% growth, all the way up to the top Hotspot of Managing Inflation in Building Costs at 130% growth.

These percentages can be compared against the overall rate of +7.5% for the SLED market. Normally, the market grows by only around 1-2% per year in the volume of formal bidding opportunities, but it was in “catch-up” mode after losing a historic -15.4% in 2020 from the pandemic’s shutdowns and the brief recession. We have further explored how the market has been rebounding in our recently released State and Local Procurement Snapshot – Q1 2022 report.

With the baseline being well above normal at 7.5%, there were quite a few niche products and services growing at faster rates such as 10-12% for the year. However, to be a Hotspot the growth typically needs to stand out as being particularly strong not just “above average.” Once the focus was narrowed to only the very highest performers, and also filtered to exclude fast growing categories with very few opportunities to target, we identified this group with recent growth of up to +130%. Each of these Hotspots had an annual volume of at least 300 published bids and RFPs from state and local governments across the nation.

See All the SLED Growth Areas in the Full Report

In preparing our annual Hotspots report on the state & local government market, we sifted through thousands of industry sectors to identify the 10 products or services that are experiencing much faster growth in usage or adoption by SLED governments - based on factors like new technologies, new standards and the ongoing coronavirus pandemic.

If you’d like to see each of the 10 Hotspots for yourself, and gain a better understanding of where the SLED market is headed in the next 12 months, and where the top growth industries are, click below to request a free copy of GovWin’s industry-leading report.