Deltek Clarity GovCon Industry Study Business Development Trends

Posted by Dan Firrincili on October 24, 2017

Deltek Clarity Government Contracting Industry Study

By Daniel Firrincili, Deltek Product Marketing

Are you doing business with federal, state or local governments?  Every year Deltek conducts the Deltek Clarity GovCon Industry Study that covers six key areas of business focus for government contractors: Business DevelopmentProject ManagementFinanceComplianceHuman Capital Management, and Information Technology. In this blog, we highlight trends and benchmarks from the business development section of the study.  For a deeper diver into the results:

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Things are Looking Up!

This year’s Deltek Clarity Government Contracting Industry Study finds an industry with its eyes on the future. After years of contraction, 2016 provided the first expansion in contract spending by the federal government since 2008. Under the new administration, GovCon firms are projecting a return to a growth market and are starting to invest more into the business development function. After several years of decline, defense spending is on the rise, new opportunities are emerging and firms know they need the resources in place to pursue and win those opportunities.

7 GovCon Business Development Trends

  1. This year’s responses indicated the overall win rate was up 2.6% from last year’s average. Roughly 6 in 10 firms of all sizes reported an increase in their win rate, reflecting a stronger market. 15% of large firms said their win rate decreased, possibly due to the shifting of funds to small businesses.
  2. The breakdown of government contracting revenue continues to shift towards sub-prime work. Three years ago, 65% of revenues were from prime work; last year it was 61% and now it is at 59%. With more contracts going to small business, many large primes are having to accept sub status in order to get a share of the opportunity. Similarly, with agencies consolidating contracts, there are fewer prime positions to be had.
  3. Firms cited limited business development resources as their #1 challenge, but they also revealed they are going after this challenge aggressively. All firms said they have significantly increased the percentage of revenues they allocate to business development. This investment includes people, as well as infrastructure and tools.
  4. GovCon’s top two business development initiatives are:  earlier identification of opportunities and more/better opportunity identification. With limited resources, these two initiatives reinforce the need for firms to drive efficiencies in their BD tools and processes so that their business development resources can focus on higher value activities.
  5. This year, business development staff became the top source for new opportunities being added to the pipeline. As growth returns to the market, firms are turning to their hunters (BD) versus their farmers (PM) for revenue growth. 
  6. The three top reasons firms gave for passing on opportunities are: they don’t feel it is a good fit, they don’t think they will win it or they don’t have time to respond. Companies are investing a lot of time in maximizing win probability and are no-bidding those that they don’t have a strong chance of winning.
  7. Centralized management of task orders continues to expand. What we are seeing here is that companies are realizing that to maximize their performance on task order contracts, they are having to implement much better command and control.

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