In an article in Washington Technology, columnist Nick Wakeman points out certain federal budget numbers that on the surface could cause some government contractors to get nervous.
Based on FedSource’s annual budget analysis, the addressable Federal market for contractors stands at $819.1 billion for FY 2011. It will be $752.1 billion in FY 2012 (an 8.2% drop). Compared to 2010’s $773 billion market, the 2012 figure is about a 2.7% decline.
Specifically, here are some areas that will take the hardest hits:
- 10.6 percent less for contractors at the Army.
- 10.6 percent less at the Energy Department.
- 9.5 percent less at the General Services Administration.
- 5.1 percent less at Homeland Security.
So, is there any good news for contractors here?
Well, investments are actually growing in areas such as technology and innovation. The Education Department is expecting to increase spending on technology, program development and student loan processing. And, the delay in the 2011 budget has likely created some pent-up demand.
The best opportunities will come for contractors who can help agencies operate more efficiently and effectively. In fact, this is a fundamental requirement anyway considering “cost savings” is often the most tangible ROI factor that can be illustrated in a government setting.
$752.1 billion is still a pretty hefty pie. And, don’t forget the vast opportunity within state and local governments who will see their tax bases begin to bounce back as the economy improves.
Cuts are inevitable in the cycle of government procurement. Focusing on strong value creation and relationship-building will help overcome these dangers.
By the way, if you missed our live online webinar entitled, “Seven Myths of Selling to Government” you can still benefit from the information (we talk a lot about value creation, relationships, and even pie). Following the link to the right and registering allows you to experience the webinar just as if you were there. We hope you enjoy and benefit.