Federal contractors in the Washington area are optimistic that they can survive cutbacks in government spending, according to a new report -- even though the study also shows that they have become more dependent on federal dollars in recent years.
Not all contractors are suffering from budget cuts: Only 28 percent of the 78 companies that responded to the survey by the Greater Washington Research Center said they had experienced reductions in federal purchases. According to an earlier study, those purchases have fallen by $1.8 billion -- 16 percent -- in the last two years.
Stephen S. Fuller, the survey's author and a professor of urban and regional planning at George Washington University, said the survey was the first comprehensive look at the area's federal contractors, and it included a few surprises.
One was the extent to which contractors, of the defense and non-defense variety, were attempting to deal with federal cutbacks by diversifying into commercial markets. "I see within federal contractors a very strong entrepreneurial behavior now that they have to move out of the comfortable area of federal sales to other areas," Fuller said.
However, he added, he was disappointed to see that much of the diversification that contractors mentioned in response to the survey was planned rather than already taking place.
The survey found that the 78 responding contractors -- 272 companies were solicited -- derived 65.8 percent of their revenue from federal sales. That is up somewhat from 59.8 percent in 1980.
Inexplicably, there was little increase in the shares for District and Northern Virginia contractors. Only contractors in Maryland experienced an increase in the proportion of their sales to the federal government, from 47.6 percent to 67.4 percent.
Area contractors don't do all their business in the area, the survey found. About $600 million worth "leaks" to nonlocal subcontractors, and another $500 million worth is performed by the nonlocal operations of local companies.
Fuller said many contractors sell the same products or services to private firms as they do to the government and thus don't need to branch into new product lines.