Contractors across the country say the top challenges they face are sequestration, contracts decided by price, and trying to grow, according to what Deltek heard on a recently completed six-week regional road tour.
Of the six regions visited, Denver/Colorado Springs and Huntsville were the only areas that experienced increased government spending from fiscal 2011 to 2012.
Here’s a look at some of the top concerns:
Some contractors said they have been somewhat insulated from the sequester thus far, but acknowledged worries about what’s ahead. These companies reported seeing indecision on funded and scheduled projects, meaning delays in contract awards, project start and stop dates and solicitations.
The fourth quarter is usually a busy time for procurement, but some companies are wondering whether contracting offices will avoid spending all budgeted funds this year.
Contractor panelists and attendees on the tour said incumbent contractors are seeing their prices undercut by bidders as the government moves to lowest price, technically acceptable (LPTA) programs, which select the lowest-priced proposal that meets the basic requirements, rather than offer the best value. The general consensus across the regions was that incumbents must focus on customer relationships to maintain their spots.
Others suggested that bidders stress what makes their company different in the first few pages of a proposal and detail how they would meet every requirement — but not propose more than what is asked in the solicitation.
Anecdotally, contractors said government agencies are noticing gaps in the quality of performance in contracts awarded under LPTA, suggesting the approach may not be lasting.
A majority of tour participants said much of their growth strategy relies on fostering their base business and prioritizing existing contracts. Beyond that, companies are trying to leverage their core competencies across new markets, from untapped federal agencies to commercial businesses and state and local governments.
Still, many contractors are sticking to their sweet spots.
The bottom line recommendations heard on the tour were to stick with what is working and get back to basics, including disciplined approaches to identifying and qualifying opportunities.
Organizational honesty is a must, which means recognizing when you can — or cannot — do the work and adjusting plans accordingly.
Jennifer Sakole is principal research analyst at Herndon-based Deltek, which analyzes the government contracting market and can be found at www.deltek.com.