Defense obligations to buy goods and services have followed a downward trajectory over the past few years. In this current market, it's crucial that government contractors take the necessary steps to increase their visibility through marketing and networking endeavors in order to grow their operations.
The most recent data from the U.S. Government Accountability Office revealed that defense spending on government contracts dropped nearly 32 percent between fiscal year 2011 and 2015, from $399.4 billion to $273.6 billion. Meanwhile civilian obligations remained fairly steady at an average $128.3 billion over this same time period.
Faced with declining agency spending, government contractors need to ensure they're putting themselves in a position to succeed. This task involves establishing a smart growth strategy and implementing it through to the finish. Consider these four smart tips for growing your government contracting business:
1. Draft a plan
The first step to any successfully growth strategy involves crafting a master plan. Without a clear route to follow, you won't be able to track your progress and you may ultimately find your company lost in a maze of bureaucracy and red tape. A three- to five-year plan will help you acquire the right contracts for long-term growth.
"A three- to five-year plan will help you acquire the right contracts for long-term growth."
What are your main goals? To gain more government contracts? To increase the scope of your current contracts? To move into a new sector and leverage your skills and experience there?
Once you identify your objectives, you can fine-tune your strategy by working backwards and adding the steps necessary to reach your goal. Include incremental growth milestones along the way so that you can still reach smaller aims along the route.
Remember, while it's always important to follow through with the original plan, you'll also need to be ready to pivot if circumstances required it, so flexibility is also crucial.
2. Consider acquiring GWACs/IDIQs
Government-Wide Acquisition Contracts (GWACs) or Indefinite Delivery/Indefinite Quantity (IDIQ) contracts are a great way to grow a government contracting business. Both of these are multiple-award contracts (MACs) that allow government agencies to use to purchase an unlimited number of services or products from contractors over a specified period.
As noted by Multibriefs: Exclusive, half of all services and products procured by the government since 2011 have been obtained through GWACs, IDIQs or blank purchase agreements (BPAs). Although the overall number of MACs has declined from 2,892 in 2012 to 2,653 in 2016, mature GWACs/IDIQs have surged in market share since 2013.
3. Diversify your practice area
As noted above, defense contracts have been on a downward trajectory over the past few years. While the new administration's budget might reverse this course, there's a chance that this trend will continue.
If you're currently focused primarily in this space, it could be wise to diversify your practice areas into complementary lines of business. While you might not be able to grow all of these at the same time, having additional areas will help keep your business growing if federal buying stalls in your sole practice sector.
4. Build relationships
Networking is key in any business, no matter which sector you operate in. Government contractors are no different, and building solid working relationships will be crucial for growing your business.
Creating working relationships with government agencies and officials will help keep your business top of mind when new contracts are announced, ensuring your bids remain competitive. However, it's also important to nurture relationships with other mid-tier businesses, as this can create strong ties for teaming or joint venturing, which is another way to make your company more likely to win contracts.