“WASHINGTON TECHNOLOGY” – By Nick Wakeman and Ross Wilkers
“The largest federal contractors continue to get bigger and that says a lot how the market is evolving and why size continues to matter.“ – Nick Wickman
“Not that long ago, the prevailing wisdom was that $1 billion in annual revenue was the goal. That’s when a company had enough scale, but we’ve long blown past that.
For last year’s Top 100, Leidos clocked in at the No. 1 spot with $9.2 billion in prime contracts. Every company in top 10 had more than $4 billion.
Is $4 billion in annual sales the new standard to be considered a large government contractor? One capable of taking on any program the government puts up for bit?
If that’s true, how do we describe the middle tier? I have a hard time thinking of a company at $3 billion in revenue as in the mid-tier.
The evolution of technology has enabled customers to buy with a more enterprise view. There is a desire to tap into the economies of scale that the cloud enables. Hence, we see larger contracts, particularly when it comes to IT management and infrastructure.
Size matters: that is the reality of today’s market.
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“The General Services Administration has big plans for small business contracting as seen in two recent announcements but is that enough to achieve what they want?“- Ross Wilkers
“In two announcements over quick succession late last week, the General Services Administration released more details on its larger procurement equity push and aim to increase the role of small businesses in federal contracting.
The agency gave more of a glimpse into that bigger picture Thursday with the announcement it plans to quadruple the contracting goal for small disadvantaged businesses in this current fiscal year.
Ambitious is one way to describe what GSA and the White House wants to achieve in by bringing more small businesses into the fold of government contracting or at least creating more opportunities for those already participating.
Here’s the larger question we want to raise: Does the path to more small business contracting dollars also require less of something else?
Contracts are getting larger in value and the requirements within them are increasing, which naturally thins out the pool of companies that can afford to bid for those opportunities. That limits the number of companies able to perform the work at the scale and standard required.
An administration memo from December 2021 said the number of new small business entrants into federal procurement fell by 79% between 2005 and 2009, and lays out corrective plans.
Mitigate those negative impacts, and perhaps the government contracting ecosystem can change the often-used “barbell shape” imagery to show the vast numbers of small and large firms on opposite ends with increasingly fewer in the middle.
Setting aside the overall goal of procurement equity, growing the pool of companies participating in the government market is a worthy discussion with lots of spinoff topics to run through. But the trend of fewer and larger contracts is where that discussion’s starting line needs to be.”
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