Post-COVID Clarity report covers benchmarks for GovCon

Deltek's Clarity report for 2020 on government contracting faced a special challenge this year. The surveys for the 11th annual report were primarily in January and February before the COVID-19 pandemic became a national emergency.

But that doesn’t mean Deltek ignored the pandemic in its report. In fact, many of the trends and other findings in the report are only amplified by the pandemic.

Coronavirus or not, the contracting industry is struggling with acquiring and retaining talent. Regulatory compliance is also a continual challenge.

The report highlights the strong level of confidence that government contractors felt going into the next fiscal year and  sets a benchmark to see how the pandemic will impact that level of confidence.

“Now that there is a high degree of uncertainty, it is more important than ever to monitor and under the metrics in this study,” the report states.

The key metrics in the Clarity report cover business development, financial compliance, project and risk management, human capital, procurement and IT.

In the area of business development, 59 percent felt those efforts were limited by a lack of resources and 46 percent see an increase in competition.

Given that recessions tend to push new entrants to the government market, companies should expect to see the level of competition increase.

One metric to track going forward in my opinion is win rates. Deltek found the overall win rate was 40 percent, down from 43 percent a year earlier. Both large and mid-size companies reported declines in their win rates. Large businesses still reported a win rate of 45 percent. Mid-sized firms saw their win rate drop from 42 percent to 35 percent. Small businesses held steady at 40 percent.

In addition to limited BD resources and the increase in competition, the Clarity report identified other challenges including customers shifting to new contract vehicles and not enough time to assemble high-quality responses to solicitations.

Finding new opportunities is obviously a priority for any company in the GovCon market and here respondents leaned heavily on active client relationships as the source of new work, with 83 percent picking that as their best BD tool.

Also high on that list at 77 percent were teaming partners and networking. Also at 77 percent were requests for proposals and requests for qualifications. Respondents also listed public notices such as postings in Beta.Sam.Gov as an important source on new opportunities with 73 percent highlighting that.

What didn’t score well were marketing generated leads, which was named only by 33 percent. That was lower than the 42 percent who picked web searches.

Another finding that should be interesting to watch during and after the pandemic is the expected growth rates. At the time Deltek took the survey, the expectation was overall growth of 9 percent. As they point out in the report, the government market has a long history of stability in times of economic downturns. Absent shutdowns, the government never really stops spending or paying its bills.

But it is hard to imagine the optimistic expectations for growth going into fiscal year 2021 will hold. Small businesses expect 24 percent growth in 2021 compared to 2020. Mid-sized firms see 11 percent growth, while large businesses are expecting 7 percent.

The Clarity report includes sections where respondents talk about overhead rates, procurement challenges, audit factors and cybersecurity.

In fact, new security policies and procedures was by far the biggest challenge ranked among the top IT challenges with 69 percent. The next highest was re-engineering businesses at 34 percent.

Big data and related trends topped the list of tech trends named by respondents. Those includes data science, artificial intelligence, and machine learning.

What is not seen as a priority is wearable technology, where 46 percent said it was not important.

I didn’t explore the human capital questions, but here is a link to an article by our sister publication where FCW Staff Writer Lia Russell reports on the findings.