Contractors mix worries with optimism
Many fret over tougher contracting rules but still believe growth will come
- By Nick Wakeman
- May 07, 2009
Tougher contracting rules, more scrutiny, increasing competition, challenging entries into new markets and the need to attract good employees, preferably with security clearances: that is the reality companies on the 2009 Top 100 faced.
It’s a tough marketplace, with the potential to get tougher, according to a survey of Washington Technology readers who work for Top 100 companies.
But our look inside the minds of executives at Top 100 companies also shows a belief that the market will grow at rates much stronger than the economy in general.
The biggest worry for Top 100 companies is developing new lines of business or expertise. That topic ranked as first, second or third among concerns expressed by nearly 80 percent of respondents.
Personnel issues also are a major concern. Hiring and retaining workers with security clearances was the No. 2 concern picked by respondents. Hiring and retaining workers in general came in third.
Finding the right teaming partners ranked as the fourth most common concern.
A significant number of respondents, 35 percent, were unsure if the Obama administration’s procurement reforms would have a positive or negative impact on the market. Thirty-nine percent said it would be negative.
A big change many of the companies might face is the Obama administration's preference for fixed-price contracts. Forty-six percent said that 25 percent or less of their contracts are fixed price.
A shift in this direction will mean that companies will need to adopt new ways of managing their businesses to control their costs and make sure they have a clear view of customers' requirements before committing to bid on a contract.
However, most companies expect to grow in the coming year, with confidence in individual company performance higher than for the government market overall and the economy in general.
Fifty-seven percent said they thought their company would grow by 5 percent or better this year, while 53 percent said the government market would grow by that rate. Meanwhile, 41 percent said the Dow Jones Industrial Average, a measure of the broader economy, would grow at 5 percent or better.
For respondents with a less optimistic view, the broader economy also is expected to fare worse, according to the survey. Thirty percent said the Dow would stay the same or go down, compared to 20 percent who felt the government market would stay the same or go down and 10 percent who predicted that fate for their own company.
Among the spending priorities in the American Recovery and Reinvestment Act, health care and cybersecurity are seen as the strongest business opportunities. Health care was picked as the first, second or third growth opportunity by 56 percent of respondents. Cybersecurity was close behind at 54 percent.
Overall, 53 percent of respondents said the president’s stimulus package would create opportunities for their companies, compared to 21 percent who said no and 26 percent who said they didn’t know.
The survey also revealed that Top 100 executives think the marketplace is becoming more competitive, with an overwhelming majority of respondents — 80 percent — saying that competition has increased compared to five years ago. Only 4 percent said it was less competitive, and 15 percent said it was the same.
Looking ahead, 73 percent felt the market will get more competitive, while 7 percent thought it would be less competitive, and 20 percent thought it would stay the same.