A little silver among the black clouds

It is no secret that government contractors had a rough 2011 but there are still signs that the group remains optimistic about business prospects going forward.

Deltek’s Clarity survey had the strongest positive spin on the market. While the average growth rate fell from 14.7 percent in 2010 to 7.3 percent in 2011, survey respondents said they felt that growth rates would return to double digits in 2012.

Meanwhile, Grant Thornton’s annual contractor survey wasn’t quite so cheery, but more than half of the companies reported growth and another 21 percent reported no change. The downer was that the 29 percent of companies responding to Grant Thornton’s survey saw a reduction in revenue. That was the highest in several years.

Another bright spot with a downside in Grant Thornton’s survey are profit margins, which remain strong. However, profits aren’t being buoyed by revenue growth but by cost cutting, said retired Vice Adm. Lewis Crenshaw Jr., national practice leader for Grant Thornton’s aerospace and defense market sector. Take a look at some highlights from both studies below.

Two highlights from the Grant Thornton survey: 

1) Revenue by contract type
  • Cost reimbursable: 45 percent
  • Time and materials: 35 percent
  • Firm-fixed price: 20 percent

2) Reasons for losing
  • Price and technical: 48 percent
  • Price: 30 percent
  • Technical: 15 percent
  • Other: 7 percent

The Deltek Clarity survey highlights: 

Top 5 business development challenges
  • More restrictive spending environment 
  • Increased competition
  • Limited resources
  • Need for improved sales support
  • Not enough time to build quality RFPs

Top 5 audit issues

  • Labor and time keeping 
  • Indirect rates 
  • Internal control systems 
  • Unallowable costs 
  • Billing 

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