An Important Step Toward the New Normal.
Whether it’s “back to normal” or the “new normal,” our first in-person GovCon conference since the pandemic started just seemed like a step in the right direction. The last in-person conference we attended for GovCon was one put on by this very same organization in February of 2020. Sessions and booths and people milling about, talking and swapping business cards all seemed very familiar. Yet, things were different in a not so subtle way. It was hard to recognize even old friends behind the masks. And there were hand sanitizer stations everywhere you turned. Physically, everyone was further apart than at the last conference, and yet we seemed closer together as a group.
And business got done – or at least discussed.
What Kind of Business?
A lot of this conference was about catching up – catching up on how companies have evolved and changed, catching up on how agencies like the SBA have changed their processes, and catching up on what’s going on in this strange and wonderful business we call GovCon. Of course, there was the obligatory exhibit hall with its tables, booths, handouts and giveaways, but the breakout sessions are where the magic happens. We did our part to help everyone catch up with what’s going on in GovCon with a session on our 2021 GAUGE Report. For those of you not familiar with GAUGE, it’s an industry-wide survey and a report of the survey responses. The GAUGE initiative is in its fifth year and some of the year-over-year data is beginning to show some interesting trends. In each report, we attempt to postulate some explanations for why things are changing – or, in some cases, why they aren’t.
A Brief Recap
First a little about the attendees. There were a dozen or so vendor/sponsors there and another five or ten contractors looking for opportunities or partners and several representatives from government agencies – notably the SBA and the Department of State. But the attendees were mostly from the 8(a) contractor community. The GAUGE report is much too extensive to present in the 50 minutes they allow in a breakout session, so we hit the highlights we thought would be most of interest to the small business GovCon segment.
Taking the Temperature of the Industry
This year’s report starts out by trying to measure the attitude of GovCon firms about their prospects for the 2022 appropriation and procurement cycle. We were delighted to report that 71% of all survey respondents were optimistic about the industry and only 8% were out and out pessimistic.
That said, the number one issue of concern for GovCons was the potential for budgeting and funding constraints. We pointed out that to some extent, this is cyclical and occurs whenever there is a change of administration, but that doesn’t mean it isn’t real. The concern colors everything that happens from targeting of opportunities to hiring and recruiting.
Coming in at numbers two and three were the “cost of compliance” and “lack of qualified talent.” The only other concern that made the cut statistically was “lack of integrated project management/accounting tools” and that was a distant fourth.
It’s probably also noteworthy that the top three are so tightly clustered that there is no statistically significant difference. There are all top of mind for just about everyone.
Finding and Hiring Talent
The small businesses that dominated the audience in the GAUGE breakout session were also very interested in our findings on recruiting and retaining qualified talent to fuel growth. Based on this year’s survey, over three-quarters of GovCon firms plan to increase the size of their workforce in the coming year; only four percent have any plans to cut back resources.
If this seems to contradict the concern expressed over budgeting and funding growth, remember the optimistic outlook. It is possible to be both concerned and, at the same time, to plan for growth.
Competing More Effectively
Of course, no self-respecting survey would ever ask a question just one way. Hot on the heels of the top concerns question, we asked “What keeps you up at night?”
You will notice that recruiting and retention was highly ranked this time as well, but the number one issue when we asked the question this way was all about competition and winning. Increasing Competition for Contracts was ranked either number one or number two by almost half of all respondents.
There was also a lot of interest in our in our breakout session around our findings on win rates. This year’s survey points to what the firms in the room already knew –opportunities are plentiful, but winning new business is hard. Three quarters of all respondents reported winning less than half the government proposals they submitted; almost a third won less than one-quarter of the work they competed for.
That’s not as bad as it might seem. Business Development professionals view win rates that are very high as generally indicative of “cherry picking.” And if you only go after the “sure things” it will definitely inhibit growth. They tend to view very low win rates as a sign that the firm’s pursuit process lacks focus. So, in the middle is not necessarily a bad thing, but most principals in small firms, especially the 8(a) firms that made up most of the audience for this conference, want a win rate that is significantly better than a coin toss.
Despite this, at least 1 in 3 GovCons don’t have a formalized gate or capture process for new opportunities. By show of hands, in the audience for our breakout sessions at the National 8(a) conference, it was slightly more.
In the highly competitive GovCon environment, the disciplined processes and assessments that make up a formal capture process are critical to ensuring that key requirements are addressed accurately and completely, and positioned to improve win rates. Without them, the proposal process tends to be ad-hoc, repeatability and efficiency suffer and the opportunity to differentiate yourself from the rest of the pack are easily missed.
Growing to ensure future viability
For the attendees at this conference, like most readers of the 2021 Report, all of these factors point to a clear focus on growth to fuel success. And despite optimism in the industry, organic growth and uncertain federal spending are top financial concerns for most GovCons.
This is what led us to this year’s theme for the GAUGE Report: Winning In GovCon. Of course, winning is a lot more than just writing a good proposal. To win consistently, you have to know your customer, know your competition and know yourself. Of those, knowing your competition is probably the hardest, but knowing yourself can be just as difficult. To get the full extent of the information available in the 2021 GAUGE report, download a copy here. We have also built a benchmarking web site where you can compare your metrics to those of your competition or other firms like yourself. You will find that here. Of course, if you just want to know more about Unanet, visit us at www.unanet.com.
Rich Wilkinson works for Unanet and is an expert in government contracting, specializing in compliance. He has spent the last 25 years in executive roles with prominent GovCon accounting software companies. Prior to that he worked in the controllership of Washington DC area government contractors implementing accounting systems and managing financial operations and compliance functions and before that, he served as a contracting officer with the Naval Air Systems Command.