Insights and trends for the GovCon industry
Welcome to a new era of government contracting: where embracing technological innovation is how the winners separate themselves from all the rest and informed decision-making is more important than ever.
The GAUGE Report 2024 is your definitive guide to navigating the complexities of the government contracting landscape with confidence and foresight.
Designed specifically for government contract professionals like you, this report is packed with insights and data that are essential for gaining a competitive advantage and staying ahead in a crowded field. This year's report dives deep into the industry trends and pressures shaping your world, with a special focus on leveraging AI to enhance operational efficiencies while maintaining compliance.
Staying ahead in the government contracting industry requires constant vigilance and adaptation.
The eighth annual GAUGE Report from Unanet and CohnReznick offers a roadmap for government contractors aiming to maximize opportunities and mitigate risks in an increasingly complex environment.
Challenges facing the Government Contracting industry
GovCons continue to navigate many challenges that can significantly impact its operations and growth. Key issues include constraints around business development resources, the costs associated with maintaining government regulations, and the pressing need for technological advancements to remain competitive in a rapidly evolving marketplace.
When examining the landscape of government contracting business development, a striking 45% of GAUGE respondents pointed to a lack of resources as a significant hurdle. This statistic underscores the critical importance of building strong relationships and leveraging sophisticated market intelligence tools to identify new opportunities efficiently. Without these resources, companies may struggle to expand their foothold in a highly competitive environment.
The complexity of the regulatory landscape is creating unprecedented challenges for government contracting compliance. As regulations evolve and become more intricate, contract companies are finding it increasingly difficult to navigate this maze. This situation necessitates that GovCons not only adopt but also maintain rigorous compliance frameworks. These frameworks must be robust enough to adapt to changing federal contracting regulations while ensuring that all operational practices align with federal requirements.
The combination of these challenges underscores the need for comprehensive strategies to thrive in GovCon.
This year's edition focuses on balancing operational efficiency and compliance with actionable AI insights to win more business from the federal government. By embracing the insights offered by the GAUGE Report, you're not just keeping pace with the industry—you're setting the standard for excellence and efficiency. Discover what the future holds and position yourself as a leader in government contracting.
GovCon Industry Survey Respondants
Current GovCon market dynamics
The government contracting industry remains a vital pillar of stability in the economy, yet it faces numerous challenges that can impact its growth and sustainability. Key issues such as technology modernization, cybersecurity threats, environmental, social, and governance (ESG) initiatives, and compliance with an increasing number of new regulations from the federal government are putting pressure on GovCons to continually adapt and innovate to keep their competitive edge.
Research from the GAUGE Report provides a wealth of statistics and valuable insights that can significantly enhance your understanding of the current market landscape and future trends. For instance, consider the following compelling findings from the GAUGE:
These statistics illustrate that while there are plenty of reasons to feel positive about the industry’s potential, significant obstacles remain. Many leading GovCons continue to grapple with these challenges, underscoring the importance of staying informed and proactive in addressing the evolving demands of the marketplace. As the landscape shifts, those who can navigate these complexities will be best positioned to thrive in the future.
Opportunities in GovCon
Despite the challenges facing many GovCons, the industry is ripe with opportunities, particularly for those willing to leverage AI and other advanced technologies. As the landscape evolves, companies that adapt and innovate can find themselves at the forefront of this dynamic sector.
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Increased federal budget
The recent announcement of a 3% increase in defense spending not only paves the way for new contracts but also creates avenues for substantial growth. This increase signifies a robust commitment to national security and technological advancement, opening doors for GovCons to propose and implement modern technological solutions. To capitalize on these opportunities, companies must adopt a scalable approach to identify the right projects to pursue. This involves thorough market research, understanding client needs, and analyzing competition.
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AI efficiencies
Additionally, AI can assist in streamlining compliance processes and managing documentation, reducing the time and effort required to meet regulatory requirements. With the right tools - such as machine learning algorithms and cloud-based platforms - and a smart implementation process in place, GovCons can harness emerging technologies to boost efficiency, improve collaboration across teams, and ensure more positive business outcomes.
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Technology modernization
Technology modernization stands out as a primary opportunity area where GovCons can outpace their competitors through strategic application. AI offers powerful capabilities for automating routine tasks, enhancing data analysis, and improving strategic planning. For instance, AI-driven analytics can provide insights into spending patterns and project outcomes, helping companies make informed decisions that align with government priorities.
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Winning proposals
Developing winning proposals is crucial for securing contracts and requires a deep understanding of the procurement process and the ability to clearly articulate value. Once contracts are won, executing them effectively becomes essential. Here is where modern technology, including AI, can play a major role.
The GovCon industry presents a wealth of opportunities for those prepared to embrace innovation, leverage technology, and develop strategic approaches to navigate the competitive landscape successfully. By doing so, companies can position themselves for long-term success in an ever-evolving market.
AI in GovCon
The term “artificial intelligence” is discussed often in the business world, but many GovCons fail to understand the true positive, lasting impact it can have on their businesses. From automating administrative tasks to enhancing data analysis and improving compliance, AI offers many benefits.
Below are just a few examples of how GovCons might apply AI:
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Automating tasks
Repeatable, mundane tasks don’t need to assume the bulk of your team’s time. With AI, you can reduce your manual workload and enhance efficiency.
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Data validation
Accessing and analyzing data is valuable – if you have the right data. Ensure data accuracy and compliance using AI capabilities.
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Proposal preparation
The focus of your proposal efforts should be on your ability to craft a compelling narrative, not creating a new way of doing things each time you answer an RFP. Simplify the proposal process with automation.
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Virtual assistance
When applied as a tool to help accentuate a human touch, AI can help you improve customer service and internal operations.
Artificial Intelligence (AI) has the ability to transform the government contracting sector, offering capabilities that growth-minded businesses can no longer ignore. Leveraging AI allows GovCons to optimize day-to-day operations, assess the attractiveness of opportunities, and improve proposal success rates.
The GAUGE Report displays how companies utilizing AI are at the forefront, using market intelligence tools to uncover new contracts and streamline service delivery.
Assessing your GovCon AI readiness
Before integrating AI, assess your GovCon’s AI readiness using our AI Maturity Model. This will help you identify areas for improvement and prepare for a smooth transition.
Our AI Maturity Model provides a comprehensive framework for assessing your organization's readiness for AI integration. This model covers key areas such as:
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Strategic alignment
Without a carefully thought-out plan, you won’t be able to get the most value out of AI. Thinking strategically ensures your AI initiatives align with business goals.
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Data management
Handling your data the right way leads to more accuracy, which leads to better outcomes. AI can help you establish robust data governance practices.
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Technology infrastructure
AI is a nearly ubiquitous presence across many types of software, so you’ll want to identify the platforms and uses cases your team actually needs, building a scalable and secure IT environment.
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Skills and capabilities
Do you have the right people on your team to help implement and use AI correctly? You’ll want to develop the necessary skills within your workforce.
We’ve identified four levels of AI maturity. All organizations fall under one of the following categories: resistant, curious, emergent, and mature.
You can read more on these four levels in the GAUGE Report.
What kind of AI is right for you?
Use this tool to determine whether generative, analytic or a combination of AI is right for your GovCon business.
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Question 7:
Result: Generative AI
Great for writing, content creation, and coming up with new ideas
Generative AI may be right for your business. To find the best solution, be sure to define clear, specific purchase criteria based on your use case and your goals.
Result: Analytic AI
Pull out incisive insights to really level up
Analytic AI may be right for your business. To find the best solution, be sure to define clear, specific purchase criteria based on your use case and your goals.
Result: Robotic or Automation AI
Take over routine tasks to focus more on growth
AI Automation may be right for your business. To find the best solution, be sure to define clear, specific purchase criteria based on your use case and your goals.
Get more benchmarking data and GovCon industry insights in the latest GAUGE Report.
Compliance in the age of AI
You’re no stranger to the critical need for maintaining GovCon regulatory compliance, especially as the landscape continues to evolve. Government contractors must navigate a complex web of regulations and requirements, and the stakes are high when it comes to compliance.
Putting systems in place to encourage efficiency while balancing that need with compliance is no small task. It requires a strategic approach, where technology and human oversight work hand in hand to create a robust framework that ensures adherence to regulations.
AI can certainly help streamline your GovCon compliance processes, automating routine tasks and enabling quicker access to important data. It also introduces new risks that must be managed carefully, such as data privacy concerns and algorithmic biases. You’ll need to ensure your AI solutions meet all regulatory requirements to avoid penalties and maintain trust with stakeholders.
That’s why smart implementation is so integral for your success using AI. This involves not only selecting the right tools but also training your team to understand the intricacies of both AI technology and compliance standards. By doing so, you can harness the power of AI while safeguarding your organization against potential pitfalls.
How AI can make compliance easier
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Analyzing and applying rules by contract or project
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Continuously monitoring time and expense entries
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Providing automated detection and alerts for data disparities across systems or reports
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Checking whether relevant clauses are included in RFPs
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Sending automated alerts for project milestones or project plan deviations
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Providing updates and training on policy changes
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Creating dynamic learning modules to update and train employees on new requirements.
What is the GAUGE Report?
For eight years, the GAUGE Report has been an invaluable resource for the government contracting industry, providing industry-wide performance benchmarks and insights on the latest trends and best practices.
For GovCons, think of the GAUGE as a tool for seeing how well you stack up with some of the leaders in your industry. Reading it allows you to gain insight on what areas other GovCons are prioritizing and what are their biggest causes for concern. Every year, the GAUGE helps GovCons put their own successes and challenges into the larger context of the government contracting industry as a whole.
About the Authors
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AuthorChristine Williamson
Partner, Government Contracting Industry, CohnReznick
Expert perspectives
You can’t turn anywhere without reading about AI or its impact on the world at large. But where can you find customized insights on how it might affect you as a GovCon?
It’s not enough to make the decision to incorporate AI into your operations – you’ll need to have a strategic vision for what role it can play making business easy for you. While widespread use of AI in GovCon hasn’t yet been achieved, there are thought leaders who have foreseen and in some cases experienced its impact.
The GAUGE Report features GovCon industry insights from thought leaders in our field. Learn from these industry leaders who are at the forefront of AI transformation in their respective fields. Their commentary can provide valuable guidance for your own AI integration efforts.
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Download the GAUGE Report now
AI in GovCon isn’t a reality for the majority of companies in the industry, but that makes it extra important for you to stay ahead of the curve. Reading the GAUGE Report can help you get started on the path to empowering your people with AI. It can help you do better work more efficiently, all while maintaining compliance without sacrificing efficiency.