Preparing Your 2019 GovCon Growth Strategy? See What We Learned in Our 2018 GAUGE Report

Now that FY 2019 is well underway, knowing where you stand in the GovCon industry is critical for deciding how to steer your ship for the rest of this year. The Unanet and CohnReznick 2018 GAUGE Report provides benchmarking data and information compiled by surveying government contractors. This data helps us gain insight into the current GovCon growth rates and make predictions for the future.

Profitability, winning deals, and growth are always top of mind for contractors. In a previous blog, we discussed our survey respondents’ win rates and how they changed year over year. Here, we focus on how much growth our respondents have experienced in 2018 and how they expect to grow in the future.

Current GovCon Growth Rates

Current GovCon Growth Rates

Source: Unanet and CohnReznick 2018 GAUGE Report

Fortunately, the government contracting world was marked by significant growth for our respondents. Our respondents were divided almost right down the middle: 51% experienced growth of 10 – 50% which is awesome, while 49% experienced 0-9% growth. With a stable economic environment, a two year stable budget, and further adjustment to the Trump administration, the positive growth for contractors was not too surprising.

 

How Did Our Respondents Describe Their Current GovCon Growth Rates?

Our data becomes even more interesting when we look at how our respondents described their current growth. 

Descriptions of Current GovCon Growth Rates

Source: Unanet and CohnReznick 2018 GAUGE Report

In addition to the categories we used to ask our respondents about their current growth rates—25-50%, 10-24%, and 0-9%—our respondents’ descriptions of their growth rate provides us further insight into the GovCon climate. While the hard numbers of our growth ranges provide us valuable, quantifiable data, contractors describing their growth adds an additional, somewhat personal element to our results.

Combining the orange and yellow categories in this chart, 54% of our respondents experienced either “very quick” or “steady” growth. In our previous question, 51% experienced noticeable growth of at least 10%, so these numbers are certainly close. 46% of respondents described their growth as slow or non-existent. This again lines up nicely with the 49% of our respondents who had 9% or less growth. 

However, it’s important to keep in mind that a growth rate of 10% may be quick growth for one contractor, and slow for another. Contractors, of course, truly understand their own businesses the best and have the freedom to take their growth rate with a grain of salt and decide what that number means to them.

Projected GovCon Growth Rates

As growth continues to exceed expectations, many government contractors like our survey respondents are even more optimistic about the future of the GovCon industry. With the first month of 2019 wrapping up, now is the best time to look ahead and think about the future and make sure you are set up for success in the months that remain. We asked our respondents about their projected growth rates for 2019 and beyond.

Projected GovCon Growth Across All Revenue Bands:

Projected GovCon Growth Rates

Source: Unanet and CohnReznick 2018 GAUGE Report

These responses are even more encouraging than the current growth rates. 67% of respondents predict they will experience growth of at least 10%. As stated above, 10% may be notable for some contractors and disappointing for others, but we still enjoy seeing that a majority of the responses are predicting higher growth rates.

What is especially refreshing is the percentage of our respondents who reported having 0 – 9 % current growth versus those who predict to have 0 – 9 % growth in the future. 49% of our respondents fell into the current growth range of 0 – 9%, but only 33% are predicting to be within that range in 2019. 

Projected GovCon Growth Rate by Revenue Band

Let’s dive a little deeper and analyze our respondents’ projected growth rates by the revenue band into which their organization falls. In order to provide additional insights about our respondents and the government contracting industry as a whole, we divided our respondents’ organizations into four primary revenue bands: up to $25M, $26 - $50M, $51 - $100 M, and above $100M.

Projected Growth Rate for Companies with Revenue Up to $25 Million

Projected GovCon Growth Rates Up to $25M

 

Projected Growth Rate for Companies with Revenue from $51 - $100 Million

Projected GovCon Growth Rates $51-100M

Projected Growth Rate for Companies with Revenue from $26 - $50 Million

Projected GovCon Growth Rates $26-50M

 

Projected Growth Rate for Companies with Revenue Above $100 Million

Projected GovCon Growth Rates Over $100M

Source: Unanet and CohnReznick 2018 GAUGE Report

About 18 – 21% of our respondents in each band predict they will experience 25-50% growth. We like seeing this commonality between all the revenue bands and the optimistic glimpse of the future it provides us. Overwhelmingly the biggest projected growth rate is of 10 – 24% from 70% of our respondents within the $51-$100 million revenue band. The other revenue bands aren’t too far behind, either. 43% of those in the up to $25M revenue band, 47% of those in the $26 - $50M revenue band, and 46% of those in the above $100M revenue band anticipate growth of 10 – 24%.

This again depends on the individual contractor, but it is likely fair to say that a growth rate of 10 – 24% is a considerable amount, and we love seeing that all our contractors—especially those within the $51-100M revenue band—expect to grow so significantly in 2019 and beyond. 

Our respondents’ optimism about the future is contagious, and 2019 is already looking interesting. We will be eager to see how all of these predictions play out later this year.

Moving Forward by Resolving BD Challenges

In a previous blog, we explored the win rates of our respondents and spent some time analyzing our respondents’ biggest BD challenges preventing them from winning deals. To summarize those results, the biggest challenge was that BD teams have a lack of funding followed by finding a teaming partner, poor performance, and having inadequate reporting tools. Reducing the burden of or resolving these challenges sets your organization up for achieving your projected growth rates. If you find your BD team is bogged down by these same or similar challenges, pencil in a plan to address and resolve these challenges into your 2019 plan.

Download Your Copy of the GAUGE Report!

No matter where your organization fell in terms of growth this year, understanding the state of the industry and best practices for moving forward will help set your organization apart from the rest. In the 2018 GAUGE report, we dive even deeper into our respondents’ growth rates and revenue bands. Download your copy today!

The 2019 GAUGE Report is coming, and we need your help! The data we report on in each edition of the GAUGE is provided by government contractors. We’d love to have you be a part of the 2019 Report. Please take a few minutes to fill out our survey and tell us about your experience in the GovCon industry!

 

Sources:

Unanet & CohnReznick, the 2018 GAUGE Report

Kim Koster

Kim Koster

Kim is an experienced executive who brings over 30 years of experience in project management, project accounting, EVMS,  government contract and accounting compliance, and communications.

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