2014 – WashingtonExec Annual Market Outlook Series
As we turn the page on 2013, we look forward to a new year and new opportunities for innovation and growth in the government contracting community. This past year we experienced budget sequestration, a 16-day-long government shutdown, and a perpetually increasing focus on cyber security and healthcare IT.
WashingtonExec reached out to those most knowledgeable and experienced individuals in the federal contracting space. We asked executives in and around the beltway for insight regarding where they see the government contracting community headed in 2014. Topics discussed include M&A activity, cloud computing, healthcare IT, defense, mobility, and more.
Mike Murphy, Vice President, Mission Support Group, of GCS, Inc.
Spending on GovCon will continue to decrease thru FY14 and FY15. Cuts of 20% – 30% are projected across many Agencies (Intelligence Community, DoD and Civilian). A key by-product of these cuts will be increased M&A activity, as small and medium sized companies struggle to remain competitive and solvent. The continued downward budgetary pressure will result in a decrease of new procurements. To successfully compete and grow in this market will require companies to:
Significantly decrease wrap-rates (lower OH, G&A and Fringe)
Protecting core contracts
Taking work away from Incumbents
Selective acquisition of key market and/or technical capabilities (e.g., Cyber, Big Data, Cloud)
With this said, all is not doom and gloom. Real opportunities to succeed in the marketplace remain. Companies who demonstrate the ability to quickly adapt to the “leaner” market, focusing their energy and intellectual capital on producing truly innovative and cost-effective capabilities (aligned with current market demands), will not only survive, but thrive.