The State of Competition in Federal Contracting

Competition in federal procurement remains a highly scrutinized topic as industrial base health and opportunity equity dominate agency priorities. Competing in the federal contracting market comes with a unique set of advantages and disadvantages that support and impede competition. The federal government represents a stable customer base that offers resources to support and enlarge its pool of competitive bidders, however, the regulatory environment and administrative burden can create barriers to market participation and growth.

Healthy contract spending, contract consolidation and expanding agency missions have converged to heighten competition, adding complexities to pricing strategies, teaming decisions, compliance processes and other issues. Competing in the federal space requires contractors to structure scalable and agile business development processes; streamline and maximize market research and due diligence; institutionalize documentation and reporting processes; develop robust cost and pricing analysis methodologies; and create processes for effective teaming decisions.

Key Findings

• Market Consolidation. Although contract spending has increased, contract and vendor consolidation continues to create an environment of heightened competition, demand for well-positioned teaming partners and bid protests.
• Small Business Participation. Agency efforts have successfully attracted new market entrants of all sizes, however small businesses continue to leave the market faster than new small businesses are entering.
• GWAC/IDIQ Preference. Category management and agency preferences for large GWACs and IDIQs have shifted award concentration from unique contracts to task order competitions.
• Costs of Compliance. Compliance requirements – such as those for cybersecurity, cloud computing, sustainability, cost accounting standards and general contracting – continue to expand, adding costs and complexity to the pricing strategies needed to remain competitive.
• Business Development Practices. Competitive contractors emphasize institutionalizing market research, pipeline development and bid/no-bid decision processes to drive stability in business development decisions.
• Teaming and Subcontracting.  Contract consolidation heightens competition within the subcontracting contractor pool. Challenges in partner identification, teaming agreements and prompt payments can derail successful team building.
• Election Impact on Contract Awards.Competition for contract awards are typically minimally impacted by administration transitions. While solicitation and award activities could pause to give incoming leadership an opportunity to provide feedback (more likely for very large procurements), solicitations are rarely canceled due to an administration change. In fact, award cancellations declined following the 2016 and 2020 elections.
• Past Performance. “Satisfactory” past performance ratings are increasingly becoming the default, diluting competitive advantage. Contractors are under pressure to develop robust win themes that will highlight competitive differentiation, but should also prioritize self-assessments to help contracting officers justify higher ratings.

Critical Insight for Vendors

This report delivers a comprehensive view of the issues and challenges that contractors face while competing in the federal market, and offers recommendations and best practices for assessing, mitigating and improving decision-making.

• Understand the market forces influencing the competitive environment
• Understand the policy and legislative environment guiding acquisition processes and reform initiatives intended to facilitate competition
• Analyze the spending trends offering insight into market direction
• Develop strategies to improve business development and capture strategies

Deltek's The State of Competition in Federal Contracting report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.