Vendor competition rising: survey

      A survey of government contractors by Grant Thornton found that competition is increasing and firms are diversifying.

      The survey showed a significant drop in the win rates for new proposals. The win rate dropped to 26%, the lowest rate in six years. Last year, companies reported a 35% win rate.

      “This gives a strong indication that competition is increasing,” the report said.

     In 2016, federal government revenue as a percentage of total company revenue fell to 54%, from 74% in 2015. This possibly was due to diversification to include more state and local, commercial and global clients, the authors wrote.

      “Because of funding issues associated with sequestration, federal contractors found it necessary to seek contracting opportunities outside of federal government agencies. We see this trend continuing in the foreseeable future and possibly driving down pricing and profit percentages on federal contracts. Grant Thornton advised contractors to look at their current pricing techniques to determine if adjustments are necessary.

      Another trend in 2016 was a “surge” in higher profit rates before interest and taxes, with 56% of the contractors surveyed saying their profits were greater than 6%.

      The study suggested that the non-federal projects might be raising the profit rate.

More information: Grant Thornton report: http://goo.gl/eb7H5F

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