Annual Government Contractor Industry Survey

Now in its 15th edition, the Grant Thornton Government Contractor Industry Survey continues to assist government contractors in preparing for the future of their business.

The Government Contractor Survey offers an in-depth look at the industry as a whole and into the day-to-day business of government contracting. The survey reflects findings from well over 100 companies. Following are some of this year’s survey highlights:

• Revenue Trends--Fifty percent of survey participants experienced revenue increases from federal business during the past year, while 20% suffered decreases.
• Revenue impact from stimulus spending--Only 4% of surveyed companies anticipate significant revenue increases from the stimulus package.
• Management and support headcount--At 14.6%, management and support headcount as a percentage of total headcount is somewhat lower than the 16% reported in last year’s survey.
• Profit rate-- Profits before interest and taxes continue to be modest in the government contracting industry. Forty-five percent of surveyed companies had either no profit or profit rates between 1% and 5% of revenue in this year’s survey, compared with 37% last year.
• Proposal win rates--Survey participants report a 30% win rate from proposals for non-sole-source business. The win rate jumps to 60% when the company establishes a special business unit such as a joint venture or a limited liability corporation to bid the work.
• Identifying out-of-scope work--Fifty-six percent of surveyed companies consider their procedures for identifying out-of-scope work to be either not effective or only somewhat effective.
• Executive compensation--Executive compensation remains the cost element most frequently challenged by DCAA. DCAA’s methods for questioning these costs tend to be weak and can be challenged from several perspectives.
• New compliance regulations--The government has recently expanded requirements for compliance systems which are applicable to most government contractors. Compliance with these regulations is mandatory, and failure to comply can result in prosecution, suspension and debarment.
• Recent DCAA developments--DCAA operations have been severely criticized in two recent GAO reports, and as a result there have been major changes in DCAA management and audit procedures. These changes are likely to increase the risks facing government contractors.
  

For more information regarding the 15th Annual Government Contractor Industry Survey, or to participate in next year’s survey, please contact Melissa.Epstein@gt.com.