Deltek: Contractors report tough competition and interest in diversification

Contractors are focused on diversifying and bracing for cybersecurity threats, according to Deltek's new seventh annual Clarity study, a report on the government contracting industry.

One of the "overarching" messages from this year's study, which had nearly 600 responses, was a reported rise in the success of small businesses, Deltek said.

"Companies <$20M are getting a seat at the table and they are winning," the study states. "In write-in comments, participants pointed to difficulty competing in an environment favorable to small businesses."

The success of these companies, the report adds, is partly because of the government's increased focus on awarding work to small businesses but also a result of lower overhead costs at these companies.

The top business development challenges reported by participants were limited resources and increased competition. To cope, respondents said they are seeking a better understanding of opportunities and their requirements earlier in the process and exploring new markets.

Indeed, the Deltek study found that many companies are seeking to diversify, in state and local work, in commercial markets and in new geographies.

Contractors are also spending more on IT -- up to 9.4 percent of annual revenue from 8 percent last year, according to Deltek. Many large companies reported dramatically increasing their investment in protecting their company from cyber threats.

"The need to ward off growing cybersecurity threats, upgrade and integrate critical systems and support an expanding number of mobile devices means the IT burden is increasing," the report adds.