When 2020 began, government contractors had a positive outlook for business. Now they have many questions to address, says a new study.
For the last 10 years, government contractors have used the annual Deltek Clarity Government Contracting Industry Study to benchmark their performance against their industry peers. But in the recently released 11th edition of the study, the COVID-19 pandemic is raising many questions and presenting new challenges for government contractors.
This year’s report spotlights the 2019 performance of 380 government contractors who responded to a lengthy questionnaire on a wide range of topics, said Amy Champigny, Deltek’s senior product marketing manager. For contractors, the report provides key metrics that are used to plan and forecast into the next year so they can track and modify contract lifecycles.
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The 80-page report is based on online surveys completed between Jan. 6 and March 2, 2020, from government contractors who deal with local, state, and federal governments, as well as from some who work with school systems and higher education institutions. About 44% of the responding companies are small businesses with less than $20 million in annual revenue, while 25% were medium-sized companies with annual revenue between $20 million and $99.9 million. Another 16% of the respondents are companies with annual revenue between $100 million and $999.9 million, while 14% have annual revenue above $1 billion. The report was done in partnership with CMG Consulting, which conducted the online surveys for Deltek, a project lifecycle software vendor.
Following the research, the report was written in March and April as the COVID-19 pandemic was spreading and causing havoc around the globe. The collected data showed that government contractors largely saw 2019 as a positive year for their businesses and that they expected to build on that progress in 2020.
“We knew when our staff was reviewing and talking about the data in this report that so much would change due to the pandemic,” Champigny said. “This report is more about what happened for these contractors in 2019, but there is some forward-facing information about 2020 as well.”
One eye-opener from the data is that some 53% of the respondents said they expected to move some of their operations to the cloud in 2020, Champigny said. But that was before the coronavirus shut down offices and caused millions of government and education workers to do their jobs from home.
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“We are looking at the impact today in how we frame this,” she said. With 53% saying before the pandemic that they would move more to the cloud in 2020, those numbers have already been escalating across the nation. “What do you think their answer is going to be now?” she said. “It’s a new reality. It has to be in the forefront.”
Champigny said she recently read a news story in which someone was asked whether a company’s CIO or COVID-19 itself was actually leading its move to the cloud.
“I think that’s really the question,” she said.
When it comes to IT for government contractors, the report identified data security as the leading objective in 2019, along with a strong focus on compliance and meeting ever-increasing government regulations, cited by 64% of the respondents.
Finding skilled IT workers remains a challenge
Staffing challenges were also noted, especially when it comes to finding qualified IT team members.
“One thing that keeps popping up in the study research is that there is a continuing shortage of technical talent, particularly IT leaders,” Champigny said. “About 20% of the respondents said that finding top IT talent is a top challenge for their businesses.”
Also reported by respondents are frustrations that despite annually identifying the need to reengineer business processes to improve them, that it never happens, Champigny said. “We’re seeing this year over year. “It stays there as a top initiative. They say they want to do it but we’re not getting to it.”
That problem ties into staffing shortages of skilled IT workers that contractors are experiencing, she said. “There’s a disconnect between what organizations say are their top challenges and the initiatives they are taking to solve those top challenges. It’s due partially to a lack of leadership, but also due to the investments organizations are willing to make to make those initiatives a success or get them off the ground.”
Another problem is a shortage of IT leaders who have the needed tools to lead their organizations into the future, she said. “We don’t see these leaders creating comprehensive strategies from the state of their current operations to whatever state will be needed in the future. These are the responses we are hearing.”
Instead, respondents said that IT leaders need to be asking more questions and planning ahead concerning topics such as can employees do their work from their homes and can they operate with part-time work-from-home, Champigny said.
For government contractors, there can be more issues like these to deal with compared with traditional commercial vendors, Champigny said. “They can’t pivot as easily,” due to government requirements and compliance issues. “It depends on the kinds of contractors. They have different needs.”
On a positive note, the study confirms and identifies these issues so they can be addressed, she said. “We’re seeing that a lot of these challenges are being recognized, and they are known. If they are not known, that is scarier. We are being forced to really re-examine a lot of the infrastructure, and we’re hoping to see more planning as a result of the gaps that were identified because of the pandemic.”
The effects of COVID-19 are likely causing more self-reflection for government contractors, based on their survey responses from earlier this year, she said.
“Organizations were not necessarily prepared for what was going to be required of them in the year of COVID-19,” Champigny said. “Yes, in normal times they are often just trying to keep things running and the lights on. We haven’t really been thinking about the ways people work, and now we have to think about what the future holds.”
The lessons learned from the study and the pandemic will be useful for the long term, Champigny said. “This is not the last time that there’s a crisis that forces us to rethink the way that we work.”