2015
Written by:
Government Contractors Survey Results:
Selling Into the B2G Market
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
TABLE OF
CONTENTS
Introduction
3
Profile of government contractors surveyed
4
Recent and upcoming sales to government agencies
5
Contractors point to market changes in 2015
6
2015 expectations vary based on 2014 results
7
Top themes for growth
8
Specific drivers of growth
9
Drivers of negative expectations
10
Onvia recommendation: Diversify into additional levels of state and
local government
11
Onvia recommendation: Participate in cooperative purchasing
12
Onvia recommendation: Invest in the sales/marketing process
13
Top trends or issues of concern by industry
14
Conclusion
15
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
INTRODUCTION
Introduction:
Identifying trends and expectations to
better understand the government market in 2015
While studying national patterns in contracts and bidding data can offer valuable insights, surveys
of the government contractors themselves can offer a unique perspective into the expectations and
concerns facing these firms.
For this report, the market analysis team at Onvia reached out to the larger universe of SLED (State,
Local and Education) government contractors with a focused survey. These firms were asked to
identify recent and upcoming trends affecting their government sales activity while also considering
some of the most important factors impacting their public sector sales in the coming year.
Primary Goal
The information and insights in this report will
help vendors and contractors to understand the
contracting environment for 2015 and make
better, more objective decisions.
To achieve this, a total of 188 online interviews
were conducted with representatives from
government contracting firms nationwide
across the full range of industries and levels of
government served.
A number of findings emerged from the
research, which we examine in this report.
©2015 Onvia, Inc. All rights reserved.
Top Findings
2014 was a year of mixed results for
contractors, with less than half reporting
sales growth
One of the top reasons cited for growth
is an expansion of public sector sales
and marketing efforts
Aided by an improving economy, 2015
is expected to be a year of broader
opportunity for government contractors
Cooperative purchasing was more
important to larger sales contractors,
but very few firms cited it as a negative
factor
The more levels of state and local
government a firm sells into the higher
the likelihood they will grow
Many firms consider competition to be
the greatest negative factor
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
PROFILE OF GOVERNMENT CONTRACTORS SURVEYED
Profile of government
contractors surveyed
Current
Government Sales
Location of
Company
28%
19%
23%
27%
$1M-$4.9
23%
Central
States
under
$1M
26%
Job Title/Role
27%
$5M-$19M
24%
$20M
or more
Western
States
Business
Development
Northeast
States
22%
27%
21%
14%
Marketing
30%
Executive
Southern
States
Industry
Sales
12%
Technology
(IT,telecom)
35%
Professional
services,
healthcare,
public safety
44%
Infrastructure
(construction
&
maintenance
related)
Other
In terms of government sales
revenue, the survey included a wide
range of firms, with 47% under $5M
and 26% over $20M
Looking at the business locations
of companies, the sample was
representative of national patterns
Those responding held a range of
job titles spanning sales, business
development, executive and
marketing roles
Levels of Government Served
74%
Federal
82%
State
78%
County
76%
City and Town
52%
School
District
The sample was fairly evenly
distributed across industries,
including infrastructure (i.e.
construction and maintenance
related), professional services/
healthcare/public safety and IT/
telecom
27%
Special
District
The typical contractor surveyed sold into state, local and federal agency levels
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4
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
RECENT AND UPCOMING SALES TO GOVERNMENT AGENCIES
Recent and upcoming sales
to government agencies
2014 reported change in sales*
19%
47%
Discussion and takeaway
After a slower year in 2014, government contractors are looking ahead to improved growth
opportunities. During 2014, less than half of
firms reported growth and 19% declined in their
volume of government business.
While some of the optimism surrounding 2015
could be attributed to wishful thinking, evidence
of an improving economy and healthier public
sector can be found across many 3rd party
sources, making a more favorable scenario in
the realm of possibility. It should be noted that
these answers do not consider how fast firms will
grow, only that some level of growth is expected
by the majority.
69% of contractors expect
growth in 2015
34%
Lower
2014 was a mixed year
About the same
Higher
2015 expected change in sales*
Contractors and vendors were more optimistic
as a group as far as whether their sales to public
agencies would grow in the coming year (69%
expect to grow) compared to only 47% that
reported growth during 2014.
“ It seems that the economy is getting better. The government has been
69%
holding off but will turn up the spending for 2015. ”
9%
- Manufacturing firm with $1M-$5M government sales
22%
Lower
About the same
Higher
*Note: The survey, which was administered in early 2015, asked respondents to answer questions about their government
sales for the previous 12 months and the upcoming 12 month period rather than the actual calendar years of 2014 and 2015
©2015 Onvia, Inc. All rights reserved.
5
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
CONTRACTORS POINT TO MARKET CHANGES IN 2015
Contractors point to
market changes in 2015
% of firms with an increase in
sales for the year by
range of government revenue
79%
69%
61%
69%
68%
66%
49%
47%
41%
The impact of smaller sales
contractors changing direction
towards “growth”
With a majority of contractors expecting to
grow in 2015, size of current government sales
volumes doesn’t appear to play a key role in the
direction of the sales trend.
Much of the shift in optimism from 2014 to 2015
appears to be weighted toward the smaller sales
contractors, who generally were not growing in
2014. For example, in the group of contractors
with under $1M in public sector sales, only 24%
grew their government business in 2014 but 61%
expect to grow this year.
2014 was strong…for firms with
larger government sales
Among the group of companies with the largest
public sector revenue (>$20M), more than twothirds were able to grow their government sales
last year. In contrast, only
20-40% of the smaller sales firms reported an
increase.
24%
Under $1M
2015 outlook: opportunities to
grow regardless of size/scale of
government sales
$1M -$4M
$15 - $19M
2014 Reported
$20M
or more
2015 Expected
All Firms
Discussion and takeaway
In slower markets, larger contractors can still
attain growth based on their name recognition
and greater scale. In an expanding market, all
can benefit from growing agency spending.
With 69% expecting an increase, even without
the potentially over-optimistic companies,
the survey results suggest a high likelihood of
growth for the majority of firms.
“ 2015 results will be based on relationships, loyalty and hard work. ”
- Technology firm with over $50M government sales
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
2015 EXPECTATIONS VARY BASED ON 2014 RESULTS
2015 expectations vary
based on 2014 results
Growing before,
still growing now
Half of the “flat” companies
expect to trend higher
Less than half of the “decliners”
expect improvement
It would seem that recent growth is a good
predictor of continued growth in this often
challenging government market. Nearly
all contractors (90%) who reported having
grown in 2014 in government sales looked
forward to a better year in 2015. Only four
percent expected a decrease in sales.
Just over half (51%) of the firms with
flat sales in 2014 expect an increase in
2015, with only four percent expecting an
decrease. 45% expect to continue their
sideways trend with no change in sales
volume for 2015.
A total of 47% of the companies reporting a
decrease for 2014 expected sales growth in
2015. One-third (33%) expected to continue
in the negative direction with another
decline for 2015.
Firms that grew in 2014:
Expected change in 2015
Firms flat in 2014:
Expected change in 2015
Firms declining in 2014:
Expecting change in 2015
6%
51%
33%
20%
90%
4%
4%
47%
45%
Lower
©2015 Onvia, Inc. All rights reserved.
Higher
About
the same
Lower
Higher
About
the same
Lower
Higher
About
the same
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
TOP THEMES FOR GROWTH
Top themes for growth
Examples of reasons
for growth expectation
Improving economy and tax revenues
• “It seems the economy is getting better”
• “I am simply optimistic as to the direction of
the economy”
• “Local government tax revenues are
improving”
More spending in our area of expertise
• “The market in public safety is greatly
expanding”
• “More expenditures for road and bridge
repair”
Higher spending in general by government
agencies
• “Government will be spending more”
• “The government will turn up the spending
for 2015”
We are expanding in our marketing/sales
efforts
• “Greater investment in sales and marketing”
• “Better CRM and sales initiatives for 2015”
• “Extensive new marketing efforts”
• “Heavier marketing”
• “We’re bidding on more contracts”
• “More involvement with states and cities”
©2015 Onvia, Inc. All rights reserved.
The top reasons for positive 2015 sales expectations are listed on the left. We first
selected answers from companies that indicated expected growth in the coming year.
Out of these contractors surveyed with growth
expectations we were able to identify four major
themes or categories, including improvement
in the economy and revenues, higher spending
in general, more spending in a related area, and
winning or expanding in a firm’s sales/marketing
efforts.
Of these four, only the last one has to do with
a factor within the control of the company.
Businesses that choose to invest in their
marketing and sales teams would presumably do
so with an expectation of reward at some level.
The other three themes generally have to
do with macro factors such as economic
improvement, or greater spending or demand in
specialized areas that affect the contractor’s area
of government business.
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
SPECIFIC DRIVERS OF GROWTH
Specific drivers of growth
A total of 10 different potential factors or reasons were tested that could influence the
growth expectations of contractors either positively or negatively.
% Expect positive impact
Contractors were asked to indicate for each
one whether they felt it had a positive impact,
negative impact or no impact on their future
2015 outlook. The chart reports on the
percentage of respondents who thought a given
factor had a positive impact overall.
Allocation of Funding by Agency
Overall Economy
Overall Agency Budgets
Company Budget for Govt. Sales
The highest factors include funding by specific
agencies, overall economy and overall agency
budgets. These can be considered the reasons
that are the most broad-based.
Cooperative Purchasing
Contract Requirements
Local Tax Revenues
Regulations
In the case of company sales budgets, the
37% impact suggests nearly four out of ten
companies are setting their internal funding bar
high enough to help drive additional revenues
for the year. In what looks to be an improving
market in 2015, many firms seem to believe that
higher sales/marketing spend will be well worth
the price.
It may seem surprising that as many as 34%
expect a positive impact for co-op purchasing
but agencies can purchase through local and
statewide cooperative groups as well as through
the national high-volume co-op associations.
Borrowing Cost
Competition
0%
10% 20%
30%
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40%
50%
60%
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
DRIVERS OF NEGATIVE EXPECTATIONS
Drivers of negative expectations
The same 10 factors were also evaluated for whether or not they will cause a negative
impact on company performance over the coming year.
% Expect negative impact
The percentage of companies in the survey that
expect to be negatively impacted by each factor
are reported in the chart. The top factor was
competition, mentioned by 44% of the firms.
Competition
Overall Agency Budgets
Regulations
Besides funding, which shifts with the economy,
regulations and contract requirements are things
that are largely under the control of the public
agencies and can have a significant impact
on the revenues and success of government
contractors; they may also serve as motivators
for re-location or territory decisions.
Allocation of Funding by Agency
Contract Requirements
Overall Economy
Company Budget for Govt. Sales
Local Tax Revenues
At the very bottom of the list of negatives were
borrowing cost and cooperative purchasing.
Even with the prospect of an improving economy
and rising interest rates, the low ranking here for
borrowing cost suggests that the affordability of
capital is generally not considered a barrier to
reaching their business goals.
The fact that cooperative purchasing ranked
dead last as a negative points to the absence
of critics and the broad base of support by
contractors, who are either already competing
for these contracts or who likely are considering
doing so in the near future.
Borrowing Cost
Cooperative Purchasing
0%
10% 20%
30%
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40%
50%
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
ONVIA RECOMMENDATION: DIVERSIFY INTO ADDITIONAL LEVELS OF STATE AND LOCAL GOVERNMENT
Onvia recommendation:
Diversify into additional levels
of state and local government
% of firms with an increase
in sales by number of
SLED agency levels served
Perception of growth opportunities
varies by how much of the SLED
market is targeted
86%
71%
74%
69%
66%
56%
47%
45%
40%
34%
69%
Two or
Less
Three
Four
2014 Reported
Five
Total
Sample
2015 Expected
Method: Each level of state & local (SLED) government a firm
sells into was counted as “1” and summed. The possible five
levels included state, city, county, schools and special districts
©2015 Onvia, Inc. All rights reserved.
As the chart demonstrates, there is a correlation
between number of agency types and how
many firms are expecting to grow in 2015. The
segment serving only two or fewer types of
SLED agencies had statistically fewer companies
expecting to grow (56%) compared to 86% for
contractors serving all five levels.
The highest performing category
sells into every level of state & local
agencies
Firms who intentionally target every possible
level of SLED government are much more likely
to have grown over the last year (>70%) and
are also more likely to expect to grow in 2015
(>80%).
Current government sales doesn’t
explain the pattern
A majority of firms selling into every type
of agency actually had small to mid-tier
government sales volumes. It was clear that
patterns of current sales cannot by themselves
explain this pattern around agency level.
Recommendation
There appears to be a suggested path here for
contractors to take in order to move toward a
higher probability of growth or success. Focusing
on many levels of government seems to be a
winning proposition. Since not all bids or RFPs
will apply to a given vendor or contractor, it
makes sense to watch for suitable opportunities
across as wide a net as possible. With 27% of the
firms that target all five levels having sales of less
than $5 million and another 27% with mid-tier
sales of $5M - $19M, even smaller contractors
are seeing success through diversification across
multiple levels of government.
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
ONVIA RECOMMENDATION: PARTICIPATE IN COOPERATIVE PURCHASING
Onvia recommendation:
Participate in cooperative purchasing
% of firms expecting positive impact
from cooperative purchasing
by government sales
56%
37%
34%
25%
Under $5M
It appears the most successful
firms are engaged in cooperative
purchasing
Nearly 60% of contractors that had at least $20
million in government revenues expect to be
positively impacted by cooperative purchasing,
compared to only one in four of the smallest
revenue firms.
On the low side: barriers to success?
$5M - $19M
$20M or more
Government Sales Revenue
All Firms
Companies with low government sales expected
growth in the year ahead but for the most part
do not expect it to come from cooperative
purchasing. Contractors with larger government
sales have certain understandable advantages in
areas like solid brand awareness and a greater
ability to deliver at a scale appropriate for a
national co-op supplier. Smaller players may
simply not be in a position to imitate them.
Recommendation
That said, there appears to be a path of
opportunity for somewhat lower sales firms to
grow their government business by building
awareness and competing for cooperative
contracts through local or statewide associations
initially to prove capability. The cooperative
movement has been growing faster than the
broader market and winning contractors have a
chance to increase volume while simultaneously
decreasing marketing costs on a per unit basis.
“ Cooperative contracts seem to be getting a larger share. ”
- Technology company with $5M-$9M in government sales
©2015 Onvia, Inc. All rights reserved.
12
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
ONVIA RECOMMENDATION: INVEST IN THE SALES/MARKETING PROCESS
Onvia recommendation:
Invest in the sales/marketing process
% of firms expecting positive impact
from sales/marketing budget
57%
39%
37%
28%
Under $5M
$5M - $19M
$20M or more
All Firms
A total of 57% of contractors with at least $20
million in government revenues expect their
sales and marketing budgets to help drive their
sales in 2015. This is considerably higher than
mid-tier sales firms (39%) or smaller sales firms
(28%).
Recommendation
Discussion
On the lower end, a majority of firms in the
survey expect to grow this year but as with
cooperative purchasing, the vast majority of
these decision-makers are not counting on their
sales budget to make this happen. Contractors
with larger government sales generally have
a greater ability to invest in well-funded and
carefully planned sales and advertising budgets.
With the improving economy and evidence that
some firms are making investments to grow
market share, being highly conservative on sales
budgets may not be wise in the year ahead. Even
though this option to invest may be seen as
riskier for those with smaller government sales
volumes, this remains a key area to consider for
any company’s B2G growth strategy.
Government Sales Revenue
“ We are investing in the government consulting practice of the firm ”
- Real Estate company with at least $50M in government sales
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13
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
TOP TRENDS OR ISSUES OF CONCERN BY INDUSTRY
Top trends or issues of
concern by industry
We asked our panel of contractors to tell us about the issues and trends they see affecting the market. We
examined their comments and pulled out representative examples within three major industry groupings to
provide additional insight into the factors that either assist or constrain businesses over the next 12 months.
TECHNOLOGY
•
•
•
•
•
•
•
•
•
•
•
Improving economy will help tech budgets
Continued need for more effective and
efficient IT systems
Need to upgrade very old legacy systems
More agencies will look for a single software
solution
Increasing emphasis on timely,
knowledgeable support/service as part of
total product value
FedRAMP approval will be important
Bias for larger contractors (smaller
firms squeezed out), such as growth in
cooperative purchasing
IDIQ (indefinite quantity contracts) to grow
Cloud computing, big data, cyber security,
mobile computing, fraud detection
Connection improvements for Internet
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INFRASTRUCTURE
(CONSTRUCTION/ MAINTENANCE RELATED)
•
•
•
•
•
Growing economy will help demand
Regional population growth or relocation
will drive more municipal services
Aging and stressed infrastructure will lead to
more repairs and improvements
Water conservation/quality projects are a
focus; innovative solutions are needed
3-D printing will continue as a trend
PROFESSIONAL SERVICES,
HEALTHCARE, PUBLIC SAFETY
•
•
•
•
•
•
•
Economy, job market and consumer
confidence will drive improvement
Bonding requirements forcing some small
firms out
Threat of consolidation of contracts
Cities or counties banding together to form
local cooperative buying groups
Focus on police reform and allocation of
budgets to public safety
Improvements in law enforcement
technology
Changes in demand for worker training
create more continuing education
opportunities
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Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
CONCLUSION
Conclusion
After a slower year in 2014, government
contractors are looking ahead to improved
growth opportunities, a positive outlook that is
consistent with third party sources reported in
Onvia’s 2015 Trends report calling for improved
tax revenues, budgets and spending in state and
local governments nationwide.
With less than half of firms reporting
government sales growth last year, a full 69%
expect to grow this year. Moreover, the survey
found that this outlook holds true regardless of
government sales volume, industry, location or
job title. But as important as this overall finding
is, a primary goal of the survey was to explore
some of the dynamics affecting the market or
trends that will be shaping things in the year
ahead.
Three key strategies surfaced in conducting the
research that can provide valuable insight for
contractors looking at ways to grow their public
sector sales:
©2015 Onvia, Inc. All rights reserved.
Diversify into additional levels of
state & local government
One of the places where we found real
differences in 2015 growth expectations was
in the number of state and local agency levels
a company serves. Companies focused on a
more diverse list of agency types are more
likely to have been growing and expect growth
in the future. For those firms that have not yet
diversified across agency levels this is a key tool
to consider for increasing sales.
Participate in cooperative purchasing
The 34% who expect a positive impact from
cooperative purchasing is slanted toward
the larger contractors, where a majority are
benefiting. However, this is not an exclusive
market segment for the largest brands as some
are benefiting at a smaller scale (such as through
local or statewide associations). Whether the
situation is a smaller sales company that can
begin participating in local or regional co-ops,
or a large sales firm not yet engaged in national
co-op contracting, this is an important option to
consider for growth.
Invest in the sales/marketing process
Investing in the sales and marketing function was
another important lever for driving government
sales revenues. 37% of all contractors indicated
their sales/marketing budgets would have a
positive impact on their sales for 2015. This
impact was disproportionately skewed toward
larger sales firms, who seemed to have a
greater propensity to make investments in this
area. Smaller sales contractors were generally
planning on growing this year but very few
planned on budgets that would make an impact.
In a growing market characterized by some firms
investing to gain market share, being highly
conservative in sales and marketing budgets
may not make sense.
15
Onvia Government Contractors Survey Results: Selling Into the B2G Market in 2015
ABOUT ONVIA
Onvia specializes in providing business intelligence solutions to vendors to grow their government
business, helping them get ahead of the bid and RFP process. Active vendors in the government market
that need timely, comprehensive and unique insights in their industry vertical, key buyers and competitive
landscape should visit www.onvia.com and request a demo to speak with a Business Development
Manager in their industry. Onvia helps clients strategically grow their government business with solutions
for project intelligence, agency intelligence and vendor intelligence in the public sector.
Disclaimer:
The information contained in this Onvia publication has been obtained from publicly available sources and
survey responses provided by government contractors. Onvia disclaims all warranties as to the accuracy,
completeness or adequacy of such information. The views and opinions expressed in this publication are
those of Onvia’s research organization or contributors and are subject to change.
For More Information
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