Government Contracting: 5 Strategies to Beat the Budget Crunch
The government plans to cut $2.4 Trillion from the budget over the next 10 years, beginning in the 2012 budget. It is expected that up to $900 Billion in cuts could be included in the 2012 budget. The Defense department could see over $28 Billion in cuts in 2012 with an expected $350 Billion over the next 10 years. Federal agencies and departments are "running scared". Contractors should be too as many current programs either will not exist or may exist in a reduced form in the next budget. The Federal Budget is a large pendulum that swings from one extreme to the other. We have enjoyed almost 10 years now of increased spending that can only be viewed as a boom. Now there is a correction. Sometime in the future the pendulum will swing back, we need to survive in the meantime. Here are 5 strategies that small businesses can use to help mitigate their risk in this uncertain time;
1) Communicate with your customer - You need to stay close with your customer to find out as much as you can about their changing needs. You should be having regular conversations with your CO, your TPOC and other customer contacts to not only tell them about progress on current jobs but to find out more about what is happening in their organization. What priorities are changing, how can you help solve these changing needs with your value proposition.
2) Subcontract with Primes - If you currently are contracting direct with the government and think the contract may change, you should look to team with a large Prime that may need your expertise and help. The Small Business Liaison at these companies is a good place to start to form a relationship.
3) Diversify your government customer base - You may want to look at other agencies that could use your products and services. For instance if you have been supplying IT services to a military base (DoD) you may want to look at how the other agencies like NIH, DOE, etc. might use your services. Don't be afraid to visit these "target" agency websites to find initial contacts and drill down to find the right people to talk to.
4) Diversify your product offering - Currently some of the large DoD primes are adding health care services to their product portfolios. They are doing this to help bolster top line revenue in anticipation of loosing DoD weapons and other related sales.
5) Diversify to commercial markets - If you have been successful in selling to the government, are there commercial markets that you have overlooked in the recent boom? Time to analyze the market and target some more commercial sales.