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GovCon Expert Kim Koster: The Challenges Keeping GovCon Execs Up at Night (And How to Overcome Them)

By Kim Koster, VP of Industry Marketing at Unanet 

Unanet and CohnReznick recently released the seventh annual GAUGE Report, a report that surveys top government contracting (GovCon) executives to identify industry trends and benchmarks.  

The 2023 GAUGE Report (which you can download for free), found that while GovCon executives are more optimistic about business than they were in 2022, they also see plenty of opportunities for improvement when it comes to managing and promoting growth.  

There is a good reason for this outlook. The report indicates that when it comes to growing their businesses, companies with mature processes and an ability to embrace technology have a decided advantage over companies with neither. 

That leads to two questions: what challenges are top GovCons facing, and what differentiates the ones that are able to overcome these challenges from the ones that aren’t?  

Optimism Tempered by Growth Challenges 

Just how strong is the sense of optimism across the GovCon world? Based on the report’s findings, a combined 72 percent of respondents are either very or cautiously optimistic about the current business environment, an uptick of 4 percent from last year. 

The report also shows that GovCons face a number of growth-related challenges, the most formidable of which is identifying new revenue sources. An overwhelming 61 percent of respondents cite the identification of new revenue resources as their biggest financial challenge, followed by achieving organic growth from existing sources. 

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The GAUGE Report makes it clear that for GovCons to grow in 2023 and beyond, accurate forecasting and mature capture processes are essential. However, many companies have significant work to do in these areas, particularly small and medium-sized companies. 

“What we also found from the GAUGE Report,” said Jonathan Boswell, Unanet Senior Product Marketing Director, “is that the opposite is also true. In contrast, companies who are already leveraging technology to build accurate forecasts and maintain formal capture processes enjoy a distinct competitive advantage.”  

Concerns and Common Approaches to Growth Among GovCons  

Growth is certainly on the mind of GovCon executives in 2023. Obtaining and winning new contracts is their leading concern by a wide margin, with 77 percent of executives citing it as their most concerning issue.  

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How are GovCons going about finding these new contracts? By a wide margin, respondents claim leveraging personal relationships (82 percent) and market intel tools (62 percent) are their top avenues for finding new opportunities.  

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The GAUGE Report also notes that relative to larger companies, SMB GovCons are likely to use virtual events and conferences – and less likely to use public notices – to discover new opportunities.  

Larger companies also report pursuing far more opportunities than their smaller GovCon counterparts, highlighting how important it is to have customer relationship management (CRM) software to help efficiently manage opportunities every step of the way. 

Forecast Accuracy is a Competitive Differentiator 

The 2023 GAUGE report stresses the importance of accurate forecasting to GovCon companies while noting some interesting trends in this area. 

“Forecasting can have a profoundly positive impact on GovCon companies,” said Boswell. “And as important as forecasting is to the success of a company, the GAUGE Report also makes it clear that most have room to improve their forecasting game.”  

Perhaps nowhere is this more apparent than with pipeline forecasting. While respondents said a pipeline forecast is of “above average” importance, most do not believe their company’s forecasts are providing them with accurate information.  

According to the GAUGE report, less than one-fifth of respondents believe their forecasting to be very accurate, while almost one-quarter of respondents think their own pipeline forecasts are not very accurate or highly inaccurate. 

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This finding should concern all government contractors. A firm’s pipeline forecast informs many of its other forecasts, including the firm’s cash flow, indirect rates, and labor forecasts. If their pipeline forecast is off, these other forecasts are likely to be wrong as well. 

What’s driving inaccurate forecasts in the GovCon industry, and what can companies do to improve? The report points to two likely culprits: immature forecasting policies and the continued use of spreadsheets instead of purpose-built forecasting tools.  

Many GovCons Lack Even Basic Forecasting Policies 

This year’s GAUGE report reveals dramatic differences among GovCon companies when it comes to policies governing forecasts. Only 21 percent of respondents said their firm have strict forecasting policies. Even more concerning, nearly half (47 percent) report their firm has no forecasting policies at all. 

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​Having even a basic policy on forecasting can be a huge competitive differentiator for small and medium-sized government contractors, along with adopting better forecasting tools. 

Better Forecasting Tools Yield Better Forecast Accuracy 

The GAUGE Report finds that many government contractors continue to rely on spreadsheets and siloed information to store their opportunity data. This limits opportunities for visibility and collaboration across the firm’s teams and executives, resulting in pipeline forecasts based on potentially incomplete or out-of-date information.  

This suggests there is a real opportunity for companies to use purpose-built technology to gain a competitive edge over their peers. 

For example, an opportunity pipeline tool can be indispensable for improving forecast accuracy. This tool can help decision-makers clearly understand revenue velocity and resource needs for the future, providing a comprehensive visualization of opportunities the firm is pursuing. A high level of visibility allows companies to manage their pipeline and adjust forecasts as opportunities move through the capture process. 

Such a tool can be immensely helpful for small and medium-sized companies, who are nearly four times more likely to have inaccurate pipeline forecasts than their larger competitors. 

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Formalizing the Capture Process 

Just as mature forecasting policies can help a firm improve the accuracy of its pipeline forecasts, a formal capture process can improve a firm’s chance of actually converting its pipeline opportunities into new business.  

According to the GAUGE Report, 65 percent of companies overall have a formalized capture/gate process in place for federal proposals. That share is just 46 percent among smaller companies with annual revenue under $10 million. 

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Companies that do have a formalized capture process in place give themselves a decided advantage over those that don’t when it comes to pursuing opportunities that best fit the firm’s capabilities, expertise and performance history. 

What GovCons Can Do to Grow Their Business 

The 2023 GAUGE report shows that to successfully grow their business, GovCons should invest in tools and processes to develop a clearer picture of their pipeline and improve their ability to capture the right business for their companies.  

This is especially true for small and medium GovCons. Leveraging technology and seeking expert guidance can make a critical difference in their ability to compete and win.  

About the GAUGE Report 

The GAUGE Report is an annual industry roadmap of benchmarks and trends designed for GovCon companies and executives. Based on research conducted by Unanet and CohnReznick LLP, it provides a comprehensive analysis of the common threads among successful GovCon companies. Download the 2023 GAUGE Report – for free – right here.   

About Unanet 
Unanet is a leading provider of project-based ERP and CRM solutions purpose-built for government contractors, architecture, engineering, construction, and professional services. More than 3,700 project-driven organizations depend on Unanet to turn their information into actionable insights, drive better decision-making, maintain regulatory compliance, and accelerate business growth. All backed by a people-centered team invested in the success of your projects, people, and financials. For more information, visit www.unanet.com. 

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