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By Wagish Bhartiya
Wagish Bhartiya, chief growth officer for REI Systems, explains that while midsized government contractors feel the squeeze, they still have some advantages they can leverage.
Today’s government IT contractor market is structured to be bi-modal: there are thousands of small firms striving to earn set-aside business, build back-office functions and achieve scale. And there are numerous very large, multi-billion-dollar companies that dominate the headlines.
In between these two groupings are midsized firms. They lack access to set-aside contracts directed to smaller, fledging enterprises. But they are also often unable to pursue large contracts that have prohibitive administrative, contractual or past performance-related requirements. When it comes to government contracting, midsized firms are stuck in “no man’s land.”
On one side, the market is increasingly favorable for small businesses. More and larger IT contracts are set aside for socio-economically disadvantaged businesses. According to research by Bloomberg Government, since fiscal 2014, the number of small businesses has fallen by nearly 33%. However, the total dollars obligated to small businesses has increased dramatically to 26.5% of all fiscal 2022 federal contract dollars, up $8.7 billion from fiscal 2021.
On the other end of the spectrum, billion-dollar enterprises have an imperative from Wall Street or their private equity financial sponsors to continue growing both top-and bottom-lines, and can deploy their large balance sheets to grow through acquisitions.
