As we begin the new year in 2020, companies large and small should keep a watchful eye on Washington and be on the lookout for budget spending priorities.
The United States has increased defense spending over the last four years, but other programs have not received that same support. In this election year, with rising tensions between the United States and Iran, some trends are likely to continue.
Information technology giants will try to win and hold their market positions as the threat in Cybersecurity remains their top priority.
What will it take for a government contractor to survive or thrive in the upcoming years? Well, it really will depends on numerous factors within the company's control and external factors with the federal's elastic forecast.
In the federal contract space, size matters. With the merger of Harris Corporation and L3 Technology, as an example of companies entering domains previously held by the “Big 5” defense contractors, some government contractors are joining forces and consolidating.
But bigger isn’t always better. “Even some of the bigger guys are spinning off companies,” says Matthew Roberson, SC&H Capital Director. (SC&H Capital has developed a process for consistently delivering successful business transactions.) Roberson, citing the Harris-L3 merger, which was able to move past a Justice Department block after Harris agreed to spin off its night-vision technology division.
Sometimes it makes sense to stay in a niche. Some of the larger, more broadly focused contractors are “finding they can’t be as innovative as the smaller companies in certain areas,” he says. “And that can lead bigger companies to evaluate smaller, innovative companies as attractive joint venture acquisition targets.”