Government contractors face a multitude of challenges in their battles to win business and remain profitable. Budget reductions, fierce competition, and demanding contract benchmarks weighed heavily on net income in recent years. Given these uncontrollable factors, contractors with a vision strive to master the areas that can be influenced, but it’s much easier said than done.
Smaller and mid-sized contractors are often heavily impacted; they feel pressure to work for smaller margins, focus on risky LPTA (lowest-price technically acceptable) work, or even do add-on work without compensation. New competition appears constantly, as new entrants in the market typically start small. Smaller contractors may have overstretched staff who struggle to handle forecasting, bids, and payroll while fulfilling Statements of Work. Their smaller reserves leave no margin of error in handling cash flow.
Performance management—geared to your business—is a vital part of this approach. Precise planning, forecasting, reliable data, consistent budgeting, and accurate persistent monitoring—supported by highly flexible reporting and analysis—are essential elements of managing operations and contracts efficiently thereby increasing profitability.