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Government Contractors Industry Profile Excerpt
| SIC Codes: NA NAICS Codes: 23, 54, 56, 61, 62, 92, 511, 515, 516, 517, 5182, 7223, 51912 Page Length: 10-12 Last Quarterly Update: 11/3/2008 View Sample Industry Profile |
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The US federal government each year spends about $500 billion to buy goods and services, including $240 billion for Medicare, $150 billion for defense, and $100 billion for non-defense items. State and local governments spend an additional $150 billion on capital projects, such as highways, bridges, and public buildings. Government contractors include large corporations, like Lockheed Martin and Boeing; academic institutions, like the University of California and California Institute of Technology; healthcare companies, like AmeriSourceBergen; and tens of thousands of smaller companies.
The government contracting industry is highly fragmented, but at the federal level is concentrated at the top:the 100 largest federal contractors receive about 60 percent of procurement dollars.
COMPETITIVE LANDSCAPE
Demand is driven by the expanding needs of governments and the trend toward outsourcing. The profitability of individual contracts depends on efficiency, because most contracts have a fixed price. Large companies have advantages in getting large contracts and may have greater expertise in the contracting process, but small companies can compete successfully for most contracts by offering the lowest price. Although some government contracts can be handled only by large companies, small companies can be very competitive by supplying specialized products or services, or by working as subcontractors. Some programs set funds aside specifically for small businesses.
PRODUCTS, OPERATIONS & TECHNOLOGY
In addition to supplying ordinary administrative goods and services, commercial vendors provide governments with specialized goods and services such as consulting, IT, research, construction, weapons, ...
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