Government contractors are starting to see the effects of the current budget deficit which will require the Federal government to reduce future spending, thereby increasing competition in the Federal marketplace. Increased price competitiveness has already begun to manifest itself as a result of new entrants to the marketplace and contractors vying for less Federal dollars. In addition, there is also increased focus by the Federal government on compliance and accountability. By now, most contractors have finalized, or are in the process of finalizing, their 2011 budgets.
In addition to looking for ways to reduce costs, contractors should be asking themselves if they are spending their precious dollars in the right places in order to meet the challenges they will encounter as a result of the changes in the marketplace. Below are a few considerations toward aligning your budget to the right business objectives:
- Business development activities are becoming increasingly more important in order to feed your company’s pipeline. Once the company has quantified its bid and proposal budget, it is now time to determine the right opportunities to pursue. It is time to develop a plan which focuses your company in the right places with the right people in order to increase the effectiveness of the money that is to be spent.
- Companies should undertake a review of their indirect rate structure in order to ensure their pricing is as competitive as it could be. Contractors should be aware of the effect of changes in their budgets have on their indirect rates, and ultimately pricing.
- With the increased emphasis on compliance, contractors should assess the financial reporting systems that are in place and develop a plan to remediate any deficiencies before their cognizant agency determines them to be inadequate.