Make 2025 Your Federal Contracts Breakout Year

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Posted In: Articles, Blog, Government Marketing, Posts by Gloria

By Gloria Larkin

Seven Considerations in Growing an Effective Federal Contracting Pipeline in 2025

Every business with a federal contracts segment faces similar pressures in determining effective growth strategies. It is simplified to state growth goals only by gross revenue; however, one must start somewhere. If the goal for 2025 is $100M in new business, or $10M or $1M, here are seven critical factors to consider to plan for 2025 federal contracts pipeline growth goals.  

Revenue growth

While a dollar growth goal is a must-have data point, to achieve the goal, one must calculate several factors including past win rates and the inevitable issues beyond your control. Today the frustrating “issues beyond your control” have a powerful impact, especially with a new administration now in control. While a contractor with a 25% win rate may have had success in the past with a straight-forward 4x multiplier (to reach $100M, $400M in pipeline opportunities were needed,) now with the uncertainty of stable government funding, agency budgets as well as even the existence of entire agencies, one may need to plan for a 10X or even larger opportunities pipeline with built-in pivotability when continuing resolutions, budget cuts or expansions, and agency cut-backs or actual closures occur.  

“Organic revenue growth” most often refers to a company’s revenue increase achieved through internal efforts like improving existing products, expanding customer base within the current market, and operational efficiencies, while “accelerated revenue growth” signifies a rapid increase in revenue often achieved through external strategies like acquisitions, aggressive marketing campaigns, or entering new markets quickly, essentially aiming for faster growth than organic methods allow.

No matter if the plan is either organic or accelerated growth, building an effective, achievable growth goal also needs to take the following additional factors into consideration as well.  

Diversify customers

Many contractors have enjoyed growth within a single federal agency because of familiarity, relationships, expertise, and preferred contract vehicles. However, pursuing opportunities only within current clients can be a very risky strategy with the unknowns of cutting budgets, defunding agencies, and agency closures looming. Diversifying into other agencies, departments or offices can mitigate those risks, but the inherent costs to tackle new targets and the time needed to build trusted relationships must also be taken into consideration.

The key to successful client diversification is to identify and target new market segments with existing, proven tailored solutions, while leveraging your existing core competencies and past performance to expand your product or service offerings, thereby mitigating risk and not relying solely on one customer federal agency; this allows for more stable revenue streams and adaptability to market changes.

Broaden geographic footprint

The federal government market’s inherent geographic preference is reinforced by the regions-type or a command structure such as in GSA and USACE, or VISNs in the VA, as general examples. And it is human nature to want to work with people who are located nearby, even in the age of remote work.

There are costs to consider in developing business outside of the existing footprint to include marketing, travel, event attendance, capability briefings, matchmaking, and orals presentations during the bidding process, not to mention lost opportunities when traveling and the additional cost of performance when awarded a contract in a new location.  

However, one way to mitigate these extra costs is by developing a business development strategy to leverage existing relationships with decision-makers who have moved on to other assignments and remember and value the contractors they were used to working with before their move.

Prime, subcontractor or teaming position

For large and small businesses, developing flexibility use all three positions to serve as a prime, a subcontractor and teaming partner will keep the most growth options open in 2025 in this uncertain market.  However, for those companies who want to make a conscious shift into the prime contractor position, a concerted strategic effort to proactively market as a prime before the RFP is written, with the capacity and funding to perform, the appropriate past performance, and strong differentiators all featured during pre-RFP outreach and capability briefings are basic requirements for success.

Socio-economic strategies

The fact that small businesses recently won over $178 Billion in federal prime contracts highlights the sole-source and set-aside results for those with 8a, WOSB, SDVOSB, VOSB, and HUBZone socio-economic certifications. Those certified companies have a wide-open market to achieve accelerated growth within these set-asides, and if one knows how to leverage the sole-source ability this can further reduce BD costs and increase profitability.

However, this set-aside world does not shut out small businesses without those certifications or large businesses, for that matter. If one considers subcontracting, teaming, joint ventures and mentor-protégé programs, all businesses may see growth with the set-aside and sole-source strategies.

Add new services or products

Pipeline and business growth can also be fueled by increasing the range of services and products offered to federal customers. For many companies, these may be services or products that are currently offered, but the federal customer is unaware of them. Or there may be modifications to existing offerings that can become a “new” product or service. Of course, if one has also developed new offerings, it is imperative to proactively market them to the existing and prospective customers.

Contract vehicles

Unique to the federal government are the Best-in-Class contract vehicles like GSA Schedules, SEWP, OASIS, etc. A “best in class contract vehicle” refers to a federal government-wide contract designated by the Office of Management and Budget (OMB) as a preferred solution, signifying that it meets rigorous criteria and represents the highest performing option within its category, allowing multiple agencies to leverage the government’s collective buying power and access pre-vetted contractors, high-quality services or goods. The benefit if one is a prime contract holder of one or more of these vehicles is that the competition is limited for the task orders. All is not lost if one is not the contract holder as there is always the option of being a subcontractor or teaming partner if one can prove strong differentiators, salient past performance or appropriate relationships.  

8th Bonus: Acquisition

Acquisition activity involving government contractors has increased substantially in recent years with defense and space leading the way. A combination of factors has led to this dramatic growth, including the market adjustment to changing government priorities (not to mention a new administration this year), projected decreases in government procurement and many existing business owners reaching retirement age.

This combination of factors has opened the door in all industries including construction, engineering, information technology, bio-med, and professional services to identify potential targets to achieve business growth through acquiring companies who have the current desired customers and past performance, services, products or geographic footprints.

Take Action

The noted seven tactics (and bonus 8th) should all be taken into account as you create and finalize your growth objectives, goals and tactics for federal contracting growth and success in 2025.

For questions about these considerations or expert guidance to set and achieve your goals, reach out to TargetGov experts. We have helped our clients win over $20 Billion in federal contracts. Email fast@targetgov.com, call 410-579-01346 x 325, or visit www.targetgov.com.

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