Contractors Report Revenue Losses from Sequestration

Sequestration forced revenue losses on almost two-thirds of contractors in 2013, according to a survey by a consulting firm released Tuesday.

Almost 31 percent of the 220 firms that responded to the survey by Market Connections Inc. and Lohfeld Consulting Group Inc. said their revenue fell by more than 10 percent, while another 30 percent reported declines of nearly 10 percent.

The shrinking government market has caused contractors to “re-architect” by expanding into adjacent markets (45 percent) such as health care, state and local, and international markets. Others are modifying lines of business (35 percent), and putting “greater emphasis on the front-end of the lifecycle to improve capture strategies and increase revenue in 2014,” the survey analysis said. Forty percent said they are expanding into new federal agencies.

“It is clear that sequestration and the government shutdown have had a tremendous impact on the government contracting community,” said Lisa Dezzutti, president and CEO of Market Connections. “Contractors need to think outside the box, leverage their expertise in adjacent markets and focus on business development and capture strategies that will increase win rates.”

(Image via Kutlayev Dmitry/Shutterstock.com)