The Development Source
Is it becoming more difficult to make a living as a proposal professional?
Over the past six months, I have spoken about what I perceive to be a serious slackening in federal proposal development activity with independent contractors who are proposal professionals, with companies that frequently bid on proposals, and with proposal staffing firms. They generally have agreed with me. Now a recent survey by the American Express Open for Government Contracts Program confirms this trend.
According to the survey, there are four major trends in federal proposal development for small businesses:
1. The average number of federal prime contract bids from 2007 to 2012 declined from 19.5 bids over a three-year period to 5.5 bids. This is a whopping 72 percent reduction.
2. The average amount of time and money invested in seeking federal contracts has soared from an average of $86,124 in 2009 to $128,628 in 2012. This is a 49 percent increase over the past three years.
3. The win rate for small businesses in the federal arena – defined as the number of wins divided by the number of bids – on average has increased from 41 percent in 2007-2009 to 54 percent in 2010-2012. Small businesses are bidding less but winning more contracts.
4. The federal government spent approximately $541.8 billion on contracts in Fiscal Year 2008 and $517 billion in Fiscal Year 2012. There has been a slight reduction in the total value of federal contracts over the past four years.
I think these trends are very clear and very unfavorable for many proposal professionals. Let me spell them out:
• The total value of federal contracts will continue declining in the years to come. This is not the result of a desire to reduce the US budget deficit. This is the result of poor leadership in both political parties and political gridlock in the legislative branch caused by the intransigence of the Republican Party.
• For independent contractors, there will be fewer billable hours and lower hourly rates due to a decline in the number of prime contracts bid.
• For proposal professionals working in small business, there will be an increase in the number of hours worked but not a commensurate increase in salaries. If the number of bids is declining and the amount of time and money invested in bids is increasing, than more effort (hours) will go into each bid independent of a person’s salary.
These trends will apply to independent contractors and proposal professionals in small businesses. Proposal professionals working in large businesses with large contracts with federal agencies may be immune from these trends.
I wish I could be more positive, but trends in federal government contracting do not bode well for proposal professionals.
What do you think? Are your prospects as a proposal professional likely to improve or decline over the next few years?