Glass only half full on a range of issues from political uncertainty to cybersecurity.
A new CohnReznick poll of government contractors uncovered guarded optimism about the current procurement environment. However, concern over Congress’ inability to get things done efficiently and increased cybersecurity threats is causing some to lose sleep at night.
“Some government contractors are experiencing an uptick in revenue, but organic growth continues to create a challenge, even though there are positive economic indicators such as a thriving stock market and low unemployment,” said Kristen Soles, leader of CohnReznick’s Government Contracting Industry practice. “Unpredictability, such as political instability in D.C., has most contractors wondering if a U.S economy on the upswing will translate into consistent revenue growth.”
Despite uncertainty, nearly 73% of the 180 respondents indicated that they were “cautiously optimistic” or “neutral” when asked to characterize the current business environment for government contractors.
Regarding insomnia-causing issues, contractors noted “Congress’ inability to get things done”
(32%), “increasing competition for contracts” (29%), and “operational efficiency” (28%) as the top three concerns, with “cybersecurity” (19%) and “federal government shutdowns” (10%) being of a slightly lesser concern.
When asked specifically about financial challenges, contractors said “organic growth” (37%) and “uncertain federal spending” (30%) topped the list. “Cashflow,” and “Increasing EBITDA” also appear on the financial challenges radar. Conversely, fallout from the Tax Cuts & Jobs Act is not a front-burner financial issue. Nearly two-thirds predict that tax reform will have either a small impact (51%) or no impact at all (11%).
“With the changing regulatory environment and the ongoing threat of government shutdowns, contractors are faced with many obstacles to growth,” said Soles. “Therefore, many of these results were not surprising to our government contracting team. However, based on our 2017 GAUGE Report Survey, we were expecting the new tax legislation to have more of an impact on contractors.”
Soles said that the questions conducted during this poll also will be found in the CohnReznick Government Contracting Industry practice’s annual GAUGE Report Survey, which is open for government contracting professionals to respond to by April 23.
The poll results reported here were gathered during a recent CohnReznick webinar for government contractors.
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