Government Spending and Opportunity Outlook for GovCons in FY23

As we head into 2023, uncertainty abounds for our industry. Where and how much will the government be spending, who will get elected, and what new executive orders can we expect? Although we all wish we had some insight, nobody knows with certainty. Nonetheless, we’ll highlight a few insightful trends and what this all means for GovCons.

KME.digital is a B2G digital marketing agency in Washington, DC. We help our GovCon clients establish a solid digital presence and market their services efficiently and effectively. Our knowledge of the continually-changing B2G landscape allows us to offer a unique marketing perspective and to design responsive solutions. For more information on how we can market B2G services, contact us online or at (703) 585-3321.

Below, we discuss government spending trends in FY 22 and what that means for GovCons in FY 23:

Government Spending Trends in FY 22

Some improvements in budgeting appear across the board in government appropriations for FY 2023 compared to FY 22. The Biden Administration released its full FY 2023 budget with a base discretionary funding request of $1.582T, 7.4% more than in FY 2022. Spending continues to be somewhat unconstrained by either party, despite the most aggressive tightening cycle in decades and a looming recession.

Also, both wage inflation and the scarcity of qualified, certified, and cleared talent remain onerous issues that will follow us into the new year. Employers across the country find themselves increasing pay wages and projecting future salary jumps into their current budgets. All the while, they’re weathering a talent-shortage storm, inflationary pressure, and supply chain impacts.

Moreover, there’s some slowness in new programs and contracts, owing somewhat to a lack of personnel in the procurement and acquisition shops. Essentially, GSA can’t quantify the precise amount of supplies/services the government would need during that specific contract period. This situation favors more task orders on existing IDIQs and programs, simplifying contract processes and speeding up service delivery.

Opportunity Outlook for GovCons in FY 23

In response to this ambiguity, GovCons must work hard with their government procurement and program customers to accept and incorporate price realism into RFQs and program planning. They must also be crystal clear and consistent with return-to-office strategies, ensuring their office occupancy projections are accurate amid the post-pandemic prevalence of remote and hybrid work as well as labor shortages.

Overall inflation and continued supply chain issues are increasing financial and delivery risks for GovCons on programs. Thus, risk mitigation must not only be baked into BD/capture planning and proposals but also into program and asset management. In other words, GovCons likely need to rearrange their current and future contract portfolios.

Smaller and mid-sized GovCons must market and expand differently than larger companies, beyond simple differentiation and generalized, horizontal capabilities—including AI/ML, cybersecurity, agile engineering, and autonomics. Moving to more focused, mission-targeted, or customer-specific value propositions may benefit them.

In other words, more modest GovCons should drop riskier contracts and choose a niche that aligns with their core competencies and anticipated government appropriations. Doing so will give them a greater ability to compete with larger contractors, which are anchored by slow decision-making, lack of differentiation, and costly commercial real estate.

This more targeted sales and marketing challenge entails more targeted messaging, advertising, and capability-description assets as well as greater participation and exposure within trusted communities and spheres of influence. With the help of a digital marketing agency with unique expertise in GovCon/B2G sales, BD, and capture-related marketing communications, GovCons can align their marketing with their niche offerings and relevant government spending and procurement cycles. 

Digital Marketing for GovCons in Washington, DC

KME.digital is a B2G digital marketing agency in Washington, DC. Although the future is always uncertain, we’re continually scanning and assessing the state of the government spending markets. Doing so helps us refine our clients’ messaging and approach to growth and pursuit-lifecycle marketing. With our unique experience and knowledge of the B2G business segment, we can provide tailored digital marketing services for our GovCon clients. For a full digital marketing audit, contact us online or at (703) 585-3321.

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