Existing deals to dominate US government spending

13 October 2010

13 October 2010 | Angeline Albert

The majority of large-scale US government tendering next year will be to replace or reshape existing projects, rather than for new programmes, according to a report.

Of the top 20 contract opportunities, which amount to $142 billion, 18 are replacements or reconfigurations of existing contracts with incumbent suppliers, according to the annual Top 20 Federal Contract Opportunities report by market research firm Input.

This reflected the current spending restraints in government following the recession, said Kevin Plexico, senior vice-president at Input.

“In this budget environment, there are few brand new programmes. Agencies are leaning toward replacing existing contracts with incumbent contractors, making the competitive environment rather intense for the vendor community.”

Meanwhile, defence procurement is set to make up 80 per cent of US government spend on its top 20 contracts for 2011, the report found.

Major defence projects in the pipeline include the army logistics improvement plan known as Enhanced Army Global Logistics Enterprise (EAGLE), valued at $50 billion.

The report also said that federal agencies are setting aside a separate set of contract awards for small businesses. “The government is clearly trying to increase prime contract opportunities for small businesses, in an effort to increase their engagement,” said Plexico.

But first the government has to make it worthwhile for smaller suppliers to bid for government work, he said.

“The challenge ahead for agencies is to ensure that the work procured under these contracts is distributed in sufficient volume to make it meaningful for those small businesses that significantly invested in the development proposal.”

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