Government contracting remains recession-proof
In spite of the private sector’s fiscal struggles in 2009, government contractors did fairly well. Grant Thornton LLP’s 15th Annual Government Contractor Survey found that half of the nation’s government contractors reported increased revenues from federal government contracts, while only 20 percent reported a decrease. Grant Thornton is based in Chicago.
“The revenue trends experienced by surveyed companies illustrate the conventional wisdom that government spending never experiences a recession,” said Kerry Hall, Grant Thornton LLP’s Government Contractor practice leader. “While the commercial sector of the economy has been suffering from major business disruption, financial losses and employee cutbacks, government contracting remains a growth industry.”
The survey reflects responses from more than 100 companies. Survey questionnaires were distributed in early 2009, and responses were received by July 2009. Financial and business statistics presented in the survey represent information related to fiscal years ending in 2008 or early 2009. One of the goals of the survey is to offer information that assists government contractors in preparing for the future of their businesses.
Survey respondents reported fairly modest profits before interest and taxes. Forty-five percent of the contractors surveyed reportedly had either no profit or profit rates between 1 percent and 5 percent of revenue in the 2009 survey, compared with 37 percent in 2008.
The contractors were asked how much revenue they expected to receive from federal stimulus spending. Just 4 percent of the surveyed companies said that they expect to see a significant revenue increase from stimulus spending — the majority of the companies (63 percent) said that they do not expect any significant revenue impact from the federal government’s stimulus program.
For more information on the survey, visit http://www.grantthornton.com/govcon