recommended reading

In 2017, Expect Fierce Competition for Defense IT Contracts


2017 is shaping up to be an insanely competitive year for IT contracts across the U.S. military branches and Defense Department.

According to research from big data and analytics firm Govini, $210 billion in DOD contracts are set to expire during the 2017 calendar year, and no market will be more competitive than that of IT and services.

Govini projects an average of seven bids per expiring contract in 2017 across IT—up from six bids per contract in 2016—meaning increased competition among vendors competing for an estimated $9 billion in expiring contracts and untold billions more in new ones.

“2017 is going to be a big year for IT contractors and systems integrators,” said Matt Hummer, director of analytics and professional services for Govini. “It’s going to be really competitive, with shorter contracts and higher churn. If you’re not having a unique solution that is fitting in some side of mission IT, you could be in trouble.”

» Get the best federal technology news and ideas delivered right to your inbox. Sign up here.

According to Govini’s analysis, whose data includes the size, importance and competitive outlook of contracts important to each contractor’s portfolio, over half of the top 100 contractors will be more "exposed"—at risk of losing revenue—than they were in 2016. Hummer said that “should be good for government,” meaning more competition ought to increase the government’s bang for its buck.

There’s “no question” 2017’s competitive environment will continue the ongoing trend of mergers and acquisitions in the IT space, Hummer said. Last year, Leidos diversified its business significantly through acquiring Lockheed Martin’s Information Systems & Global Solutions business for $5 billion. As a result, Leidos is positioned reasonably well in 2017, with its federal revenue spread well across various contracts and markets. In other words, losing a contract here or there won't make or break its financial year.

Contrast that with companies such as Accenture, which Govini rates as the eighth most exposed contractor. Accenture will receive more money per contract it holds in 2017 than any other contractor, and therefore can't afford to lose out on many expiring contractors. ManTech, CSRA, SAIC, Deloitte and PricewaterhouseCoopers face similar situations.

Companies will be on the lookout to acquire that which they can’t already deliver, Hummer said.

Govini’s analysis takes into account President-elect Donald Trump’s (sometimes tweeted) positions on well-established initiatives that received continued support under the Obama administration, like the F-35 Joint Strike Fighter and Air Force One programs. Trump has also met with tech executives in an effort to root out government waste. The Trump administration may well give DOD IT contracts the same treatment it gives large weapons systems contacts.

“All cost-cutting measures will be on the table as the Trump administration redirects funds towards priorities that fall far from those pursued by the outgoing administration,” Govini’s analysis states. “Expiring contracts will be seen as low-hanging fruit by the incoming Trump administration looking to begin implementing its agenda immediately. Combined with the backdrop of leveraging federal purchasing power, procurement reform and eliminating fraud, waste and abuse, the defense industrial base faces much uncertainty in 2017.”

Threatwatch Alert

Thousands of cyber attacks occur each day

See the latest threats


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • It’s Time for the Federal Government to Embrace Wireless and Mobility

    The United States has turned a corner on the adoption of mobile phones, tablets and other smart devices, outpacing traditional desktop and laptop sales by a wide margin. This issue brief discusses the state of wireless and mobility in federal government and outlines why now is the time to embrace these technologies in government.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • A New Security Architecture for Federal Networks

    Federal government networks are under constant attack, and the number of those attacks is increasing. This issue brief discusses today's threats and a new model for the future.

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Software-Defined Networking

    So many demands are being placed on federal information technology networks, which must handle vast amounts of data, accommodate voice and video, and cope with a multitude of highly connected devices while keeping government information secure from cyber threats. This issue brief discusses the state of SDN in the federal government and the path forward.

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.


When you download a report, your information may be shared with the underwriters of that document.