Contracts Market

To understand the potential for government contracts in the US, one has to have an idea of gross government spending in a fiscal year. The total proposed US federal budget for the fiscal year 2022 is expected to be $6.01 trillion in spending and raise $4.1 trillion in revenue. Of that figure, 66% of the amount is mandatory ie compulsory on essential services provided by the government e.g. government wages, Medicaid. The balancing 1/3 is discretionary which is approximately $2 trillion. A lot of this figure is used by the government to purchase goods and services from registered vendors.

Contracts awarded by the government are allocated through local and state budgets, also the federal market.

The local and state contracts are awarded to vendor businesses which are registered to provide them the necessary services. Whilst administrating the affairs of the state, many of the contracts are at local and state level. The local and state budgets are dependent on the local activity and popularity.

The US federal budget is the largest buyer of goods and services in the world. In the fiscal year ending 2021, the federal budget amounted to about $629 billion. This was awarded in goods and services to registered vendors through the Systems For Awards Management (SAM).

There were approximately 1.24 million vendors registered for government contracting in SAM during the fiscal year to 2021. Of this number, only 27% of them were active. Of the functioning active vendors:

20% – Bid for More Than Two Contracts

40% – Bid for only Two Contracts

60% – Bid for Only One Contracts

Provided a vendor meets all relevant registration criteria, they have a good chance of winning federal contracts. 23% of the federal business market for contractors is allocated to small businesses. There are also other criteria the government uses to assist businesses with opportunities called set asides. Once qualifying businesses are eligible for set asides, the government allocates percentages of the budget to eligible vendors. The main set asides and their percentages are as follows:

Type                                      Percentage %

Women Businesses                         5

Veteran Disabled                             3

Hub Zone                                          3

8A                                                       5

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