ANALYST REPORT
POSITIONING FOR 2017:
COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
COMPANIES INCLUDED
AASKI Technology Inc.
Accenture PLC (ACN)
AECOM (ACM)
Aegis Defense Services
Akal Security
Alutiiq Security and Technology
American President Lines
Arrow Electronics (ARW)
Artel, LLC
ASM Research
AT&T Inc. (T)
B.L. Harbert International
BAE Systems
Battelle Memorial Institute
Bechtel
Becton Dickinson (BDX)
Bell-Boeing JPO
Bollinger Shipyards
Booz Allen Hamilton (BAH)
Brighton Marine Health Center
CA Technologies (CA)
CACI International Inc. (CACI)
Caddell Construction Co.
CALIBRE Systems Inc.
Cardinal Health (CAH)
CDW Corp.
Celerian Group Services
CGI Federal Inc. (GIB)
Corrections Corporation of America (CXW)
Covenant Aviation Security
CSRA Inc. (CSRA)
D&S Consultants Inc.
DaVita (DVA)
Day & Zimmermann
DECO Inc.
Dell
Deloitte Consulting LLP
DHA Group, Inc.
Digital Management Inc.
DLH Solutions, Inc.
DLT Solutions
Document Storage Systems, Inc.
Doyon Security Services
DynCorp International Inc.
E3 Federal Solutions
FCN Inc.
FedEx (FDX)
FJC Security Services
G4S Secure Solutions
General Dynamics Corp. (GD)
General Electric Corp. (GE)
GEO Group Inc. (GEO)
GlaxoSmithKline (GSK)
GN Hearing Care Corp.
Harris Corp. (HRS)
Health Net, Inc.
Hewlett-Packard Co. (HPQ)
Highmark
HighPoint Global
Humana Inc. (HUM)
IAP Worldwide Services
Inter-Con Security
International Business Machines Corp. (IBM)
International Development Solutions
Iron Bow
Johnson & Johnson (JNJ)
Jordan Reses Supply Co.
L-3 Communications Holdings Inc. (LLL)
Lawrence Livermore National Laboratory
Leidos (LDOS)
Lockheed Martin Corp. (LMT)
LongView International Technology Solutions, Inc.
Los Alamos National Security, LLC
Maersk
Management and Training Corp.
ManTech International (MANT)
Master Security Co.
Maximus Inc. (MMS)
McKesson Corp. (MCK)
Medtronic (MDT)
Merck & Co. (MRK)
MicroTech
MVM Inc.
NANA Development Corp.
National Government Services
NCI Inc.
Noridian Mutual Insurance Co.
Northrop Grumman Corp. (NOC)
NTT Data Corp.
PacMed Clinics
PAE
Patriot Team
Pernix Group Inc.
Pfizer (PFE)
Phacil, Inc.
Philips (PHG)
Presidio Networked Solutions
Raytheon (RTN)
Rolling Bay, LLC
Rolls-Royce Corp. (RYCEY)
S&K Technologies, Inc.
Sandia National Laboratories
Sanofi (SNY)
Science Applications International Corp. (SAIC)
Security Consultants Group
Serco Inc.
Sierra Nevada Corporation
SIGA Technologies Inc. (SIGA)
Softchoice Corp.
Sonova (SOON)
Sotera Defense Solutions, Inc.
SpaceX
Starkey Hearing Technologies
Textron (TXT)
The Boeing Co. (BA)
The MITRE Corporation
ThunderCat Technology
TRI-S Security (TRIS)
Triple Canopy Inc.
TriWest Healthcare Alliance
UNICOM
Unisys Corp.
United Launch Alliance
United Technologies Corp. (UTC)
UnitedHealth Group (UNH)
URS Corp.
VariQ Corp.
Verizon (VZN)
Westat Inc.
Wisconsin Physicians Service Health Insurance Corp.
AGENCIES INCLUDED
Agency for International Development
Department of Agriculture
Air Force
Army
Coast Guard
Department of Commerce
Department of Defense
Defense Health Agency
Defense Information System Agency
Defense Logistics Agency
Defense-wide Agencies
Department of Education
Department of Energy
General Services Administration
Department of Health and Human Services
Department of Homeland Security
Department of Housing and Urban Development
Department of Interior
Department of Justice
Department of Labor
NASA
Navy
Department of State
Department of the Treasury
Department of Transportation
Department of Veterans Affairs
The findings in this report are derived from the Big Data and Analytics in Govini’s SaaS platform. Govini is designed to
help contractors identify and qualify opportunities, prioritize and target the right agencies, and optimize their ability
to evaluate the competitive landscape.
1
POSITIONING FOR 2017: COMPETITIVE OUTLOOK FOR DEFENSE & CIVILIAN AGENCIES
As the last quarter of the year comes to a close, with its results all but certain, we look to the
beginning of FY17. With a Continuing Resolution looming, it is critical to examine historical trends
to understand how procurement might unfold over the next few months. This Govini analysis
profiles spending behavior for agencies that obligate the largest share of their annual funds in
Q1 after taking stock in how FY16 will conclude.
Overview
The agencies that rush to spend at the end of the fiscal year are distinct from those that start the year
strong. Among DoD agencies, Army and Navy spend a large share of their funds in the Q4, while
Air Force and Defense-wide agencies are big Q1 spenders. Among Civilan agencies, HHS and DOS
spend a large share of funds in Q4, while VA, DOE, Treasury and DOJ lead Q1 spending.
Q1 is when agencies obligate funds for core mission needs, including healthcare for DHA, aircraft
maintenance for Air Force, research labs for DOE, and prisons for DOJ. This contrasts with Q4, when
a surge of spending occurs for IT and professional services as agencies scramble to expend their
remaining funds.
Govini’s database of record shows 79,600 contracts or task orders worth $87.4 billion are set to expire
during Q1 of FY17. Six agencies, including Air Force, Defense-wide, VA, DOE, Treasury and DOJ
account for more than a third of the expiring opportunities.
Army spends most of its Q4 funds on IT networks, communications equipment and supporting
services while Navy procured new aircraft and sustainment services. Top Q4 spending Civilan
agencies, including HHS, DHS, VA and Department of State prioritize IT as it relates to their mission,
which gives system integrators an edge in winning the work.
Exhibit 1:
Q4 share of annual contract obligations will continue to decline from its high of 33.9 percent in FY13 to
around 31 percent in FY16. The trend is due in-part to increased spending in Q1 and Q2.
* Hashed segments represent Govini’s predictive analytics.
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
FY16 Year-end Spending Overview by Agency
Q4 share of annual spending is declining after several years of elevated levels. Greater budget
certainty is one reason for the shift in quarter-over-quarter spending. Nearly 40 percent of all
cabinet-level agencies had a decrease in Q4 share of FY15 spending compared to FY14, and
many are on-track to do so again in FY16.
Both Defense and Civilan agencies are contributing to the softening of the year-end spending
spike. The Department of Justice (DOJ) had the largest decrease, with its Q4 share of FY15
spending declining by 8 percentage points from its FY14 share. Health and Human Services (HHS),
Department of Interior (DOI), Department of Education, Veterans Affairs (VA) and Department
of Homeland Security (DHS) contributed the most among Civilan agencies to the smoothing of
spending across fiscal quarters. Defense-wide agencies, Navy and Army all lowered their share of
annual funds obligated in the final quarter of FY15, while Air Force had no change.
Despite the trend away from Q4 spending, agencies still obligated an average of 31.1 percent
of funds in the final three months of FY15. Army and Navy stand out among Defense agencies
as strong Q4 spenders. HHS, VA, DHS and State Department spending habits merit greater
attention in Q4 compared to other Civilan agencies. Army spending on information technology,
communications equipment and supporting technical services tends to surge in Q4, while
the Navy focuses on aircraft and airframe components and supporting technical services.
Pharmaceuticals, medical equipment and health IT are popular Q4 purchases for HHS and VA.
Security IT and supporting professional services are the priorities for DHS and the Department of
State.
Exhibit 2:
Agencies requiring complex IT networks and integrated systems tend to spend a larger share of funds in
Q4 compared to agencies with more centralized operations and consolidated vendor competition.
2
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Q1 FY17 Outlook
The share of annual Federal spending occurring in Q1 is rising. If Congress and the Administration
provide budget certainty, Q1 will continue to be an increasingly important time for Federal
contractors.
The Federal Government obligated 21.8 percent of its annual funds in Q1 of FY15, a 2.3
percentage point increase from FY14. The jump in Q1 spending is being driven by the
Department of Defense, particularly the Air Force and Defense-wide agencies. These two
agencies allocate the largest share of their annual funds in Q1. Air Force buys aircraft components
and the services to install them while Defense-wide agencies purchase mission-critical services
and products that go towards resupplying the military departments. The Defense Health Agency
(DHA) spends heavily on general healthcare services, Defense Information Systems Agency (DISA)
buys network hardware in bulk and Defense Logistics Agency (DLA) prioritizes maritime freight as
it works to replenish military inventories.
Civilian agencies are also obligating a greater share of funds in Q1. Veterans Affairs (VA),
Department of Energy (DOE), Department of Treasury and Department of Justice (DOJ) rank
the highest among Civilan agencies. VA buys surgical instruments in bulk and Treasury focuses
on software development. DOE disperses funds for its research and development programs,
including contracts for managing Federally Funded Research and Development Centers (FFRDCs).
DOJ obligates funds on service contracts supporting social rehabilitation programs and the IT
used to deliver those services.
Q1 Spending Compared to Average Share of Q1 Spending
Exhibit 3:
Air Force and Defense-wide rank highly among DoD agencies by share of annual funding allocated in
Q1. VA, DOE, Treasury and DOJ stand out among Civilan agencies.
3
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Army SETA Providers Position for Q4 Spend
Among the major military services, Army typically obligates the largest share of its annual funds
in Q4, especially in recent years. Severe budget cuts have prompted the service to decrease its
annual contract obligations by 50 percent to $71.4 billion in FY15 from a peak of $143.3 billion in
FY10, the largest cut of any military service.
As a result of the budget pressure, Q4 share of annual spending surged to a record high of 40.1
percent in FY14 from 34.9 percent in FY10, and is on track to remain elevated in FY16. Although
not yet fully reported, FY16 spending data through the third quarter is well below the historical
average, setting up another surge in Q4 spending for the Army.
Technical Engineering (R425), typically Army’s largest spending category, has 39.2 percent of
its annual spending obligated in Q4. CACI leads capture in the Product Service Code (PSC),
accounting for 10.2 percent of contract obligations between FY11 and FY16. SAIC is the nextlargest vendor with 8.3 percent of the market, followed by Lockheed Martin with 8.1 percent,
ManTech with 7.2 percent, Raytheon with 6.8 percent and Booz Allen Hamilton with 4.9 percent.
Professional Support (R499), the next-largest spending category, is also likely to surge in Q4 of
FY16. L-3 Communications and General Dynamics led capture, with 5.4 percent market share
since FY11 through the first two quarters of FY16. Lockheed Martin, Calibre Systems, CACI,
Serco, DynCorp International, CGI Federal, Booz Allen Hamilton and PAE all compete for and get
awarded professional support contract work.
Army Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Army Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 4:
With contract obligation data tracking well below historical averages, Army’s Q4 spending will surge in
FY16. Technical Engineering and Professional Support will fuel the rise in Q4 spending.
* Hashed segments represent Govini’s predictive analytics.
4
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Defense-wide a Consistent Q1 Spender, Concentrates Healthcare Spending in Q1 and Q2
Next to Air Force, Defense-wide allocates the largest share of its funds in Q1 and it does so
consistently. It spent 25.1 percent of its FY15 funds in Q1; the share has held steady since FY11.
Health Care, particularly TRICARE Managed Care Support is a top priority for DHA. Humana,
Health Net, UnitedHealth and TriWest Healthcare are the top competitors within the spending
category, General Healthcare (Q201). With nearly 75 percent of spending in the first half of the
year, DoD healthcare providers stand ready to compete for the $11 billion allocated annually.
IT and Telecommunications (D399) is another important spending category. Defense-wide
agencies allocate 32.7 percent of their annual contract obligations in the category in Q4. That
share dips to 19.4 percent in Q1. Northrop Grumman, Artel and SAIC are among the top players
in this spending category.
Defense-wide spending on R&D (AD93) is concentrated in the first three quarters of the fiscal
year then trails off in Q4, in which only 15.3 percent of total contract obligations occurred. Boeing,
Lockheed Martin, and Johns Hopkins Applied Physics Laboratory are top players in the Defense
R&D space.
Shipping accounts for a significant portion of Defense-Wide Q1 spending. Transportation Services
(V221) and Maritime Freight (V115) are dominated by FedEx and Maersk, respectively. More than
48 percent of Transportation Services spending is obligated in Q1. In contrast, Maritime Freight
contracts are mostly awarded in Q4, which accounts for 39 percent of total annual spending in the
category.
Defense-wide Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Defense-wide Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 5:
Among Defense-wide’s top Q1 spending categories, health care has held steady throughout the years,
while others notably Defense R&D (AD93) and Maritime Freight (V115) have declined.
* Hashed segments represent Govini’s predictive analytics.
5
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Navy’s Q4 Aircraft Spending to be Captured by Lockheed Martin & Boeing
After Army, Navy spends the greatest share of its annual funds in Q4 among the major military
services. The Navy’s Q4 spending share is remarkably steady from year to year, averaging 30.1
percent between FY11 and FY15.
In recent years, aircraft has accounted for most of Q4 spending. Platform Original Equipment
Manufacturers (OEMs), Lockheed Martin, leads Fixed Wing Aircraft (1510), capturing 59.8 percent
of market spending since the beginning of FY11, mostly from Joint Strike Fighter low-rate initial
production contracts. Boeing captured 24.4 percent of Fixed Wing spending from F/A-18 Hornet
and P-8 Poseidon purchases. As the JSF becomes the predominant line-item in Navy’s procurement
budget, the gap between Lockheed Martin and its competitors in the Fixed Wing market will continue
to widen.
Aircraft sustainment is a slightly different story. Boeing leads capture of Airframe Components (1560)
and Aircraft Components (1680), accounting for 64.1 percent of the combined market since the
beginning of FY11. Elevated operational tempo has raised utilization of the OEM’s electronic warfare
platforms, particularly the EA-18G Growler and P-8 Poseidon. United Technologies Corp. (UTC) leads
capture of spending on Jet Engines & Components (2840) with 56.7 percent of the market since FY11,
followed by General Electric with 33.6 percent and Rolls-Royce with 9 percent of market spending.
Technical Engineering (R425), the most competitive of Navy’s top Q4 spending categories, is related
to sustainment of weapons platforms. L-3 Communications leads capture from services procured
through Seaport-e.
Navy Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Navy Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 6:
Lockheed Martin leads the largest category, Fixed Wing Aircraft (1510) with procurement of the JSF ramping
up. Boeing is well positioned to capture the sustainment tail of its platforms with high utilization.
* Hashed segments represent Govini’s predictive analytics.
6
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Air Force Transitions Focus from Components in Q4 to Maintenance and Support in Q1
Among all Federal agencies, Air Force spends the largest share of its annual funds in Q1. The
agency allocated 25.7 percent of its FY15 funds in Q1, which is slightly above the average for the
previous five years.
Space Launch (V126) is heavily weighted towards Q1, allocating an average of 52.3 percent of
its spending in the category in Q1. ULA accounts for nearly all of the market, but will face stiff
competition down the road as SpaceX emerges as a viable player.
Spending allocated towards Fixed Wing Aircraft (1510) is complemented by similar quarterly
distributions of Aircraft Maintenance (J015), Aircraft Components (1680) contract obligations.
Within each category, the Air Force obligates about one-third of its total annual spending in Q1.
In Q1 FY17, Lockheed Martin is due to receive further funding for C-5 Galaxy Reliability
Enhancement and Re-Engineering, with the program poised to sunset in the next few years.
Lockheed Martin has several contracts due to close out in Q1 FY17, including FMS sales of F-15
fighters and retrofits to Oman and Egypt.
Aircraft Maintenance surges in Q1 following a prioritization of purchases of Aircraft Components
in Q4. The Air Force buys these two in sequence - doing the bulk of Components purchases in Q4
and then allocating Maintenance awards in Q1. L-3 Communications, Lockheed Martin, Boeing,
and Sierra Nevada are the leading suppliers of Aircraft Components to the Air Force. Northrop
Grumman, L-3 Communications and Boeing are the leading providers of Aircraft Maintenance
services.
Air Force Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Air Force Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 7:
Aside from scheduled procurement of new aircraft, Air Force prioritizes aircraft modernization and
maintenance in Q1; Northrop, L-3 Communications and Boeing are the leading providers.
* Hashed segments represent Govini’s predictive analytics.
7
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
In Q1 FY17, L-3 is poised to win more work for avionics upgrades to the EC-130H Compass Call
electronic attack aircraft.
Most of the Air Force’s spending on Professional Support (R499) is in Q1 and Q2. More than 38
percent of its contract obligations for that spending category are executed in Q1. The leading
providers of Professional Services are Boeing, Northrop Grumman and Raytheon.
HHS’s Health IT Modernization Fuels Its Q4 Spending Surge
Among cabinet-level agencies, HHS spends the third-largest share of its annual funds in Q4,
averaging 45.3 percent between FY11 and FY15. State and DOI are the only other agencies to spend
a larger share of their annual funds in Q4.
When examining HHS’s top ten product and service categories, five stand out as routinely surging
in the final quarter of the fiscal year. Professional Support (R499) has proved particularly important
to HHS in Q4. More than 53 percent of the category’s annual spending occurred in the final quarter
between FY11 and FY15. General Dynamics is the dominant vendor, capturing 17.4 percent of the
market since the beginning of FY11. Serco is a distant second with 6.7 percent of the market.
Aside from HHS’s largest category, Drugs & Biologicals (6505) dominated by the large pharmaceutical
companies, IT & Telecommunications (D399) is a worthy focus area in Q4. On average, 44.3 percent
of the category’s work was obligated in Q4. Hewlett-Packard is the leader, capturing 12.3 percent of
the market since FY11, followed closely by Lockheed Martin with 11.8 percent, CSRA with 8 percent,
Northrop Grumman with 7.7 percent and General Dynamics with 6.2 percent of the overall market.
The Centers for Medicare and Medicaid Services’ $4 billion Enterprise System Development (ESD)
contract is the primary method of procuring the work. CSRA wins the most IT & Telecommunications
work through the vehicle, followed by General Dynamics and CGI Federal.
Department of Health and Human Services Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of Health and Human Services Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 8:
Aside from the largest spending category, Drugs & Biologicals dominated by the top pharmaceutical
companies, IT & Telecommunications and supporting services drive HHS Q4 spending.
* Hashed segments represent Govini’s predictive analytics.
8
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
DOE’s National Labs Create Opportunity for U.S. Academic Ecosystem in Q1
DOE allocates a large share of its annual funding in Q1 and very little in Q4. This is due to the
agency’s role in overseeing 17 national laboratories scattered throughout the country that
underpin the scientific and technological capabilities of the U.S. Operating these labs requires that
funds for facility maintenance, program research and even new construction be obligated at the
beginning of the year.
DOE spending on its network of national labs sparks opportunity for those across the entire
academic ecosystem, ranging from service companies that directly support research facilities
to those that supply equipment and even partner universities, commercial labs and advanced
technology companies.
The largest category among those with the greatest share of spending in Q1 is R&D Facility
Operation (M181). These funds are captured by a consortium of universities and contractors
that make up the majority of prime awardees. Lockheed Martin, the largest R&D facility manager
by revenue capture, is preparing for a re-compete of its contract to manage Sandia, which is
expected to be awarded by April 2017.
Lawrence Livermore National Security captures the nearly all of DOE’s Basic Research &
Development (AZ11) spending and Battelle Memorial’s Pacific Northwest Laboratory contract is
used to procure Science & Technology Basic Research (AJ31). AECOM is doing waste isolation
work in Carlsbad, New Mexico.
Department of Energy Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of Energy Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 9:
DOE’s support of 17 national labs initiates opportunities for contractors supporting the U.S. academic
ecosystem, ranging from universities and commercial labs to partnering technology companies.
* Hashed segments represent Govini’s predictive analytics.
9
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Veterans Affairs Spends Q4 Funds on Health IT & Support Services
Veterans Affairs is not known for contracting a large share of its annual funds in Q4. The agency ranks
tenth among the 16 cabinet-level agencies by Q4 share of annual spending, with an average of 34
percent between FY11 and FY15. However, the agency does depend on products and services that
typically surge in Q4, notably IT & Telecommunications (D399) and Professional Support (R499).
IT & Telecommunications, the larger of the two spending categories by dollar value, is a highly
competitive market at VA, and is a primary market related to overall Federal health IT modernization.
Lockheed Martin leads capture, with 14.3 percent of market spending since the beginning of FY11.
MicroTech, a Service-Disabled Veteran-Owned Small Business (SDVOSB), is the second largest with
10.9 percent of the market, followed by Booz Allen Hamilton with 6.8 percent, Hewlett-Packard with
5.3 percent and CSRA with 5.1 percent.
Professional Support, a much smaller market by dollar value, has demonstrated its ability to surge
during the final quarter of the fiscal year. Q4 spending for the category averaged 52.3 percent
between FY11 and FY15. Half of the work is procured through contract vehicles, of which MOBIS, T4,
Schedule 70 and Schedule 520 (FABS) account for 72.6 percent of overall contract vehicle obligations
for the category since FY11.
Veterans Affairs Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Veterans Affairs Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 10:
Drugs & Biologicals (6505) and Medical Instruments (6515) dominate VA spending, but IT &
Telecommunications (D399) and Professional Support (R499) present opportunity during the year-end.
* Hashed segments represent Govini’s predictive analytics.
10
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Veterans Affairs Buys Surgical Instruments, IT and Medical Services in Bulk in Q1
The Department of Veterans Affairs allocates most of its funding in the beginning and the end
of the year, with the beginning of the year growing more prominent. The agency allocated 26.1
percent of its FY15 funds in Q1. Q1 share of spending is 2.3 percentage points higher than the
average between FY11 and FY15.
Spending categories that have a large share of spending in Q1 include Surgical Instruments
(6515), IT & Telecommunications (D399) and Medical Services (Q999). The three categories have
accounted for an average of 20.5 percent of Q1 spending since FY11.
The largest category, Surgical Instruments, is competitive with several large-to-medium-sized
vendors competing for market share. A search of Govini’s database of record shows contracts with
$117.4 million in obligations expiring in Q1 of FY17. A market leader, Medtronic, has the most at
stake with $5.7 million in expiring contracts for pacemakers, surgical implants and clinical supplies.
Top IT & Telecommunications (D399) vendors, including Lockheed Martin, MicroTech, Booz Allen
and CSRA, do not currently hold contracts or task orders that are set to expire over the next
fiscal quarter. However, mid-tier providers do, including Document Storage Systems, Thundercat
Technology and Longview International Technology. Opportunities also exist in the third-largest
spending category, Medical Services (Q999). There are 84 contracts or task orders worth $138.5
million expiring over the next fiscal quarter. DLH Solutions has the most at stake.
Veterans Affairs Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Veterans Affairs Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 11:
Five spending categories account for an average of 20.5 percent of VA’s Q1 spending since FY11 with
Surgical Instruments, IT & Telecommunications and Medical Services driving spending.
* Hashed segments represent Govini’s predictive analytics.
11
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
DHS Prioritizes IT Modernization Over Security Personnel in Q4
Among cabinet-level agencies, the Department of Homeland Security falls in the middle when it
comes to year-end spending. The agency obligated 37.8 percent of its annual funds in Q4 between
FY11 and FY15.
Combat Ships and Landing Vessels (1905) stands out among the spending categories that surge in
the final quarter of the year. Q4 share of annual spending in the category averaged 83.2 percent
between FY11 and FY15. Nearly all of the funds are captured by Bollinger Shipyards, a Louisianabased shipbuilder that specializes in Coast Guard patrol boats.
DHS spending on Program Management (R408), Professional Support (R499) and IT &
Telecommunications also tends to surge in Q4, while its largest category, security personnel, does
not. Program Management surges the most out of all three categories; Q4 share of annual spending
averaged 47.9 percent between FY11 and FY15. Booz Allen Hamilton led capture with 9.6 percent of
total spending, followed by Deloitte with 8.8 percent.
Q4 share of spending on Professional Support averaged 41.5 percent between FY11 and FY15.
During that time, two vendors, Lockheed Martin and CSRA, together captured 40 percent of
total contract obligations. The two systems integrators are also among leading providers of IT &
Telecommunications services to DHS, CSRA in particular with its lead role in managing the Stennis
Data Center. CRSA wins most of its work through Eagle task orders. The other big players in the
market, Hewlett-Packard and IBM, support DHS data centers and IT modernization efforts. HewlettPackard wins its work through Eagle task orders and IBM leverages a combination of multiple-award
contracts and Schedule 70.
Department of Homeland Security Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of Homeland Security Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 12:
DHS prioritizes IT & Telecommunications (D399), Professional Support (R499) and Program
Management (R408) in Q4 over its largest category, Guard/Housekeeping (S206).
* Hashed segments represent Govini’s predictive analytics.
12
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
DOJ Strikes Balance Between Personnel and Technology Spending in Q1
DOJ is a big Q1 spender for reasons similar to the DOE’s. The agency oversees a large number
of facilities, personnel, and integrated IT networks scattered throughout the country. However,
instead of a focus on research and development, DOJ’s mission requires enforcing laws, and
incarcerating and rehabilitating those that break them.
The agency’s responsibilities call for striking a balance in spending on professional services and
technology. These two categories were prioritized in Q1 of 2016 and will again be the focus in
2017.
Spending in the largest category, Social Rehabilitation (G004), oscillates from year-to-year. With
2017 expected to be an up year, well-known mental health treatment companies such as GEO
Group, Management & Training Corp. and Corrections Corp. of America are well positioned. GEO
Group, however, has contracts valued at $27.5 million that are set to expire this fiscal quarter.
Many of the same companies also compete for Professional Support (R499) work. Top competitors
Rolling Bay, Booz Allen Hamilton and Deloitte all have contracts set to expire within the next three
months.
Providers of IT & Telecommunications (D399) compete fiercely for share in a relatively stable
market. IBM is the only top competitor with a contract set to expire in the coming quarter, worth
$6.7 million. Among IT Network Development (D302) providers, Lockheed Martin is one of the
few that also competes in other IT markets. The second largest contractor by obligated dollars,
Sotera, has one contract worth $13.2 million set to expire over the next three months.
Department of Justice Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of Justice Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 13:
The two largest categories, Social Rehabilitation (G004) and IT & Telecommunications (D399) account
for most of Q1 spending, while other IT categories remain stable over the years.
* Hashed segments represent Govini’s predictive analytics.
13
POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Department of State Q4 Spending Surged in FY16
DOS is notorious for spending the largest share of its annual budget in the final quarter of the fiscal
year. The agency’s Q4 share of annual spending averaged 55.1 percent between FY11 and FY15. The
share is 6.5 percentage points higher than the Department of Interior, the second ranked agency by
Q4 share of annual spending. With FY16 contract obligation data tracking well below annual totals,
DOS’ Q4 spending is set to surge yet again.
IT modernization, supporting services and construction typically fuel DOS’ emphasis on Q4 spending.
Program Management (R408), the second-largest category by contract value, obligates an average
of 51.9 percent of annual spending in Q4. Four vendors, CGI Federal, PAE, DynCorp International and
CSRA, captured 60 percent of overall spending since the beginning of FY11.
IT & Telecommunications (D399) is another category that surges in Q4. DOS obligated 52.3 percent
of the category’s overall funds in the final quarter of the fiscal year. With spending in the category
tracking well below expected annual totals, it is set to surge in Q4 of FY16. Two companies, Leidos
and SAIC, dominate by capturing nearly 40 percent of the market. Other systems integrator
technology companies have a presence including Harris, Digital Management, Accenture and
Deloitte.
Office Construction (Y1AA) also sees attention in the final quarter of the year. On average, 68.8
percent of the category’s overall funds were obligated in Q4. B.L. Harbert and Caddell Construction
hold major contracts and are poised to gain from year-end spending.
Department of State Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of State Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 14:
DOS is well known for obligating the largest share of its annual funds in Q4. Categories related to IT
modernization, supporting services and construction typically fuel the year-end spending surge.
* Hashed segments represent Govini’s predictive analytics.
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POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Treasury’s Software Programming Fuels Its Q1 IT Spending
The Department of Treasury, historically a consistent spender across fiscal quarters, is showing
signs of favoring Q1. The manager of government revenue allocated 25.3 percent of its FY15
funds in Q1, up 2.2 percentage points from an average of 23.1 percent between FY11 and FY15.
Treasury’s propensity to spend in Q1 is largely driven by IT modernization efforts. IT accounted for
36.1 percent of Q1 spending since FY11.
Deloitte has led capture of a highly competitive IT market since FY11. The New York-based
consulting company gains its edge from being well-positioned in Software Programming (D308),
the spending category with the most growth of 289 percent between FY11 and FY16. Other top
IT consulting companies Accenture and Booz Allen Hamilton may begin to lose their competitive
position as Treasury’s programming needs grow at the expense of other IT categories, specifically
IT & Telecommunications (D399) which is in decline. Other well-positioned software development
companies, including IBM and Northrop Grumman, have increased their share of Treasury’s IT
market spending.
Looking ahead to Q1 of 2017, there are 102 IT-related contracts worth $169.7 million set to
expire; most of them are software programming contracts. Within that category, Northrop
Grumman’s remittance processing support contract is set to expire. CGI Federal, Phacil, AT&T and
CA Technologies also have contracts expiring.
Department of the Treasury Annual Contract Obligations by Product Service Code (PSC) FY11 - FY16
Department of the Treasury Vendor Revenue Capture by Product Service Code (PSC) FY11 - FY16
Exhibit 15:
Software Programming (D308) spending is growing at the expense of other top IT categories. Deloitte,
Northrop Grumman, IBM and Booz Allen Hamilton are well-positioned to benefit from the rise in spending.
* Hashed segments represent Govini’s predictive analytics.
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POSITIONING FOR 2017: COMPETITIVE OUTLOOK IN DEFENSE & CIVILIAN AGENCIES
Preparing for a Strong FY17
Quarterly spending trends, particularly at the end and the beginning of the fiscal year, are
dictated by a combination of factors such as agency mission, budget cycle and procurement
mechanisms in place to support purchasing. During Q4, agencies tend to lean heavily on
procurement mechanisms geared towards transactional purchases of standard price products
and services. By contrast, during Q1 agencies look to obligate funds to their preferred industry
partners that support core agency mission requirements. Most of these Q1 dollars are typically
dispersed through conventional stand-alone contracts, which also tend to be re-competed in Q1.
Depending on how a company is positioned in a market and across agencies, quarterly buying
behavior significantly affects cash flow and the ability to meet business objectives.
As industry prepares for FY17, Govini’s database of record shows 79,600 contracts or task
orders worth $87.4 billion are set to expire during Q1 of FY17. Sifting through opportunities and
prioritizing efforts requires a big data approach to business intelligence. Such an approach was
used to target six agencies that tend to spend in Q1, including Air Force, Defense-wide, VA, DOE,
Treasury and DOJ and account for more than a third of the expiring opportunities.
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Govini is the leading business intelligence platform for companies that sell to the public sector. Across the entire
business development lifecycle, Govini creates proprietary analytics which answer critical questions pertaining
to addressable market size, opportunity qualification, competitive positioning and partner profiling. Govini’s
database of record gives companies in every industry a distinct advantage when working with the government.