WT Survey: Contractors see dark clouds hanging over the market

Government contractors see a market full of risk and uncertainty, as found in a survey of Washington Technology readers.

We asked readers a series of questions about the direction of the market, growth prospects and areas of opportunity. We also asked about the impact the new Trump administration so far.

The majority of respondents see the market headed in a negative direction and they are blaming Trump administration policies for their outlook.

Our survey of 52 respondents provides valuable insights into contractor perspectives, but of course represents a limited sample of the broader government contracting community. Nevertheless, the consistency of responses across different questions reveals notable trends worth consideration.

Two-thirds of respondents said the market is either headed in a somewhat negative direction (40%) or a very negative direction (27.5%).

Only 7.8% said the market was headed in a somewhat positive direction and 3.9% said a very positive direction.

Respondents across-the-board said administration policies are having a negative impact on their company’s growth opportunities, with 73.1% answering "Yes" to that question.

Another 21.2% said they are uncertain about the impact of the Trump administration policies. The remaining 7.8% said that the administration has a neutral impact.

Budget cuts and federal workforce layoffs were picked most often as having a negative impact. Respondents could pick more than one issue:

• Budget constraints: 76.2%
• Federal workforce cuts: 61.9%
• Regulatory changes: 35.7%
• Trade policies: 14.3%
• DEI policy changes: 16.7%

Respondent also said the Trump administration is not creating opportunities for contractors, with 63.5% answering "No" to that question.

Those who see opportunities ahead cited areas such as artificial intelligence, defense, cybersecurity, and infrastructure investments.

The clear majority said small businesses are the most negatively impacted contractors so far under the Trump administration, with 61.5% picking that option. Large businesses were picked by 21.5% of respondents. Only 9.6% said mid-sized businesses were the most negatively impacted.

We also asked about contract cancellations and delays with 82.4% saying their company had experienced either a cancellation, delay or termination.

But about 70% said the revenue impact would be less than 10 percent.

Survey respondents also are worried about the impact that workforce reductions at federal agencies will have on their business, with 44.2% saying that they are very concerned. Another 38.5% say they are moderately concerned, and 11.5% say they are slightly concerned. Only 5.7% say they are not concerned.

Company morale appears steady so far, with 36.5% saying morale is neutral. Somewhat negative was just higher at 26.9%, compared to somewhat positive at 21.2%.

Of the 52 people that answered our survey 53.9% identified themselves as senior executives. Another 17.3% said they worked in business development. Roughly 11% work in marketing.

The largest group of respondents (36.5%) said their company had between $10 million and $100 million in annual revenue. The next largest group (21.2%) said their company had more than $1 billion in annual revenue.