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Less federal contracting money means more desperate businesses

Federal spending has been tightening over the years, and the sequestration issue only brought the reality of this budget-tightening further to the forefront. This affects the lives of most people, even if they aren't aware of it or if they don't care about it. But in a certain light, the tightening budget of the federal government may actually impact businesses even more than most people may think.

Consider this: in 2008, federal spending on contracting reached a high of $541 billion. But now, just six years later, that figure has plummeted to $461 billion. That's $80 billion less than what companies are used to being available to them. In fact, more than the money not being there, the jobs they are bidding on may not even be there anymore.

This brings up another crucial stat: since 2003, the number of protests filed to the Government Accountability Office by companies who lost a bid has nearly doubled. In 2003, there were 1,352 such protests. Last year that number jumped to 2,429. This statistic is even more compelling when you consider there is a sort of "gentlemen's agreement" in the federal contracting world that losing companies don't protest when their bid isn't accepted.

Ultimately, these two figures combined tell a very important tale about the federal contracting world right now, and the businesses whose very existence relies on such contracts. First of all, there is less money to go around, and less contracts. That means any business's bidding process is very important, and they should do everything in their power to improve it. It also means that businesses need to be willing to accept lesser contracts.

But there's also a lesson about protesting bids and essentially doing away with this "gentlemen's agreement." Protesting a lost bid can be beneficial for the incumbent company. While the protest is in process, they get to keep working on that contract.

Source: Washington Post, "With budget tightening, disputes over federal contracts increase," Christian Davenport, April 4, 2014

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