CohnReznick LLP, one of the leading advisory, assurance, and tax firms in the United States, has announced its government contracting industry practice has released its 8th annual GAUGE Report. Published in conjunction with solutions provider Unanet, and widely recognized as the most comprehensive survey of its kind, the 2024 GAUGE Report provides contractors in many industries with competitive insights, best practices, and benchmarking metrics.

The 2024 report analyzes emerging trends, issues, priorities, and opportunities shaping the GovCon industry with a specific focus on artificial intelligence (AI), compliance challenges, growth strategies, and other industry drivers. Key focus areas include government contract compliance, accounting, utilization, growth, and efficiencies.

GovCons and AI
A new topic for this year’s survey was the impact of AI on the GovCon industry. Key findings included:

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One-third of GovCon firms are currently using AI but only 10% are using it in the finance and accounting business areas
More than half of GovCons either use or plan to use AI in their business development and marketing areas next year.
The most prolific users of AI tend to be firms with revenues between $25 million and $50 million.

This year’s GAUGE Report provides an AI maturity model to help contractors assess their readiness for AI. The Industry Insights section provides GovCon AI thought leaders perspectives on opportunities, risks, and potentially high impact uses cases that firms should consider as they adopt and expand their AI capabilities.

Other Key Survey Findings

69% of GovCons say they are having issues winning new contracts.
57% rank finding new revenue resources among their top two most significant financial challenges.
45% say they lack business development resources.
74% rely on personal relationships as a top 2 resource for new opportunities.
M&A is a priority for 39% of companies in 2024, up from 31% in 2021.
About 40% of GovCons report a growth rate between 1% and 14%, and about half of the firms surveyed project a similar growth rate in the year ahead.
40% of firms report winning more than 50% of the projects for which they submitted proposals, compared to 25% in our 2021 report.
Wrap rates, a strong indicator of how efficiently a firm runs its projects and business, improved again in 2024, continuing a several-year trend.

“Of the 1,255 contributors, 71% of firms say they are optimistic about the current GovCon business environment – a number that is consistent with what we saw in last year’s report,” said Christine Williamson, who leads the firm’s Government Contracting Advisory practice and co-authors the GAUGE Report.” She adds, “In addition to moving forward on technology initiatives like AI, our client service teams are seeing more GovCons employing automated business practices as a key component of their growth and risk mitigation strategies.”

“While the majority of GovCons report that they are “very data-driven” companies, almost half of them say they are only somewhat confident to not very confident at all in the quality and accuracy of the data they are using,” added Kristen Soles, leader of the Government Contracting practice and managing partner of CohnReznick’s Global Consulting Solutions. “This suggests a huge opportunity for them to explore more robust and innovative digital and data-management solutions to better manage compliance and enhance decision making”

To read the 2024 GAUGE Report in its entirety and learn more, please visit the CohnReznick website.

Accounting