U.S. Government Contractors

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Until 2009, U.S. Government Contractors (USGC) had been growing by 12% to 15% a year, but starting in 2009, growth slowed to 2% to 4% a year as customer spending decelerated. Traditional competitors such as USGC were also challenged by new entrants to the market, including large non-U.S. companies and large commercial service companies. Many new entrants enjoyed advantages in scale and cost position that allowed them to undercut USGC on price, causing loss of market share and increasing the challenges to market growth. Excerpt UVA-BP-0558 Rev. Jan. 8, 2013 U.S. GOVERNMENT CONTRACTORS Introduction U.S. Government Contractors, Incorporated, (USGC) served the $ 80 billion market for technical, administrative, and support services to the U.S. federal government with a work force of 16,000. As a major working unit of a large diversified industrial corporation, it had operating profit of $ 150 million in 2011 on revenues of $ 2.5 billion, which represented about 25% of total corporate revenues. Until 2009, USGC had been growing at 12% to 15% per year, but starting in 2009, growth decelerated to only 2% to 4% per year as customer spending slowed and customers became far more price sensitive. Traditional competitors such as USGC were also challenged by new entrants to the market, including large non-U.S. companies and large commercial service companies. Many of these new entrants enjoyed advantages in scale and cost position that allowed them to undercut USGC on price, causing loss of market share, furthering the challenges of slower market growth. . . .