Federal contracting trends and impacts in Missouri

‘An important generator of economic opportunity’

  • Published: Monday, March 22, 2021

COLUMBIA, Mo. – Missouri ranks eighth in federal contracting dollars as a share of total state gross domestic product. Missouri-based firms received $15.1 billion in prime federal contracts and almost $3 billion in subcontract awards in the federal fiscal year 2019. These contracts represented 5.4% of Missouri’s $332 billion 2019 GDP.

This information is from Federal Contracting Trends in Missouri, a report by Mark C. White, state specialist with the University of Missouri Extension labor and workforce development program. The report draws on data from the USAspending.gov database to show the impact of federal contracting activities in Missouri over the last decade, including

  • Federal contracting dollars in Missouri relative to other states.
  • Which federal agencies spend the most money in Missouri.
  • Which Missouri-based companies receive the most federal contracting dollars.
  • Federal contracting benefits to small and veteran-, minority- or women-owned businesses.

Federal contracting is an important generator of economic activity throughout the country. “Private firms of all sizes provide the products, equipment and services that the federal government needs to function,” the report states. “These federal contracts support many jobs and create business and growth opportunities for additional firms through sub-contracting opportunities.”

Over the past decade, the U.S. Department of Defense has been the main source of federal contracts. In FY19 that amounted to $12.5 billion, or 83.3% of the prime federal contract dollars in Missouri. Other federal agencies granting significant contracts in Missouri include the departments of Energy and Agriculture, the Army Corps of Engineers and the Veterans Administration. Overall, 42 federal agencies had contracts performed in Missouri in FY 2019, the last year the study covers.

For firms interested in federal contracts, the biggest challenge often is getting started on securing the first contract, White said.

“Federal contracting comes with several unique challenges that sets it apart from more typical private sector business activities,” he said. “The bidding processes and regulations often associated with these activities can prove frustrating for companies that are lacking the experience with securing federally funded contracts.”

To overcome these challenges, the Missouri Procurement Technical Assistance Centers (PTAC), affiliated with MU Extension, offer mentoring and support to Missouri businesses and suppliers. Located throughout the state, PTAC specialists provide counseling to firms — including small, disadvantaged, and women-, veteran- or minority-owned businesses — to help them take advantage of federal contracting opportunities. Missouri PTAC helps businesses and suppliers learn how to navigate regulations and cut through the red tape often associated with applying for federal, state or local government contracts.

In calendar year 2019 alone, Missouri PTAC helped 221 Missouri businesses win 2,324 government contracts worth more than $304.7 million and helped create or save 2,241 jobs. Specialists help businesses identify opportunities, understand the contracting process and register in the federal government’s System for Award Management.

Although a few large Missouri firms, such as Boeing, receive the lion’s share of prime federal contract dollars, almost 3,400 Missouri-based firms performed prime federal contracts in FY 2019. Many of these firms were businesses owned by veterans, service-disabled veterans, women or minorities; businesses in areas designated as “historically underutilized zones”; and sole proprietorships and disadvantaged businesses participating in the Small Business Administration’s certified 8(a) business development program. This included 485 minority-owned businesses receiving 4,770 awards valued at nearly $817 million and 574 women-owned businesses awarded 5,620 contracts valued at more than $267 million.

“The key takeaway for the general public is that federal spending makes important contributions to the Missouri economy,” White said. “For the broader business community, it is worthwhile understanding that providing products and services for the federal government is a market worth exploring for many companies.”

The report is available for download at https://extension.missouri.edu/mx53.

The USAspending.gov database can help companies better understand the federal contracting landscape in Missouri to assist them in identifying market opportunities. It can also help firms find other firms already involved in government contracting, which in turn may lead to subcontracting opportunities.

This research is supported by Missouri SBDC CARES funding so business counselors, their customers, and community leaders can benefit from timely information to help businesses and the economy rebound. The Missouri SBDC is funded in part through a cooperative agreement with the U.S. Small Business Administration and is a University of Missouri Extension partner. All opinions, conclusions and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

Writer: Katherine Foran

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