Revenue Decreases for 40% of U.S. Contractors, Survey Says

Photograph by George Frey/Bloomberg

A construction worker makes final adjustments to a large autoclave at Alliant Techsystems Inc.’s ATK Aerospace Structures – ACCW Facility. Alliant is the largest supplier of rifle rounds to the U.S. military.

Government contractors are experiencing more decreases in revenue than increases for the first time in at least 18 years.

Thirty-eight percent of federal contractors saw a decrease in revenue in 2012 from the previous year, according to a Grant Thornton LLP survey published today. Revenue grew for 36 percent of respondents, while 26 percent did not see significant change.

The survey, which reflected findings from more than 100 companies, also said that 60 percent of participants reported experiencing profits lower or equal to 5 percent. Only 37 percent of  participants last year experienced profits at 5 percent or lower.

“Demand for firm fixed price contracts, new regulations and increased government audits are certainly reflected in the declining revenues,” said retired Vice Admiral Lewis W. Crenshaw Jr., Grant Thornton’s national Aerospace and Defense practice leader.

Grant Thornton is starting to see defense contractors diversifying their portfolios and moving toward the commercial sector, Crenshaw added.

What do you think about this article? Comment below!