Navigating the Shifting Landscape of State and Federal Government Contracts
The world of state government contracting is on the brink of significant changes. To help your agency stay competitive in this evolving landscape, here’s what you need to know:
State Contracts: Holding Companies and a New Wave of Competitors
Agencies tied to holding companies with offices across multiple states will remain steady competitors. For example, WPP’s VML recently secured the $200M+ Covered California advertising program, outpacing a roster of California-based independent agencies. This dynamic has long existed and shows no signs of slowing down. However, the big shift lies in federal firms turning their attention to state contracts. Many well-positioned federal contractors are now leveraging their credentials to compete for state government opportunities within their home boundaries. Expect these firms to bring a new level of competition to your market.
What’s Happening in the Industry?
The advertising world is abuzz with Omnicom’s planned acquisition of IPG, merging two industry titans to form the largest holding company in history. This consolidation combines nearly $900M in Omnicom federal work with IPG’s half-sized share from FY2024. But does it matter in the Government/Public Sector? Not so much. Here’s why:
Government Work is Agency-Driven: Contracts are pursued and won by individual agencies, not holding companies. We already see multiple bids from a holding company on RFPs.
M&A in Government Contracting Has Different Goals: Most public sector M&A focuses on adding capabilities, gaining contracting vehicles, or expanding into new agencies. Omnicom doesn’t achieve these objectives here in the public sector marketplace, particularly on the federal front as both holding companies already have strong positions at CMS, CDC, and DoD.
Scale Doesn’t Change Everything: Size doesn’t guarantee dominance. For example, J. Walter Thompson’s merger with VML helped retain longstanding contracts but didn’t drive major new wins.
Thinking of Expanding into the Federal Market?
We’ve been hearing from many state contractors interested in exploring the $2.4B federal market and its opportunities. The federal marketplace offers significant potential, but competing here requires a nuanced understanding of its trends, strategies, and structural differences. To help you navigate this shift, we’re hosting a free 1-hour webinar in early January. This session will cover: Emerging trends in the federal market, Strategies for competing effectively, Key differences between state and federal contracting, and live Q&A. Register Here
If you have any immediate questions or would like to discuss your specific goals, don’t hesitate to reach out.