Engineering firms: Strategies for boosting government contract project profitability

For established engineering firms, government contracting offers significant opportunities — but also demands advanced strategies to boost profitability and maintain compliance. Profitability often hinges on streamlining operations, refining cost structures, and navigating regulatory complexities.

While securing contracts is a significant milestone, the ability to deliver projects efficiently and profitably is what sets successful firms apart. From fine-tuning indirect rates to leveraging technology, adopting advanced business strategies can empower engineering firms to stay competitive and profitable.

Increase profitability, enhance compliance, and manage risk with insights into effective advanced strategies that can help established engineering firms succeed in the dynamic world of government contracting.

Enhance indirect rate structures for competitive bids

Indirect rate structures play a crucial role in determining both profitability and competitiveness in government contracting.

Improve indirect rate structures and increase the ability to win competitive bids by incorporating the following strategies:

• Analyze Indirect Rate Components. Indirect rates typically include overhead, general and administrative (G&A) costs, and fringe benefits. Regularly assess these components to identify inefficiencies and eliminate unnecessary expenses.
• Improve Allocation Methods. Ensure your allocation methods align with the type of work you’re bidding on. For example, allocate overhead costs by project type — such as design or fieldwork — to avoid subsidizing less profitable activities, or adjust G&A costs to reflect shifts in the firm’s operational structure.