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Three Major Themes in State and Local Government Contracting for 2023

Submitted by Robyn Francis on August 2, 2023

Every year, Deltek’s research team sifts through thousands of industry sectors to identify 10 service categories that are experiencing much faster growth in usage or adoption by state, local and education (SLED) governments, which we release in our annual “10 Hotspots” report. After examining each of our 2023 hotspots and analyzing common elements and issues, our analysis revealed the three following major themes driving the investment and purchasing decisions of states, cities and counties.  

Protecting the Public

Safeguarding the public was a dominant trend in this year’s report, as 6 out of the 10 state and local contracting hotspots for 2023 fall into this theme. The public is continuing to receive increased support from state and local governments, as the data consistently strength in this area. Governments are focusing on providing diversity, equity and inclusion (DE&I) initiatives, leveraging automation and robotic products to fill workforce gaps and minimize hazards in the workplace, planning for the next national emergency, addressing the mental health crisis, maximizing indoor air quality, and using digital and physical security to keep the public safe.

What the last three years have highlighted is that the public needs even more SLED support as a result of the pandemic and the impact it has had on the economy, society and health of the country. SLED governments will want to remain fully staffed and keep the normal day-to-day activities moving. They’ll continue to prioritize initiatives that provide a sense of comfort and security to the public.

Protecting the Environment

State governments have felt political and societal pressure to combat climate change in recent years – the environment was a theme for SLED contracting in 2022 as well.  Additional emphasis has been placed on reducing greenhouse gas emissions thanks to federal stimulus bills, federal government incentives issued since 2020, and the current administration’s focus on environmental, social and governance initiatives (ESG). Governments will seek to promote and protect greenbelt/nature areas, produce climate studies, monitor air pollution levels and consult on energy related services. All these focuses will work toward state and local plans in place to reduce greenhouse gases, including setting standards and timelines.

Looking forward, as fossil fuel-powered vehicles are one of the main culprits of climate change, the federal government will be providing millions in stimulus for SLED to invest in electric vehicle infrastructure. The goal is to create a reliable and trustworthy countrywide network of charging stations so that the public has confidence in owning and traveling in electric vehicles.

Focusing on the Buying Process

One of the strengths of SLED government is the ability of its procurement teams to innovate the process in response to various pressures and challenges. The current economic situation continues to drive up the costs of building materials such as lumber and metal products. This has led to increasing purchases of key raw materials directly as well as relying on stimulus funding from the Infrastructure Investment and Jobs Act (IIJA) to keep projects moving and afford the increases.

Hand in hand with the trend toward higher costs is the related hotspot of seeking more efficiency in the process using vendors that utilize a design/build approach to improve results, save on cost and reduce risk. This hotspot, and each of the other nine, are profiled in more detail in the full report.

Brent Mital is a Research Analyst for GovWin from Deltek. Follow them on Twitter and LinkedIn and stay up to date with the latest government market insights.