Government Contractor Profits: Where Perception isn’t always Reality

Those who keep watch for examples of Federal largess often cast an eye towards government contractors. It is easy to get lost in eye-popping contract awards that can involve billions of dollars, but of course the devil is in the details: the actual amount awarded often ends up far less than contract ceilings, and there are significant cost burdens in fulfilling a government contract.

Perhaps this is why watchdog groups and office holders perceive a level of profitability that exceeds the true numbers. This is at least part of the story one can infer from last month’s 13th Annual Grant Thornton Government Contractor Industry Survey. The findings, drawn from questionnaires distributed and received from 100 government contractors in 2007, indicate that more than three-fourths (76%) of surveyed companies reported a pre-tax profit of 10 percent or below.

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