In Onvia’s latest study, 10 Hotspots in Government Contracting for 2016, our market analysis team discovered that contracts for ongoing maintenance of water & sewer systems in the state, local and education (SLED) government market grew 21% in 2015 over 2014.
Out of nearly 500 unique industry categories analyzed for the report, bids & RFPs for ongoing maintenance of water & sewer systems represent the #3 ranked area for growth in the SLED government contracting market.
Publicity and Cost to Replace Full Systems Leads Agencies to Ongoing Maintenance Contracts
Drought conditions in many states, along with the highly publicized problems of leaky pipes and contaminated water, such as in Flint, Michigan, have brought concerns surrounding the nation’s aging water infrastructure to the forefront.
The Center for an Urban Future reported that 24% of the water that runs through New York City’s pipes never actually makes it to homes -- just one example of the scope of the issues around aging water infrastructure that the nation is dealing with.
An increased number of maintenance, leak fixing, testing and treatment contracts for water and sewer systems can be attributed to the fact that the price for these tasks can pale in comparison to the enormous cost of replacing entire systems.
For example, Fitch Ratings estimates that on a national basis, the cost to replace all service pipes made of lead (as opposed to continuing to maintain them with anti-corrosive chemicals) is nearly $300 billion. Because of the high price tag, government agencies tend to only consider full water/sewer system replacement contracts after other proactive methods have already been exhausted, such as ongoing maintenance contracts.
Which Agencies Issue the Most Water/Sewer Ongoing Maintenance Contracts?
Onvia’s analysis shows that firms pursuing SLED government contracts related to ongoing maintenance of water and sewer systems are most likely to find the largest share of opportunities at the city level of government. City agencies accounted for a 55% share of the bids & RFPs analyzed for the report. Interesting to note is that while it may seem a bit counter-intuitive, special utility districts only accounted for a 13% share of the contracts.
Businesses can further narrow their pursuits by focusing their efforts on the top 5 states for issuing water/sewer ongoing maintenance contracts highlighted in the heatmap below:
How to Get Ahead of the Competition and Win More Water/Sewer Ongoing Maintenance Contracts
With the awarded value of SLED water/sewer ongoing maintenance contracts averaging at a healthy $614,000, contractors have the opportunity to secure long-term government clients by embedding their services in large water/sewer system maintenance efforts for years to come.
Onvia recommends that contractors who pursue these contracts should track ongoing multi-year contracts that are expiring or coming up for renewal.
Furthermore, these water/sewer system maintenance efforts are generally long-term and agencies are discussing them well before the issuance of a competitive bid or RFP. Those firms who track early mentions of future spending related to ongoing maintenance of water and sewer systems in agency budgets and spending plans can greatly increase their chances of winning more contracts.
Maintenance of Water/Sewer Systems Isn’t the Only Growing Area in Government Contracting
Watch the video below to learn about 9 other contracting hotspots that have seen notable growth rates in bids & RFPs over the last two years: