Staffing Growth Trends
The temporary and contingent staffing industry in the U.S. is thriving. Staffing Industry Analysts estimates an overall growth of 6% in 2014 and forecasts 7% growth in 2015. The U.S. Labor Department calls the temporary staffing sector “one of the largest and fastest growing in terms of employment.”
How does the growth of temporary and contingent staffing affect the federal, state and local government procurement market? Onvia data analysts analyzed over 5,000 bids and RFPs in the Onvia database for staffing-related projects with government agencies over the last two years. The data indicates temporary and contingent staffing may be a mechanism that is being more widely deployed across federal, state and local governments. We found that overall volume of staffing projects, bids and RFPs grew by 13.9% in 2013.
One explanation for this growth is that, while the economy is showing signs of a recovery after several years of weakness, agencies may be cautious in hiring new permanent staff. Contingent and temporary staffing can offer employers (either public or private sector) an opportunity to grow the workforce to meet immediate needs, while limiting the costs and long-term commitments associated with adding permanent positions. A second explanation could be the ongoing “Silver Tsunami” impact. Onvia covers this effect in depth in the recent “Government Contracting Hotspots for Professional Services in 2014” white paper. “Silver Tsunami” is the moniker given to the huge number of current public sector employees that are eligible for retirement. With the increasing staffing demands facing government decision-makers and permanent staff staying the same or declining due to retirements, agencies need a solution to make hiring decisions in the short-term while limiting their long-term risk.
Contracting Activity by Area of Expertise or Work Category
We looked at four different major categories of government agency staffing to pinpoint growth areas. The biggest staffing projects were associated with IT/telecom work. Over the last two quarters, 52% of staffing projects were classified as IT-related in Onvia’s database. Healthcare-related staffing made up 8% of activity, education had 6% of the activity and the remaining 34% was “general” (which can include a variety of work under multi-purpose and flexible contracts).
Who’s Buying Right Now?
Many assume federal contracts account for most of the staffing contracting opportunities, but the majority of staffing contracts are at the state and local level. Only 18% of bids and RFPs in the previous two quarters were from federal agencies. Staffing bids and RFPs at the state level accounted for 32% of opportunities and city agencies made up a full 20% of opportunities.
Looking further into the increased number of contracts, federal agencies had the slowest one-year growth rate of around 2%. Conversely, there were many areas of strong growth across state and local government – including the levels of county, state, city and special district government.
Term Contracts Present Large Opportunities
While a total of 2,813 bids and RFPs were issued in 2013 for vendors to compete for, there were 899 active term contracts related to staffing currently due to expire within the next six months, as tracked in Onvia’s Term Contract Center. While many staffing opportunities are project-based with a fixed scope and cost, term contracts have a fixed “term” (length) and may have only a maximum award value with actual costs primarily driven by previously agreed-to hourly rates. These contracts often cover more significant staffing needs that may supplement the agency workforce for an extended period or for a large project. In the Onvia dataset, the most term contracts were with state government clients (497), followed by school districts (147), counties (127), cities (88) and federal (29). The median or mid-point value of these contracts was around $83,000 but there was a much higher overall mean average of $683,000 due to a few of the higher value projects. A total of 34 term contracts soon to expire and categorized as staffing are worth at least $1 million, such as:
- $5.1 million healthcare temporary/relief workers staffing contract by Colorado Department of Personnel and Administration. Vendor: Maxim Staffing Solutions (expiring August 2014)
- $3.7 million IT worker contract for software and mainframe maintenance and support by Oregon Department of Transportation. Vendor: Experis IT Services U.S. (expiring June 2014)
- $2.0 million general “Temporary Personnel Services” contract by King County, WA. Vendor: CBS Personnel Services LLC (Expires July 2014)
Opportunities abound: Based on the growth rates for staffing activity in the Onvia dataset and the ongoing uncertainty in the overall economy that is causing agencies to remain cautious in hiring plans, staffing vendors can expect their potential opportunities to grow in the near future in the government market.
Strength in IT: Onvia’s data points to IT/Telecom as having the majority of contingent and temporary staffing projects available. Vendors should be confident about finding new term and contingent contract opportunities associated with IT/telecom work.
Get in early: Onvia recommends developing relationships with agency buyers 2-3 months in advance of the bid/RFP closing date or the point at which a term contract will expire. Vendors who are looking to influence the writing of the RFP or bid specifications in the planning phases to improve their chances of winning when the project comes up for bid should aim to start building relationships with key agency contacts about one year in advance.
Focus on county, state, city and special districts: With so many of the recent and current opportunities originating from state government offices and with high growth rates at the county, state, city and special district levels, vendors should consider increasing their marketing efforts in these important markets and should be proactive about developing relationships with these agency decision-makers.