Small-vendor Acquisitions Soar in Hunt for Coveted U.S. Contracts

October 9, 2011

Small government contractors are being bought at the fastest pace in at least a decade as buyers target vendors holding "multiple award" contracts that can provide years of federal dollars.

Two Northern Virginia-based firms, General Dynamics and GTSI, are among the companies that have been most active making acquisitions in expanding or stable contracting sectors such as information technology, health, intelligence and computer security. 

Long-term contracts

Multiple-award contracts establish a pool of eligible contractors who then bid on individual orders. These contracts, which are growing more common in federal contracting, can last as long as 15 years. That means acquiring a company with one may be the only way to bid for the work.

In many cases, the acquisitions give the companies access to multiple-award contracts that had been targeted to small businesses.

Such deals are increasing even though the Small Business Administration (SBA) in 2007 established a rule to ensure federal dollars reserved for small businesses don't go to bigger vendors through acquisitions. 

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