Does Government Buy Innovation?
Investors in technology and innovation always wonder whether early stage companies that sell into government can survive or thrive. These investors point to the graveyard of technology startups that have tried and failed to break into offering government solutions. We decided to analyze this, let the data do the talking.
We decided to analyze federal government agency forecast spending for 2022. This was a dataset of 17540 requests for products or services across federal agencies. The conclusion we draw from the analysis is that the only way early stage companies can thrive selling to government agencies would be to sell services as the agencies do not buy innovation.
Government Needs
Here are a few insights:
Services and Support: The words "services" and "support" are very frequent, suggesting a strong focus on service provision and support activities.
Maintenance and Repair: The terms "maintenance", "replace", "repair", and "replacement" indicate a significant need for maintenance and repair services.
Technology and Equipment: Words like "software", "equipment", and "system" imply a focus on technological needs and equipment.
Management: The presence of "management" suggests a demand for management-related services or activities.
The analysis of the number of needs per agency reveals the following top agencies with the most needs listed:
Department of the Interior: 12,999 needs
General Services Administration: 3,908 needs
Department of Labor: 414 needs
U.S. Office of Personnel Management: 156 needs
Small Business Administration: 43 needs
The analysis of the "NAICS Code" reveals the most common classifications of needs in the dataset. The top NAICS Codes and their corresponding industry segments are:
236220 (Commercial and Institutional Building Construction): 1,874 occurrences
541990 (All Other Professional, Scientific, and Technical Services): 1,013 occurrences
541519 (Other Computer Related Services): 859 occurrences
561210 (Facilities Support Services): 529 occurrences
541620 (Environmental Consulting Services): 522 occurrences
511210 (Software Publishers): 499 occurrences
423430 (Computer and Computer Peripheral Equipment and Software Merchant Wholesalers): 498 occurrences
541330 (Engineering Services): 414 occurrences
541611 (Administrative Management and General Management Consulting Services): 348 occurrences
561720 (Janitorial Services): 340 occurrences
The thematic analysis of the "Title" and "Description" fields using phrase extraction has revealed several key phrases, providing deeper insights into the dataset:
Information Technology: Phrases like "information technology" and "technology equipment" are prevalent, indicating significant needs in the IT sector.
Support Services: "Support services" is a common theme, suggesting a wide range of support-related needs.
Infrastructure and Maintenance: Phrases like "blm infrastructure" and "operations maintenance" highlight needs related to infrastructure and its maintenance.
Professional Services: The recurrence of "professional services" indicates a demand for various expert services.
Specific Locations and Projects: Phrases such as "visitor center", "national park", and "federal building" suggest location-specific or project-specific needs.
Administrative and Planning: Terms like "planning requirement" and "awarded r1 aas" reflect administrative and planning-related needs.
Conclusion: While the analysis above might be discouraging to small technology companies, it does suggest a lot of room for small businesses with specific expertise that can optimize their business solutions through the use of some of these innovative technologies (for e.g. 20 robot cleaners managed by one supervisor to implement cleaning on a building floor). While the government itself might be more interested in execution and services, there is still room for innovation in how businesses deliver their services.