What is the Federal Market Index (FMI)?
The Federal Market Index (FMI) is a real-time barometer of the U.S. Federal Government's economic activity. Given its vast size and the wide array of goods and services it procures, the Federal Government is more aptly described as an economy than a single market.
In FY 2023, the U.S. Government "obligated" approximately $759 billion in contract awards, according to the Government Accountability Office (GAO), reflecting a $33 billion increase over the previous year.
The GMI provides insight into the health and performance of this economy but is not designed to guide investment decisions. Please refer to our disclaimer for details.
How is the FMI Calculated?
The FMI starts with the FY23 Largest Contractors Static Report from Sam.gov, which lists the top 100 contractors to the U.S. Federal Government. In FY23, these companies secured $433 billion in contracts across diverse industries such as aerospace, technology, healthcare, and energy.
Of the top 100 contractors, 40 are publicly traded, securing $299 billion in contracts, or about 70% of the total. These 40 companies serve as a proxy for the broader Federal Government economy.
The FMI is unique in its approach: each of these companies is weighted based on the significance of the Federal Government as a customer to their business. The real-time FMI is calculated using their current stock prices, with weighting determined by a proprietary formula that considers more than just revenue share from Federal contracts.
For some of these 40 companies, the US Federal Government represents the lion share of their business (ex. Federal System Integrators, aerospace companies). For others, it’s only a fraction (ex. technology companies, shipping, healthcare). And for most, this massive customer lies somewhere in the middle. This weighting considers more than the revenue share of the US Federal Government to that company’s overall revenue. The specific weighting formula is proprietary.
The sum of their weighted real-time stock prices is the FMI.
Frequently Asked Questions
Should FMI be used to inform investment decisions?
No. The FMI is a barometer of the U.S. Federal Government economy, not an investment tool. Please read our disclaimer.
Who is interested in the FMI?
The FMI is valuable to C-level executives in or entering the government contracting community, as well as those involved in strategic investment activities like mergers & acquisitions (M&A), venture capital (VC), and private equity (PE) within the Federal Government economy.
Is the FMI calculated in real-time?
Yes, the FMI updates in real-time based on the current stock prices of the selected companies.
How are each company weighted?
Each of the 40 publicly traded companies is weighted based on how significant the Federal Government is to their overall business. The specific weighting formula is proprietary.
About
The Federal Market Index (FMI) was developed by Steven Vito, principal of Vito and Associates, LLC. With over 30 years of experience working with and for organizations in the government sector, Mr. Vito's expertise spans media, government contracting, marketing, and the Federal Government itself.
For more information, please contact Mr. Vito at svito@vitoandassociates.com.
Disclaimer: The Federal Market Index is intended solely as a market performance barometer and should not be construed as financial advice. It is not designed to inform or influence investment decisions. Past performance is not indicative of future results, and individuals should consult their financial advisors before making any investment choices.