An American Express unit specializing in small business released its 2011 study of federal contracting trends among small businesses earlier this month.

Highlights of the study include:

• Small businesses are spending more: Over the past year, the amount of time and money that active small business contractors have invested in seeking federal contracting opportunities has averaged $103,827, an increase of 21% from the previous year ($86,000).

Small businesses are bidding less on contracts: Even as the average total investment made in seeking federal contracts has risen over the past year, bidding activity has declined by nearly half – both in prime and subcontracting activity. The average success rates for active small business contracts in both prime and subcontracting have declined as well – pointing to a more competitive and tighter environment.

Fourth time is the charm: Active small business contractors reported that they had to submit an average of 4.4 bids before they won their first prime federal contract. Once small business contractors got their first taste of procurement success, they wasted little time before trying – and succeeding – again. Two-thirds of active small business contractors have performed on more than one federal contract, and, on average, it took them just under a year (11-1/2 months) after their first procurement victory to win their second contract.

Experience pays off: Average success rates in prime contracting – 38% overall – are significantly higher among those with 10 or more years under their belts (53%) compared to those who have been seeking federal contracts for three years or less (20%).

The research summary is based on a survey of 740 small business owners who responded to an online survey primarily conducted for American Express OPEN from October 10 through November 4, 2011. The survey population is randomly drawn and representative of small businesses that are active federal contractors, defined as small businesses that are either currently performing on a federal contract as a prime contractor or subcontractor, or that have performed on a federal contract within the past five years.