The sky is falling, the sky is falling! Government Contracting is coming to an end.

While many changes are happening in government contracting at the federal level, it doesn’t mean that it is not still a very lucrative market. Many small businesses are afraid to get into the market now, and others will leave, due to the changes. This is actually a trend that has been happening for over a decade. In 2013, about 120,000 small businesses won government contracts, by 2023 only 71,000 small businesses won contracts. Guess what the main reason is…change. It is the only constant in life, especially in Government contracting. There are more contracts and fewer vendors now; those who know how to take advantage of change are often the ones who have massive success.

There is more change than normal happening now, in fact some people have called it chaos. The great military strategist, Sun Tzu, wrote in his book, The Art of War, “Amid chaos, there is also opportunity.” Government contracting has never been for the faint of heart, it has always been for those who were bold enough and driven enough to learn what it takes to win government contracts. More importantly, for those who are willing to act on that knowledge. 

Here are some of the main changes:

1. A central pillar of the administration’s agenda was the overhaul of the Federal Acquisition Regulation (FAR). Through Executive Order 14240, titled “Restoring Common Sense to Federal Procurement,” the administration aimed to streamline procurement processes by eliminating non-statutory provisions and consolidating procurement for common goods and services under the General Services Administration (GSA). This move sought to empower contracting officers with greater discretion and reduce bureaucratic hurdles.

Due to these changes, GSA will become the largest awarding agency, going from about $100 billion/yr to $400 billion/yr. For the American people this is a good thing. There is a huge amount of duplication in contracts. As an example, HHS may have a huge IT contract, DoD has a very similar contract, so does Homeland Security. Going forward, GSA will have one contract that all agencies can use, these are called Government Wide Acquisition Contracts (GWACs). These exist already, but agencies get territorial about contracts, and so instead of using an existing GWAC they duplicate the effort and create their own contract. The current administration wants to save millions, possibly billions of dollars, by consolidating these types of contracts.

2. To further its efficiency goals, the administration established the Department of Government Efficiency (DOGE), an initiative focused on modernizing federal operations through automation and artificial intelligence. DOGE aimed to streamline processes by eliminating redundant jobs, contracts, and outdated systems. While this created opportunities for smaller IT firms, it also led to uncertainty and contract terminations, affecting larger vendors. During their review they found contracts that had over 500%, cost over runs. Again, good for the American people. 

3. Reduction In Force (RIF). We have all joked about, or seen memes about,10 guys standing around watching one guy work on road construction projects. This happens in all government agencies to some extent, and we all know it. The current administration wants agencies to be run, like a business, requiring each employee to work for their pay. 

4. Another change that this administration made is that it requires prime contractors to notify their contracting officer if they fail to pay their subcontractors. This is a huge protection for small businesses that work for large primes. If a large prime fails to notify the contracting officer, and the subcontractor reaches out to the contracting officer to let them know they haven’t been paid, the large prime can lose their right to win government contracts.

Many think this administration is like a bull in a china closet, breaking too much too fast. It doesn’t matter what your political leanings are, you may love or hate what is happening, but in either case, it is happening, and YOU CAN take advantage of it.

Some things to know:

1. Set-asides are not going away. The Federal government knows they cannot exist without small businesses. Also, the White House does not control these programs. They are controlled by Congress. U.S. Senator Joni Ernst (R-Iowa) is chair of the Senate Committee on Small Business and Entrepreneurship, she has stated that she supports the small business programs and doesn’t foresee making any changes. 

2. Some of the Reduction in Force executive orders have been countermanded by district judges. That may hold up in the Supreme Court or not. That being said, all of the agency heads have been appointed by the current president, and as such, believe in his policies about reducing the workforce of federal workers. This has actually been happening for years, just not as drastically. It’s one of the reasons Government contracting continues to grow every year. It makes more sense to hire a contractor to do a job, then to hire an employee. Once the project ends, it’s hard to fire an employee. Also, once someone gets a government job, and the person works for a long period of time then that government job has to pay a pension. For that reason, it’s cheaper to hire a contractor to do a job than employee. This Reduction in Force, Will absolutely add new opportunities. The work still needs to be done, with less employees more contractors will be needed.

3. Here are the 10 easiest contracts to win according to FedBizAccess.

1. Janitorial and Custodial Services
2. Office Supplies and Furniture
3. Landscaping and Grounds Maintenance
4. IT Support and Cybersecurity Services
5. Construction and Renovation Services
6. Training and Development Services
7. Medical Supplies and Equipment
8. Marketing and Communications Services
9. Environmental and Sustainability Services
10. Staffing and Temporary Labor Services

The economy may go up and down, but government spending continues to be a steady source of income for your business…if you know the rules, and take action!

Here at the Government Contractors Association, we’ve helped our clients win over $2 billion in government contracts. Our job is to stay up to date with the latest changes so that you can do your job which is to win and deliver on government contracts.

I hope this article is helpful as you consider your options in government contracting.

Guy Burns, CCM, CSP

Executive Vice President of Training, Government Contractors Association.