On January 20, 2026, President Trump completed his first year back in office, a year marked by substantial changes in federal contracting. His executive actions are transforming federal procurement policy, processes and regulations.

This article reviews major executive changes affecting federal contracting and ongoing implications for GovCons.

Executive Actions

Since January 20, 2025, the President signed 228 Executive Orders, 58 Presidential Memoranda and 118 Proclamations. Many orders reshaping the federal procurement landscape were issued within his first 100 days in office. Of these, EO 14158 Establishing and Implementing the President’s Department of Government Efficiency (DOGE) served as a catalyst for those changes.

Department of Government Efficiency

DOGE’s effects included contract terminations, procurement process reforms, agency reorganizations and workforce reductions. Although the centralized agency office closed in November 2025, the efficiency teams and activities continued within various agencies.

DOGE reported 18,469 canceled contracts valued at $2B as of November 2026. However, this number excluded routine terminations related to service areas not specifically targeted, such as office supplies and tools. Deltek’s analysis – based on contract requirement descriptions, contract names, Product Service Codes (PSCs) and NAICS codes – estimates 54,293 terminated contracts valued at nearly $4B and 9,634 canceled subawards valued at $8B. Small businesses held 63% of these contracts.

While intended to reduce waste, these changes also reduced contract opportunities and eroded the small business industrial base. They also created concerns surrounding the defense supply chain, innovation and competition further increasing contractor uncertainty. Agency staff reductions and reorganizations resulted in contract modifications, award delays, and communication challenges with contracting officials. Conversely, increased appropriations driven by the administration’s pursuit of American dominance in AI and energy, national security and winning the race to space, create opportunities in these same markets.

Overall FY 2025 spending finished stronger than anticipated at $834B, setting a record high, increasing about 7.4%. The eight primary requirement areas shown below accounted for about 85% of total spending. Overall, this paints a picture of anticipated growth, especially in the defense and aerospace sectors.  

 

 

 

 

 

 

 

 

 

 

Acquisition Reform

DOGE recommendations also drove acquisition-related actions including consolidation efforts, streamlined purchasing initiatives and regulatory reforms.

Prioritizing GSA Category Management and GSA OneGov

Under EO 14240, GSA increased emphasis on contract consolidations under category management requiring agencies to develop five-year plans to achieve a Spend Under Management (SUM) goal of 80% by FY 2029. Other plans include reforming the Multiple Award Schedule and expanding the One Acquisition Solution for Integrated Services Plus (OASIS+) contract vehicle. While lowering procurement costs, this reduces contracting opportunities for small and start-up firms. The figure below shows civilian agency SUM target progress for FY 2025 and 2026.

 

 

 

 

 

 

 

 

 

GSA initiated the OneGov program under EO 14271, establishing direct-to-Original Equipment Manufacturers (OEMs) purchasing authority for products and services and bypassing some Value-Added Resellers (VARs). VARs that remain eligible for GSA orders may face a 5% cap on markup fees. Under Phase I - OneGov IT, GSA anticipates multi-year discounts up to 90% on software through pre-negotiated agreements with vendors on the agency’s Multiple Award Schedule (MAS). To date, GSA has signed agreements with 21 software firms. While this approach streamlines acquisition processes, bolsters cybersecurity and lowers costs, it also reduces opportunities for VARs, especially smaller firms.

Streamlining Federal Procurement Rules

Executive Order 14275 prompted the Revolutionary FAR Overhaul (RFO) in April 2025. This effort restructured federal procurement policies and procedures to better align with the acquisition cycle. The revision simplified the text and language and reduced the regulation to essential and statutory requirements. The RFO also gave contracting officers more discretion in executing non-statutory strategies and activities. Phase II - Formal Rulemaking began in October 2025 and continues.

Transforming Defense Acquisition

The Defense Acquisition Transformation Strategy, released in November 2025, implements EO 14265 - Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base. The purpose is to strengthen national defense by accelerating commercial technologies and modernized systems, increasing production capacity for capabilities, systems, weapons and munitions, and streamlining the acquisition system and strengthening the industrial base. This order allows Portfolio Acquisition Executives (PAEs) to shift resources between programs within their portfolios. This includes contract consolidations and program acceleration and/or cancellations to optimize capability delivery. This also leverages the utilization of Commercial Solutions Openings (CSOs) and Other Transaction Agreements (OTAs) to meet defense-related research and development. Since those vehicles are exempt from the FAR, they reduce competition and reduce barriers to entry for non-traditional contractors and provide opportunities for startup companies to provide new innovative commercial products and services. The acquisition overhaul also allows for sole-source awards for production orders under contracts that were competitively awarded.

The latest defense-related EO, 14372 Prioritizing Warfighters in Defense Contracting, accelerates defense procurement, increases scrutiny on defense contractor performance, and prohibits stock-buyback and corporate distribution programs and activities that impede production. Contractors rated as underperforming are required to submit remediation plans. However, the order lacks clear definitions of contractor status, such as defense contractor, major defense contractor or traditional defense contractor. Further, references to critical weapons, supplies and equipment, underperformance, remediation plans and others remain vague. This requires enhanced contractor vigilance to ensure compliance and performance. Alex Rossino discusses the order here, and Deniece Peterson provides a more in-depth analysis with contractor recommendations in her “Defense Contractors - You Better Perform...Or Else” report.

Deregulation Agenda: Increasing American Prosperity

Beyond previously mentioned actions, other regulatory changes include a temporary freeze on regulations and EO 14192 - Unleashing Prosperity Through Deregulation, which required agencies to repeal 10 regulations for each proposed new regulation. Additional actions included revising energy exploration and natural resource development permitting processes to Unleash American Energy and rescinding those associated with the Infrastructure Investment and Jobs Act (IIJA). Other reforms focused on subcontracting compliance, supply chain processes, cybersecurity and small business program eligibility criteria, all of which inform technology adaptation and implementation.

Technology Focus

Leading the world in AI ranked first among President Trump’s priorities. To advance that goal, the administration established the President’s Council of Advisors on Science and Technology to leverage American innovation, bolster private-sector creativity and rejuvenate the nation’s research institutions. Subsequent orders focused on technology and AI, creating opportunities in data center infrastructure, AI development and education, and digital financial services.

Budget Reform

The preceding sections highlight selected actions that shifted funding priorities from environmental programs to national security, energy development and technological advances. In early May 2025, the President released a streamlined $1.6T ‘skinny budget’ for FY 2026, increasing appropriations for defense-related programs but reducing funds for civilian agency programs. In July, Congress enacted the One Big Beautiful Bill Act (OBBBA), (Public Law 119-21), providing appropriations for select agencies and programs at the FY 2025 enacted levels. The increased defense funding in the continuing resolution opened the door for surges in defense, construction and technology opportunities.

Negotiations continued toward final FY 2026 appropriations with multiple consolidated packages incrementally funding select agencies. On January 22, Congress passed both H.R. 7148 for Defense, Labor, Health and Human Services, Education, Transportation and Housing and Urban Development, and H.R. 7147, the Homeland Security Appropriations Act, 2026. The package awaits anticipated Senate approval before heading to the President’s desk. Plans for an FY 2027 budget have not been announced.

Looking Ahead

President Trump’s first year back in office brought transformative changes to the federal contracting landscape, creating both challenges and opportunities. Although DOGE initiatives cancelled contracts and reduced opportunities in some agencies, the increased defense, energy and technology emphasis opened doors for new opportunities. Incomplete final FY 2026 appropriations and the evolving regulatory landscape continue driving contractor uncertainty, especially with no mention of an FY 2027 budget. Nevertheless, the year ahead holds promise with agency acquisition forecasts projecting thousands of new and recurring opportunities.

Deltek GovWin IQ provides resources to track these opportunities, and the Federal Market Analysis team addresses uncertainties through in-depth analysis, reports and webinars. Be sure to register for the upcoming GovCon Market Outlook: Navigating Federal Trends in 2026 for more information.