Federal Contracting Trends to Watch in 2025

The evolving federal contracting environment is on the precipice of change under new leadership. Policy shifts, budget scrutiny, technology demands and reform initiatives are on the horizon and will create a complex landscape for federal contractors in 2025. Expanding agency missions, increased compliance requirements and intensifying competition continue to drive several themes that will impact contractors’ operational costs, business development strategies and competitive positioning during 2025.

Key Trends to Watch

• New Administration. The second Trump Administration transition speed and execution, including filling agency leadership positions and pursuit of priorities, will dominate the first 100 days of the new administration. The new Department of Government Efficiency (DOGE) activities may amplify program reviews throughout the term.
• Budget and Spending Uncertainty. Continuing resolutions, debate over general spending levels and specific priorities will impact agency budgets. With a unified Congress, the Trump Administration has the potential to make substantive changes to budget priorities for the remainder of FY 2025 and beyond.
• Economic Conditions. Tax and trade policy changes in the Trump Administration may impact inflation rates, labor pool and wage inflation, supply chain costs and federal revenue levels and sources.
• Artificial Intelligence. Artificial Intelligence’s (AI) transformative impact on agency missions continues, amidst risk mitigation efforts. The Trump Administration plans to repeal the Biden Administration’s AI Executive Order, stating that it may limit innovation. Time will tell which provisions, policies and initiatives will be impacted.
• Cybersecurity. Several policies and initiatives to achieve government-wide cybersecurity objectives include increasing scrutiny and oversight, additional reporting burdens and compliance requirements for product and service providers.
• Contract Consolidation. Contract consolidation, category management and Spend Under Management (SUM) impacts, small businesses accessibility concerns, and potential acquisition rules impacting subcontractors all influence the competitive landscape.
• Small Business. Amidst multiple policies and continued efforts for agencies to increase small business contracting opportunities, small business exits from the market have been outpacing new entries. The Biden-era small business equity agenda may be at risk.
• Compliance. Numerous policies and efforts to enforce acquisition compliance – from “made in America” to increased scrutiny for waste, fraud and abuse – creates an increasingly complex acquisition environment. Potential relaxation or elimination of climate sustainability regulations adds further complexities.
• Acquisition Reform. Proposed changes to major federal acquisition programs to incorporate "best value" principles, increase contractor accountability and streamline certain acquisition processes presents an ever-evolving procurement landscape.
• Workforce. The federal workforce environment remains complex, with agencies pursuing greater recruiting and retention success and focusing on narrowing gaps in critical skill staffing, all within the context of potential mandatory return to work policies and potential workforce reduction recommendations by the DOGE.

Critical Insight for Vendors

This report provides a view of diverse factors shaping the federal contracting market landscape for 2025 and that will impact opportunities, competition, and the cost of doing business. The report provides recommendations to guide solution providers in maximizing their market positioning to best take advantage of federal business opportunities.

Deltek’s Federal Contracting Trends to Watch in 2025 is delivered in PowerPoint® presentation format, including an Executive Briefing presentation summarizing the key findings and an Excel® workbook with select data behind the report analysis and other key findings.