Navigating Change: How Government Contractors Can Thrive Amid Policy and Workforce Shifts

Navigating Change: How Government Contractors Can Thrive Amid Policy and Workforce Shifts

Recent changes in government policies have sent ripples across the federal contracting landscape, leaving many contractors concerned about the road ahead. Whether it’s policy updates, shifts in agency priorities, or a new wave of retirements among government personnel, contractors are at a crossroads. But with change comes opportunity.

Recent changes in government leadership and workforce dynamics have left many government contractors wondering: When will contract awards resume, and how should we prepare for what’s ahead? The answer lies in understanding the current environment, the delays we’re facing, and the significant opportunities that lie just beneath the surface.

Drawing from my experience in government contracting and my close connections with contracting officers and government personnel, I want to shed light on how contractors can adapt, plan strategically, and position themselves for growth. Change can be a disruption, but it can also be a catalyst for innovation and expansion.

This slowdown is temporary, but its impact will shape the rest of the year—and those who prepare now will be the ones to benefit.

1. Understanding the Slowdown: Why Contract Awards Are Delayed

Government contractors across industries are seeing the brakes applied to contract awards. The reason for this is straightforward, but critical to understand: many agency secretaries have not yet been confirmed by the Senate. Until these Senate-confirmed officials take their roles, chiefs of staff and acting deputies are temporarily running the agencies. These individuals do not have the authority to make large spending decisions. As a result, we’re seeing a holding pattern for contract awards across the board.

What does this mean for contractors?

• Expect a 30 to 60-day delay: Many agencies will be unable to award contracts until their leadership is in place, meaning activity will resume in late March or early April.

• Your contracting officer doesn’t have answers yet: Calling or emailing them is unlikely to yield new information. Once they have the green light to make awards, you’ll know. Until then, focus on preparation.

2. The Second-Order Effect: A Backloaded Fiscal Year

With contract awards on hold for the next 30 to 60 days, we’re heading into Q3 of the fiscal year (April through June)—a period when agencies will be busy figuring out priorities under the new administration. This means that many of the awards typically made earlier in the year will get pushed to Q4 (July through September). On a NORMAL year the government awards about 30-35% of contracts in Q4, over 10% more than other quarters. This year, that number is going to be much higher – maybe 40-50% of contracts will be awarded in Q4.

Government Q4 is always a busy time for contract awards, but this year will be different: it’s going to be even more intense than usual. Agencies will be scrambling to obligate their budgets before the fiscal year ends, and this creates both challenges and opportunities for contractors.

What to Expect in Q4:

• A flood of opportunities: A significant portion of contracts that would typically be spread out through the year will be concentrated in Q4.

• Limited time to respond: With so many opportunities dropping at once, contractors who aren’t prepared will struggle to submit quality proposals on time.

• Heightened competition: The compressed timeline means you’ll be competing against other contractors who are equally eager to win contracts before the fiscal year ends.

How to Prepare:

• Explore AI tools for proposals: AI-driven tools can help you generate tailored, compliant proposals in a fraction of the time it used to take, allowing you to handle the Q4 workload without compromising quality.

• Train your teams now: FYQ3 and Q4 will be too late to start implementing new processes or training your staff. Invest in training now to ensure your team is ready to handle the upcoming surge.

• Evaluate your pipeline: Identify which opportunities are most critical and which agencies will likely be awarding contracts in your area of expertise.

3. The Retirement Wave: Why This is a Huge Opportunity for Contractors

The Office of Personnel Management (OPM) has introduced a significant change: federal employees are being offered the option to retire early and continue receiving pay through the end of the fiscal year (September 30th). This is expected to result in a wave of retirements across multiple agencies, creating both gaps in staffing and opportunities for contractors.

Why This is Good News:

• Knowledge transfer: Many of these retiring officials have decades of experience and intimate knowledge of how the government operates. Contractors who recruit them can gain a strategic edge in navigating the federal space.

• Short-term staffing gaps: With government personnel retiring en masse, agencies will need to rely on contractors to fill critical functions and keep operations running smoothly. This will likely lead to increased spending on contract labor.

• Strategic recruitment: This is an ideal time to bring on board former government personnel who can help you win and manage federal contracts.

What Contractors Should Do:

• Recruit strategically: Identify retiring personnel who have experience in your target agencies or contract areas. These individuals can help you build relationships, understand agency priorities, and execute successful bids.

• Expand your strategic plan: Think beyond your current contracts. With the right team in place, you can enter new markets, win contracts in adjacent areas, and take advantage of emerging agency needs.

4. Shifting Spending Priorities: More Work for Contractors

While the retirement wave may create temporary gaps within agencies, it won’t reduce overall government spending. The federal government spends around $750 billion a year on contracting, and that isn’t likely to change significantly in the short term. What will change is how that spending is allocated. With fewer full-time employees, agencies will increasingly rely on contractors to handle tasks that were previously performed by in-house staff.

Key Areas of Opportunity:

• Administrative support and program management: Agencies will need contractors to fill roles left vacant by retiring personnel.

• Emerging technology and modernization projects: As the new administration sets its agenda, expect increased spending on technology, cybersecurity, clean energy, and infrastructure.

• Compliance and regulatory support: With shifting regulations under the new administration, agencies will need help ensuring compliance, presenting another opportunity for contractors.

5. The Time to Act is Now

With 30 to 60 days of delayed awards, the real action will start in Q3 and peak in Q4. But waiting until then to prepare will be a costly mistake. Contractors who act now—by adopting AI tools, training their teams, and recruiting key personnel—will be the ones who thrive in the upcoming frenzy.

Here’s what you need to do immediately:

• Evaluate AI tools for proposals: If you haven’t already, it’s time to see how this tool can help you write proposals faster, stay compliant, and win more contracts in the compressed timeline ahead.

• Train your team: Ensure they are familiarized with essential AI techniques - such as prompt engineering – and are ready to adopt an AI tool to manage their proposal drafting process.

• Recruit retiring government personnel: Build a team that understands the government from the inside out and can guide you through the changing landscape.

• Revise your growth plan: Identify high-priority agencies and markets to target during the upcoming surge in contract awards.

Final Thoughts: Turning a Slowdown into a Springboard

While the current slowdown in government contract awards may seem like a setback, it’s actually a strategic window of opportunity. Contractors who use this time to prepare will be in a position to win big when the floodgates open in Q4.

Don’t wait for the wave to hit—start building your strategy today.