Government Contracting Updates for 2025

Now that the election and inauguration is over, it is time to take stock in what these next few years hold in store for government contracting and contractors. Every election cycle that brings in a new administration brings about changes in the contracting environment, and while it is too early to know exactly what will happen, we have some ideas of how things will play out. 

Overview of Government Contracting in 2025

The main trend that will shape government procurement and contracting this year lies in the direction the Trump administration takes on the matter. Every administration has their own sets of goals regarding government contracting. 

It is still very early, only a few weeks into the administration so it is tough to say exactly what the landscape will look like through 2029 but we have some key indicators already. Federal contracting will focus on a few significant items moving forward.  

Infrastructure and Modernization Spending

One of the major initiatives that never quite materialized at the end of President Trump’s first term was a massive infrastructure expenditure for the United States. He has not openly promised anything yet, but it appears he is teasing at a high-rolling bill this term. America has infrastructure that is certainly aging, so it will be gladly accepted and put into action. 

New Policies and Regulations in Government Contracting

One of the first major policy shifts that we are almost certainly going to witness will be a hardlined initiative to streamline acquisitions and procurement and demand efficiency. Government efficiency was a major tenant of his campaign, so expect this administration to stick to it. 

What will this look like for contractors?

  • Major policy changes for contractors—we can expect a push toward cost-cutting measures and streamlining the contract processes. The positives from this? Faster procurement cycles. 
  • Updates to federal acquisition regulations (FAR) — expect to see adjustments to the FAR that could or will reduce the heavy burdens of red tape. This will expedite procurement especially for infrastructure and defense projects. 
  • Small business set-aside program updates — We anticipate that policies will continue to favor veteran-owned and rural small businesses. 

Technology and Innovation in Procurement

Tech is playing a role in procurement because it makes the process more accurate and much faster. Expect to see government agencies increasingly leverage AI and automations to improve efficiency. 

  • How AI and automation are streamlining processes — AI will increasingly get the nod for automated bid evaluations and contract monitoring. Implementing this technology will substantially reduce human error and speed up the contract awarding process. Both are huge wins. 
  • Advances in cybersecurity for government contractors — Expect an even bigger push 
  • Emerging technologies shaping procurement strategies — You will see a rise in the use of Blockchain, cloud-based computing, and predictive analytics being rolled into procurement systems to increase transparency and improve fraud prevention. 

Sector-Specific Updates

Here is what we expect to see in the key sectors of the federal government. 

Defense Contracting

Defense spending will remain a high priority and may even see some increases in the coming years, while the rest of the federal government spending will probably see sharp reductions. We anticipate investments in modernization, increased focus on unmanned systems, and space-based initiatives will remain a high priority. 

Infrastructure Projects and Funding

Infrastructure will probably be a major initiative over the next few years, so expect funding for official projects to be lucrative in this space. Contractors will compete for new road construction, airports, and even critical digital infrastructure like broadband expansion. The opportunities will be there and the government will be looking for services to buy, it will just shift from previous focuses.

Challenges Facing Government Contractors in 2025

The supply chain is still a mess from 2020-era instability, so contractors need to be agile and adaptable to work around these continuing problems. Also, increased spending from the gov equals increased competition. Make sure your tasks are in order and you can stand to win big in the next few years, though; there will be opportunities. 

Opportunities for Contractors in 2025

Rural and underserved markets will continue to receive funding for contracts, and maybe even increased funding, or at least new avenues for freelancers. There are a number of required factors to to be considered for these federal opportunities, but they are a great deal if your company qualifies. 

Part of the process to streamline and make procurement more efficient will lie in encouraging the markets to innovate processes. This will come in the form of R&D grants for defense, technology, and energy sectors. 

Preparing for Success in 2025

Government procurement in 2025 (and onward) will present challenges like it always has, but it looks like there will be some real room for advancements as well. The procurement cycles will get shorter and be more precise thanks to advanced technologies backed by reduced regulatory burdens. This could well be a boom cycle for contractors, especially in the defense industry. 

Speaking of procurement, there is no one better situated in the industry to handle procurement, logistics, or supply chain integrity than Greenwood Aerospace. We have been doing this for over forty years and we have kept our finger on the pulse of the market and government regulations to know exactly how to serve you. 

Ready to start improving your procurement process? We can help.