By Kim Koster, Vice President of Industry Marketing at Unanet
The world of federal contracting is in a state of transition, driven by shifting policy priorities, delayed contract awards and workforce changes within government agencies. Contractors who pivot in response to these evolving dynamics by proactively adjusting their business development and proposal strategies will be in the best position to succeed.
Leveraging AI-driven proposal strategies, expanding into adjacent markets, and staying ahead of procurement reforms can help address the challenges of delayed contract awards and agency workforce shifts. These actions can also help drive greater efficiency.
Adapting to Procurement Delays With a Strategic Business Development Approach
One of the most immediate challenges facing government contractors are the delays in contract awards caused by multiple factors during this transition. According to data from USASpending, the federal government has awarded 20 percent fewer dollars than the same period last year. With some Senate-confirmed officials still pending, and changes in staffing across the government, many agencies are unable to make contract award and spending decisions. This has created a backlog of unawarded contracts. The slowdown may mean that the fourth quarter of the federal fiscal year (July–September 2025) could be even more competitive than usual as agencies rush to allocate their budgets before the deadline.
For proposal managers and business development professionals, this reality means that preparation is more important than ever. Contractors must focus on pipeline refinement, identifying the most critical and likely opportunities, and strengthening their proposal development process now rather than waiting for a potential flood of solicitations in Q4. Leveraging AI-driven proposal tools can be a massive competitive differentiator, allowing teams to generate high-quality drafts quickly, ensure compliance with federal regulations and free up human resources for strategic refinement.
With limited time to respond to the surge of RFPs expected later this year, organizations that incorporate AI-powered efficiency will gain a significant advantage.
Policy Shifts Are Creating New Market Opportunities
Beyond contract delays, policy reforms and procurement changes are reshaping the federal contracting environment. The Department of Government Efficiency has implemented aggressive spending cuts, leading to the cancellation of over 1,200 contracts, particularly those related to diversity, equity, inclusion and accessibility initiatives, strategic communications consulting and workforce training programs. These cuts are expected to be ongoing, and uncertainty exists beyond DEIA.
For example, while DEIA-specific contracts may be winding down, the government is still prioritizing IT modernization and cost-efficiency initiatives. Contractors who previously focused on DEIA-related work can pivot to consulting services around regulatory compliance, workforce transformation, or technology integration—all areas where federal agencies are still showing signs of investment. Similarly, consulting firms impacted by the reduction of strategic communications contracts may find new opportunities in data analytics, program management and cybersecurity risk assessment, where government priorities appear to remain strong.
This shift underscores why business development teams need to stay proactive, continuously tracking procurement trends and identifying adjacent contract areas where their expertise can be applied. AI-driven market intelligence tools can help analyze solicitation trends and predict emerging opportunities, allowing firms to adjust their growth strategies accordingly.
Workforce Changes & the Increasing Role of Contractors
Another major factor influencing the contracting landscape is the federal workforce transition. The Office of Personnel Management recently introduced an early retirement initiative and buyout offer, cutting thousands of jobs across the board. This has resulted in a significant number of departures among senior government personnel. This wave of departures will increase reliance on contractors to fill operational gaps, particularly in areas such as program management, administrative support and regulatory compliance.
For government contractors, this is a prime opportunity to recruit departed agency personnel, leveraging their institutional knowledge to strengthen business development efforts. Former government employees bring invaluable insight into agency priorities, procurement decision-making and compliance expectations—all of which can be used to craft more competitive proposals. Additionally, this workforce shift could lead to new staffing contract opportunities, as agencies look for external partners to maintain continuity while hiring freezes and workforce transitions play out.
AI as a Force Multiplier for Proposal Success
With an expected surge in contract awards later this year and increased competition across government contracting, AI-driven proposal solutions are becoming an essential tool rather than a luxury. Proposal teams must generate high-quality drafts quickly, ensure compliance and manage a growing pipeline — all of which AI can support.
AI-powered tools can:
- Analyze past performance data to identify strengths and tailor proposals to agency needs.
- Automate compliance checks, ensuring strict adherence to federal regulations.
- Generate high-quality drafts in minutes, freeing up proposal teams for strategic refinement.
- Support opportunity identification, using predictive analytics to flag contracts aligned with a firm’s expertise.
According to Alex Cohen, senior vice president with Unanet ProposalAI, “When there’s turbulence and volatility in the GovCon space, that’s the time for firms to focus on optimizing operations and their technology in order to position themselves and increase their capacity for growth.”
If contractors face compressed proposal timelines in Q4, AI will be instrumental in managing the workload, allowing teams to respond quickly while maintaining quality.
Moving Forward: How Contractors Can Turn Challenges Into Opportunities
The federal contracting world continues to change on a daily basis, but these shifts can be easily managed, and perhaps even capitalized upon, with the right preparation. Contractors who adapt their strategies now will be well-positioned to ride the roller coaster of changing federal awards.
Immediate Actions for BD and Proposal Teams
- Evaluate AI-driven proposal tools. Don’t wait until Q4 to modernize your workflow.
- Identify adjacent contract opportunities. Pivot into funded areas if your traditional market is shrinking.
- Recruit departing government personnel. Leverage their expertise to refine proposals and strengthen agency relationships.
- Refine your proposal process. Use AI to automate compliance and optimize past performance narratives.
With procurement reforms, workforce shifts and a backloaded fiscal year on the horizon, now is the time to act. Contractors who embrace AI, strategic workforce planning and market intelligence tools will not only survive the changing landscape but may even thrive in it.
