Federal contractors are managing one of the most dynamic eras of regulatory and operational transformation in recent memory. Success in this environment will depend on how effectively organizations anticipate, adapt to, and position themselves amid sweeping administrative and market shifts. Here’s what you need to know and do.
1. Executive Orders and the Procurement Overhaul
Federal procurement is receiving more attention from the White House than ever before. This new level of visibility is pushing agencies to refine their internal processes. Senior procurement executives are now meeting weekly to align with RFP requirements and documentation, signaling a heightened level of coordination and scrutiny. For contractors, this means the expectations are rising with agency missions.
2. FAR 2.0 and the Changing Regulatory Backbone
Contractors should prepare for significant changes to the Federal Acquisition Regulation (FAR), particularly with the anticipated release of FAR 2.0. Among the expected reforms is an overhaul of FAR Part 30, which governs the administration of cost accounting standards (CAS). While no final CAS rules have been enacted yet, key proposals include:
- Raising CAS coverage thresholds
- Decoupling CAS applicability from the Truth in Negotiations Act (TINA)
- Streamlining or eliminating specific CAS standards (e.g., 404, 408, 409, 411)
These developments aim to reduce complexity while reinforcing compliance expectations, especially for contractors managing CAS-covered contracts or those preparing for future coverage.
3. Compliance Under the Microscope: DCAA, Cyber, and Legal Trends
Oversight is intensifying. The Defense Contract Audit Agency (DCAA) has released more than 30 revamped audit programs and is recalibrating its approach to reviewing business systems. These changes highlight a contractor’s ability to maintain robust internal controls across key areas, including accounting, purchasing, estimating, and material management. Simultaneously, legal exposure is expanding. The Department of Justice’s civil cyber fraud initiative continues to hold contractors accountable for cybersecurity failures, and CMMC (Cybersecurity Maturity Model Certification) requirements remain in flux but are highly relevant. Staying ahead means continually reinforcing cyber readiness, revisiting policies, and proactively consulting with legal advisors.
4. The “DOGE” Philosophy: Outcome Over Optics
One of the most transformative forces shaping the current landscape is the administration’s cost-cutting philosophy, referred to as the “DOGE doctrine.” The view is straightforward but consequential: The national debt poses the most significant risk to the country, and spending must be curtailed aggressively. This belief is changing how agencies evaluate contracts. Fixed-price contracts are being reopened for renegotiation. Contractors are voluntarily approaching agencies with cost-saving proposals. Consulting engagements are under scrutiny, unless they deliver clear, outcome-driven value. Contractors must be prepared to explain not only what they do, but also why it matters, how it supports statutory mandates, and how it delivers a measurable impact.
5. Strategic Positioning in a Competitive Market
The contracting environment is more competitive and uncertain than ever. Agencies are scrutinizing value propositions. Procurement officers are embracing “The Art of the Deal,” expecting contractors to put something new on the table: lower prices, added risk-sharing, or stronger performance guarantees. According to the latest GAUGE Report, more mature firms are reporting improved win rates, while automation and AI are gradually gaining a foothold in finance, accounting, and proposal development workflows. Yet, many contractors remain skeptical of AI’s practical utility, causing a growing divide between technological optimism and operational reality.
6. Surviving and Thriving Through Change
Mission-critical items to check on or do immediately
- Stay informed: Regularly monitor updates from federal agencies and industry groups to stay current on new directives and policies.
- Communication: Maintain open communication with contracting officers and federal agencies to receive timely updates and guidance.
- Review contracts: Carefully review existing contracts to understand the potential impact of new executive orders and directives.
- Evaluate your cash position.
Steady the ship after you have solved for immediate needs
- Compliance audits: Conduct internal audits to ensure compliance with the latest requirements and identify areas needing improvement
- Financial planning: Prepare for potential funding freezes or stop-work orders by reviewing financial plans and ensuring contingency measures are in place.
- Monitor accounts receivable and get invoices out ASAP.
- Legal consultation: Work with legal experts to navigate the complexities of new regulations and prepare for potential challenges.
- Risk management: Develop a risk management plan to address disruptions and ensure business continuity.
- Enhance your competitive position or respond to future concerns.
Evaluate supply chain agility; check in with subcontractors often.
- Keep your business development machine active and forward-looking.
- Maintain business system compliance — and don’t forget CMMC requirements are still on the way.
- Update policies: Revise internal policies and procedures to align with new regulations, including non-discrimination and DEI requirements.
- Training programs: Implement training programs to ensure staff understand and can comply with new directives.
It remains essential to communicate proactively with stakeholders, agencies, advisors, and internal teams while positioning your organization to adapt and compete effectively.
Remain Adaptive
Federal contractors are no strangers to change, but the current times require both skillful adaptation and appropriate reinvention. Those who monitor the signals, align with agency priorities, and lead with value will be best positioned to grow through and from this transformation.
For a deeper dive, watch our webinar: Transformation of the federal government landscape: Surviving change – Part 2.
From NVC member Christine Williamson, Partner, CohnReznick. As a Partner at CohnReznick, Christine Williamson advises government contractors on complex financial and accounting matters — leading engagements that shape indirect rate structures, address tax ramifications of acquisitions, strengthen GAAP and tax compliance, and optimize organizational performance and readiness.
