Most federal contractors are focused on Q4 right now, and for a good reason. Agencies are rushing to spend the remainder of their FY2026 budgets, and businesses are busy looking for opportunities they can pursue between July 1 and September 30. But we can’t lose sight of planning for the next Fiscal Year.
The federal government has one foot in the next year already, and while nothing is final, we are getting a clearer idea of where the priorities will lie. Over the past few months, the White House has released its FY2027 Budget Request, issued new Executive Orders, and continued pushing initiatives focused on efficiency and modernization that will impact federal procurement, especially contractors under the GSA Multiple Award Schedule (MAS) Program. Here are four federal contracting trends worth watching as we head into FY2027:
National Security will Be a Major Focus As AI Technology Advances
It's not a new concept or a surprise that AI is going to be a bigger theme for next year. However, it’s important to pay attention to what regulations may change for contractors as AI is further developed and implemented into the federal government’s systems.
One example is from early June when the administration issued an Executive Order (EO) focused on advancing AI capabilities while supporting national security objectives. In the past, the Trump Administration has put more of a focus on the rapid development with AI and less guardrails, but this EO shows they are increasingly concerned with the cybersecurity threats AI can create. This EO establishes a voluntary framework so agencies can review AI models before they are released publicly, and encourages federal agencies to put more of an emphasis on testing and security evaluations.
While nothing is mandatory for now, we expect to see more development on AI and managing sensitive data, and we have seen hints of it already. GSA is eventually planning on adding an AI clause to the MAS Solicitation that would more closely govern how AI is used in GSA Schedule contracts.
In addition to protecting federal data in AI usage, the FY2027 Budget Request has made it clear that the administration is still very focused on advancing AI technology. While funding levels will ultimately be determined through the appropriations process, the request includes significant investments related to Artificial Intelligence.
We have seen a lot of change in federal procurement so far as the administration sets the stage for reforming the system, and we expect these updates to gain more traction in FY2027 as they are carried out.
Over the past year, the federal government has introduced several initiatives aimed at making procurement more efficient and cost effective. One of these initiatives is the Administration's April 2026 Executive Order promoting fixed-price contracting.
The order directs agencies to prioritize Firm-Fixed-Price (FFP) contracts whenever practical and review certain cost-reimbursement contracts. As a reminder, FFP contracts are agreements that set a specific, non-adjustable price for goods or services, regardless of the contractor's actual costs. In FY2027, we expect many solicitations and task orders under the Multiple Award Schedule (MAS) Program to be FFP.
Agencies are also preparing for regulatory changes through the ongoing Revolutionary Federal Acquisition Regulation (FAR) Overhaul initiative, or RFO. The administration plans to formally implement the proposed FAR changes for 17 sections soon, including:
The FY2027 Budget Request most notably increased the defense budget about 44%. When people hear "defense spending," they often think of aircraft, ships, and weapons systems. While those investments continue and will still play a large part in next year’s priorities, many recent defense priorities focus on technology, software, supply chains, and industrial capacity.
The FY2027 Budget Request and recent national security initiatives show a strong interest in:
As a result, technology firms, manufacturers, logistics providers, engineering companies, cybersecurity providers, and professional services firms may all find opportunities connected to these priorities.
When contractors think about future opportunities, they often focus on budgets, forecasts, and upcoming solicitations. However, another factor that may influence agency buying decisions in FY2027 is organizational restructuring.
Over the past year, several agencies have announced efforts to consolidate functions and centralize decision-making. A very recent example is the Small Business Administration's (SBA’s) June reorganization announcement, which plans to centralize several roles into a few main offices. The reorg also established a Faith Office and the Office of Rural Affairs.
We're also seeing similar themes appear throughout the administration's FY2027 budget request, which plans to make changes to several agencies, including:
While the Budget Request changes are not final, they give us a glimpse into the federal government’s big plans next year to move some things around to reduce the workforce and tighten spending.
The companies that pay attention to these changes early are often in a better position to enter FY2027. As your team continues planning for next year, you should be watching more than just budgets and paying attention to the policies, initiatives, and organizational changes that will impact federal procurement overall. For future govcon insights and updates, check out our blog and monthly newsletter. If you have questions or need help managing some of these changes for your GSA Schedule contract, we are here to help!