As we prepare to enter 2025, the landscape of government contracting continues to evolve, shaped by several factors including shifts in political leadership, technological advancements, and changing federal priorities. While the upcoming presidential administration plays a pivotal role in shaping policies, there are broader trends that contractors should watch closely. As we know, it can take months to years for new policies to have their full effect, so continuing resolutions from 2024 will still have a lasting impact. Here are the top emerging federal contracting trends we expect to see in 2025.
1. Supply Chain Resiliency
The global supply chain disruptions of recent years have led to a heightened focus on supply chain security. This is an issue that both administrations have planned to address. Both parties in recent years have signed Executive Orders (EOs) to strengthen the Buy American Act (BAA) and we know the Trump administration has intentions to refocus trade toward domestic production as much as possible.
Some trends we can anticipate within supply chain resiliency include:
- Expect stricter “Buy American” policies and incentives for using U.S.-based suppliers.
- We’ll most likely see a tighter rein on the Trade Agreements Act (TAA). We suggest you review the current policies and keep an organized process in place if there’s a change in your manufacturers.
So, how can you prepare? Strengthening supply chain operations and ensuring compliance with these standards will be important tasks to focus on heading into 2025.
2. Advancements in Artificial Intelligence (AI) Integration
AI is no longer just a buzzword we throw into conversations; it’s becoming an important part of how agencies operate. The federal government recognizes this and has started to implement it in their daily operations. However, not without guardrails. In October of last year, an Executive Order was issued to ensure AI is being developed and used safely. This EO has laid the groundwork so far in how AI has been advanced in the past year, but comprehensive AI legislation failed to pass Congress in the past few years. AI governance might take a different pathway in 2025.
In 2025, contractors can expect to see an increase in the need for AI-enabled products as the promotion of AI innovation grows. As far as precautions are concerned, we’ll likely also see a loosening in the current framework from the 2023 EO, and stricter regulations on trade with China as it pertains to AI advancement. This is what we have witnessed in the former Trump Administration, so we can anticipate similar regulations. What we do know for sure is staying ahead of AI trends and investing in innovative solutions will be key for contractors looking to expand their offerings. AI innovation isn’t going anywhere and will continue to expand.
3. Multiple Award Schedule (MAS) Program Updates
As you may already be familiar with, the GSA Multiple Award Schedule (MAS) Program is constantly making updates to align with federal priorities, take industry opinions into account, and lean into technological advancements. There are a few changes on the horizon for MAS contractors you should be aware of.
To increase transparency and enhance contractor performance, GSA is seeking feedback from customers and contractors on the potential ability of GSA to publish contractor performance information on GSA eCommerce and digital platforms. The metrics included on these platforms would be delivery information, customer feedback surveys and fulfillment success criteria. As GSA takes the feedback into account to form a draft rule, we expect to see updates in early to mid-2025.
GSA also plans to consolidate the Economic Price Adjustment (EPA) Clauses into one main clause. The idea behind this is to simplify the process create more flexibility for contractors and Contracting Officers. The rule in the federal register has been published, but it’s not in effect for contractors until it’s formally added in the MAS Solicitation.
Related to this is some upcoming audits regarding the GSA Schedules Program. Included in the Office of Inspector General’s (OIGs) Audit plan is two investigations into the MAS Program. These audits will consist of:
- A deep dive into MAS Economic Price Adjustment (EPA) requests to ensure there is enough approval justified to increase pricing (in light of GSA’s plan to simplify EPA clauses )
- A closer look to see if products sold through the MAS Program are abiding by TAA requirements.
While we are still waiting on the reduced EPA clauses to make it into the MAS Solicitation, we can anticipate some updates in FY2025 on this matter. As discussed above under supply chains, we’ll see increased scrutiny of TAA practices, so be prepared.
4. Increased Emphasis on Cybersecurity Compliance
Cybersecurity remains a top priority for federal agencies, with evolving threats driving stricter regulations. This is not a new phenomenon and tops our charts every year for trends. Here are two regulations we expect to develop further in 2025:
- CMMC: Now that the Department of Defense (DoD) finally released the Final Rule for Cybersecurity Maturity Model Certification (CMMC), it’ll likely start appearing in contracts by the end of 2025.
- FAR (Federal Acquisition Regulation) Case 2021-017 Cyber Threat and Incident Reporting and Information Sharing: Recently proposed FAR Case 2021-017 Cyber Threat and Incident Reporting and Information Sharing, will increase information sharing between IT government contractors regarding cyber threats and cyber incidents. We anticipate seeing some movement on this rule to require government contractors to comply with incident reporting regulations.
We know that the Trump Administration intends to ramp up cybersecurity laws to protect against the increasing threat of bad actors, so contractors should be on the lookout for future EOs and proposed rules. You can also spend the time now ensuring you have good cybersecurity posture and cyberattack prevention processes in place.
5. Small Business and Subcontracting Expansion
We have seen an increase in contracting dollars spent through the MAS Program topping $40 billion in the past 2 years. However, we have also seen a decrease in the number of prime contractor awards. With this trend, contracts will continue to get more competitive, and prime contractors will turn to more subcontractors to complete work and qualify for more opportunities.
The federal government has also been working to funnel more opportunities to small businesses and encourage greater participation outside of the well-known contracting giants. One way they are trying to do this is expanding the “rule of two” to apply to orders under Multiple Award Contracts. If this rule passes, it means that if a Contracting Officer (CO) determines there is a reasonable expectation of receiving offers (that are competitive in price, quality, and delivery) from two or more small businesses under Multiple Award Contracts, then it needs to be set-aside.
Staying Ahead in 2025
We know that there will inevitably be a lot of changes in the next year, so we all need to be prepared to adapt with our contracts and our business. We encourage you to do a little more research into the specific trends related to your offerings to see what else might affect your company in the coming year. If you have any questions about these updates or need help managing your GSA Schedule to prepare for upcoming changes, feel free to contact one of our consultants. We are here to help you succeed in the government market.
