We’ve talked a lot in recent blogs about the Trump administration’s impact on the federal market, but you may be wondering what its impact will be on state, local, and education (SLED) markets. While the recent Executive Orders (EOs) have created some uncertainty around federal funding to state and local governments, we’ll still see spending opportunities in SLED markets, specifically in areas aligning with the new administration’s priorities.
As a government contractor in 2025, you’ll want to be aware of where state and local governments are putting their dollars, along with larger procurement trends. In this blog, we’ll cover what’s included in the SLED market, the effect of recent Executive Orders on the SLED market, and SLED market trends and growth areas related to the new administration.
What is Included in the SLED Market?
The state, local, and education (SLED) market is a huge source of government contracting opportunities, consisting of over 100,000 government entities that together spend almost 1.5 trillion dollars annually on goods and services. The government entities included in the SLED market are:
- State governments, which manage civil infrastructure, law enforcement, and elections
- County governments, which manage law enforcement, health services, and voter registration
- Municipal governments, which mange local public services, zoning, and community development within cities, towns, and villages
- Special districts, which mange specific services such as electricity, fire protection, and parks and recreation
- Independent school districts, which operate separately from municipal or county governments
- Public colleges and universities, which depend heavily on state funding
All types of SLED government entities purchase a wide range of goods and services from government contractors, from construction services to IT solutions. Just like at the federal level, SLED governments issue their own Requests for Proposals (RFPs) and Requests for Quotes (RFQs). Government contractors can also use one of the various state and local purchasing programs to sell to SLED customers.
Effects of Recent Executive Orders on the SLED Market
While the SLED market is generally stable, the Trump administration’s recent EOS have created some uncertainty around SLED governments’ projected funding. Although state governments are mostly funded through tax revenues, they depend considerably on federal funding, which has been cut in areas such as electric vehicle (EV) infrastructure.
Contractors can expect to see a decrease in government contracting opportunities in the areas where funding has been reduced. However, as we’ll discuss, the new administration’s priorities will lead to increased contracting opportunities in certain sectors.
“Unleashing American Energy” Executive Order
This Executive Order seeks to “encourage energy exploration and production on Federal lands and waters.” It also freezes funding for electric vehicle (EV) infrastructure, specifically 5 billion intended for SLED governments to establish an EV charging grid. As a result, SLED contracting opportunities related to EV infrastructure development will decrease. This EO also pauses federal funding for green energy projects disbursed under the Infrastructure and Jobs Act of 2021 and the Inflation Reduction Act of 2022.
At the same time, we can expect to see increased federal and SLED contracting opportunities in facilities, transportation, land surveying, and other fields supporting the production of non-fuel minerals and other resources, thanks to this EO.
“America First Trade Policy” Executive Order
This Executive Order aims to prioritize American interests in international trade. To that end, the new administration has placed tariffs on imports from Canada, Mexico, and China, which could increase the costs of goods and services that SLED governments need to function. With higher costs for necessary goods and services, SLED governments may have to make budget cuts or postpone less critical projects.
However, if you are a reseller or manufacturer of American-made goods, you can anticipate an increase in SLED buyers who are working to meet this requirement.
“Expanding Educational Freedom and Opportunity for Families” Executive Order
This Executive Order aims to divert some of the federal funds that states receive for public schools towards charter schools or vouchers for private schools. While Congress ultimately has to approve any redirecting of funds, we could see reductions in funds for public schools, potentially impacting the number of contracting opportunities in the “E” (Education) portion of the SLED market.
Increased Use of SLED Contracting Vehicles and Cooperative Purchasing
The new administration’s policies are focused on taxpayer savings and government accountability, as we’ve seen with the establishment of the Department of Government Efficiency (DOGE). As a result, we can expect government buyers to rely more on contracting vehicles such as the GSA Multiple Award Schedule (MAS) Program to streamline government procurement.
In the SLED market, we could see a similar increase in Cooperative Purchasing, which allows state and local governments to efficiently procure IT, law enforcement, and security products and solutions through the MAS Program. If you’re a MAS contractor with one of those offerings, we encourage you to opt into the Cooperative Purchasing program, so you can reach additional SLED customers going forward.
State-specific contracting vehicles may also draw a greater number of customers, as state and local governments try to increase efficiencies and prepare for the potential reductions in federal funding discussed above. If you’re a government contractor looking to increase your SLED customer base in 2025, state contracting vehicles – such as the Florida Department of Management Services and the New York Office of General Services (OGS) – are great places to start. Current MAS contractors can also pursue a State MAS Contract, such as the California Multiple Award Schedule (CMAS).
Increased SLED Opportunities in Information Technology
Another key focus of the new administration is IT advancement, particularly in the areas of Artificial Intelligence (AI), cybersecurity, and software modernization. This federal emphasis on IT extends to the state and local levels. SLED markets are expected to have plentiful contracting opportunities in IT this year, especially in – you guessed it – AI, cybersecurity, and software modernization.
Artificial Intelligence (AI)
Advancement in AI is a key focus of the new administration, with efforts underway to invest in AI systems and infrastructure. Like the federal government, SLED governments are seeking to integrate AI tools into areas such as transportation, education, and procurement itself. According to survey results released by the National Association of State Chief Information Officers (NASCIO), AI/Robotic Process Automation is first on the list of state governments’ priority technologies, applications, and tools.
To give you an idea of AI-related opportunities available in Winvale’s home state of Virginia, the VDOT is looking for an AI-based support system to help with transportation incident management, and a local school district is seeking an AI-based plagiarism detection tool.
Cybersecurity
Cybersecurity is another area that the new administration will prioritize, continuing the trend of increased federal spending in cybersecurity over the last few years. This federal emphasis on cybersecurity carries over to state governments: according to the NASCIO survey linked above, cybersecurity is the number one IT priority for state governments this year, so contracting opportunities in this area should be abundant. In addition to targeting SLED cybersecurity opportunities, IT contractors should make sure they’re staying compliant with cybersecurity government regulations generally.
Software Modernization
The new administration’s DOGE has announced plans to launch software modernization initiatives to improve the efficiency of government systems, a focus also seen in SLED markets. According to the same NASCIO survey, “legacy application modernization/renovation” is second on the list of technologies that state governments are prioritizing in 2025.
SLED governments will be seeking contractors to help them digitally transform their IT systems, from case management to grants management systems, so keep an eye out for those opportunities if you’re in the software modernization space.
IT State Contracting Vehicles
IT contractors that can offer AI solutions, cybersecurity services, or software modernization services should make sure they’re monitoring for state and local contracting opportunities in these areas. Many of the state-specific contracting vehicles we discussed above are geared towards IT contractors, making them great places to get started as a SLED contractor.
Going After Government Opportunities
As we’ve discussed, the new administration’s policies and priorities mean that some fields within the SLED market will offer more opportunities for government contracting than others. Contractors who can meet – or pivot to – the new administration’s targeted areas will be more successful at capturing SLED customers.
At both the SLED and federal levels, research is your friend when it comes to finding government customers. Below are some helpful guides for researching government opportunities:
- Why Market Research is the Key to Success for Government Contractors
- How Do I Find Government Customers?
- How to Qualify a Government Opportunity: 5 Steps for Success in the Government Marketplace
We also recommend subscribing to our Weekly Bids and Awards Brief to receive curated government opportunities in your inbox. If you have any questions about how to find success in the current government marketplace, our consultants are here to help.
