What's Happening?
Government contractors in the United States are experiencing significant uncertainty due to a series of disruptions in 2025, including executive orders, budget impoundments, and the longest government
shutdown in history, lasting 43 days. The Trump administration's initiatives, such as the reform of the Federal Acquisition Regulations and consolidation of procurement efforts at the General Services Administration (GSA), are seen as positive but are challenged by workforce cuts. David Wennergren, president and CEO of ACT-IAC, highlighted the lack of communication between government and industry, exacerbated by the shutdown. Tim Brennan, vice president for technology policy and government relations at the Professional Services Council, noted the difficulty in budget negotiations due to the administration's use of impoundments, which has led to a trust issue with Congress. The current continuing resolution ends on January 31, 2026, and there is concern that significant portions of the government may continue to operate under a continuing resolution for the entire fiscal year.
Why It's Important?
The ongoing uncertainty poses challenges for both government and industry, particularly in planning and launching new projects. The reliance on continuing resolutions and workforce reductions at agencies like the GSA could hinder the effective delivery of government services and projects. Contractors are urged to adapt by positioning themselves as essential to mission delivery, as the government may increasingly rely on the private sector due to reduced intellectual capacity on the government side. The situation underscores the need for strategic adaptation and resilience in the face of changing government priorities and fiscal constraints.
What's Next?
As the end of the current continuing resolution approaches, stakeholders are closely watching the budget negotiations. The potential for continued reliance on continuing resolutions could lead to prolonged uncertainty for civilian agencies and contractors. Industry leaders are encouraged to remain flexible and innovative, questioning existing assumptions and exploring new ways to deliver services. The outcome of these negotiations will significantly impact government operations and the private sector's role in supporting government missions.
