Insights and trends for the GovCon industry
As federal priorities shift and cost pressures increase, many in the industry are rethinking how they plan, lead, and deliver. Despite these pressures, GovCon companies continue to demonstrate flexibility and a willingness to invest in smarter tools, talent, and project management. The result is a sector that remains cautiously confident while adapting to uncertainty.
The 2025 GAUGE Report arrives at a time of pronounced change for government contractors.

The 2025 GAUGE Report
The GAUGE Report, in its ninth year, includes insights from some of the top minds from the GovCon Industry. The feedback from this year’s leaders points to a few clear themes:
-
Strong project and resource management remain essential.
-
Growth and finding new revenue is more important than ever.
-
Agile planning and clear communication help companies manage policy and funding changes.
-
Targeted investments in technology and talent development are helping teams deliver more value, even in a tougher market.
Industry challenges: Facing headwinds with practical solutions
Resource management remains the top project management challenge for GovCon companies for the fourth year in a row. Forecasting, efficient labor planning, and inexperienced project managers continue to create complexity. The numbers tell the story:
The GAUGE Report: By the numbers
Market trends: Stability tested, resilience proven
Most GovCon companies remain positive about their business outlook, with two out of three companies expressing some level of optimism. At the same time, concern over the political environment has increased, reflecting a more complex operating environment. Worries about recruiting and retention have taken a back seat to political and federal spending uncertainty, but still remains a top 3 issue. Organizations with mature project and resource management practices report higher levels of optimism and are more likely to adjust quickly when priorities change.
Growth: Business development is everyone’s business
As DOGE kicked the year off and cancellations, delays, and massive changes in aquisition like the FAR Overhaul and GSA Centralization have created more uncertainty, people are investing in business development to try to fill gaps in revenue.
Almost 80% of respondents said that obtaining and winning new contracts was their top concern – a 10% jump from 2024. AI for proposal generation has become prevalent throughout the year, but only 41% of those surveyed win more than half of their bids.
We see a shift in focus as there is a slight decrease in the number of mods, task orders, and contracts tracked and pursued. However, companies with higher resource management maturity and established PMOs tend to submit more proposals and track more contracts than their counterparts.
Operational efficiency: Building strength in a changing market
Many GovCon companies are taking a fresh look at how they operate in order to better manage cash flow and cut costs. Companies using advanced technology, including AI, are seeing gains in efficiency and project management maturity.
- Interestingly, GovCons with PMOs are firm believers in the advantages of using AI; compared to those without PMOs, they are more likely to see AI as an asset across the board.
- This difference is especially marked for operational efficiency, with 35% of firms with PMOs agreeing AI will prove advantageous compared to 16% of those without.
Demand for integrated, real-time tools continues to rise and use of spreadsheets for forecasting, pipeline, and more continues to decline – albeit still being prevalent. Teams are searching for better ways to manage resources, collaborate, and track progress. These improvements are not only helping companies meet compliance but also deliver stronger results for their customers. Companies that invest in their people, improve planning, and use data to guide decisions are best positioned for sustainable growth with companies with a PMO being 40% more likely to use integrated tools and 40% less likely to use spreadsheets..
Ways to sustainable growth
-
Invest in people
-
Improve planning
-
Use data to guide decisions
AI in GovCon: Progress, not just potential
Artificial intelligence is no longer just a talking point. 30% of companies are actively exploring how AI can improve compliance and operational efficiency. 14% are already seeing the benefits of AI in their processes. Smaller companies are often just beginning to experiment, while larger organizations are integrating AI to support everything from compliance checks to forecasting. This shift is gradual but steady, and it is helping teams focus on more valuable work.
Below are just a few examples of how GovCons might apply AI:

-
Automating tasks
Repeatable, mundane tasks don’t need to assume the bulk of your team’s time. With AI, you can reduce your manual workload and enhance efficiency.
-
Data validation
Accessing and analyzing data is valuable – if you have the right data. Ensure data accuracy and compliance using AI capabilities.
-
Proposal preparation
The focus of your proposal efforts should be on your ability to craft a compelling narrative, not creating a new way of doing things each time you answer an RFP. Simplify the proposal process with automation.
-
Virtual assistance
When applied as a tool to help accentuate a human touch, AI can help you improve customer service and internal operations.
Building AI maturity: Moving from pilot to practice
The distance between companies that are testing AI and those realizing its benefits continues to widen. The difference often comes down to operational maturity. Companies with strong project management offices and robust resource management move more quickly from pilot projects to daily use, seeing measurable gains in accuracy, speed, and decision-making.
We’ve identified four levels of AI maturity. All organizations fall under one of the following categories: resistant, curious, emergent, and mature.
You can read more on these four levels in the GAUGE AI Supplimental Report.

Compliance: Adapting to new requirements
The compliance environment has changed significantly this year. The CMMC Final Rule is now live, making security and readiness non-negotiable for many contractors. 46% of companies with a PMO meet CMMC Level 2 or 3 requirements, compared to just 25% of companies without a PMO. Larger companies still spend the most time on compliance, but more teams are using new systems, better training, and practical AI applications to meet rising standards.

How AI can make compliance easier
-
Analyzing and applying rules by contract or project
-
Continuously monitoring time and expense entries
-
Providing automated detection and alerts for data disparities across systems or reports
-
Checking whether relevant clauses are included in RFPs
-
Sending automated alerts for project milestones or project plan deviations
-
Providing updates and training on policy changes
-
Creating dynamic learning modules to update and train employees on new requirements.
Get the full 2025 GAUGE Report
The 2025 GAUGE Report is built on insights from more than 1,200 industry leaders, with nearly half from the C-suite. The report covers financial performance, project execution, compliance, and growth strategies, providing real-world benchmarks that help GovCon companies see where they stand and where there is room to improve.
For a deeper look at benchmarks, challenges, and solutions shaping the GovCon sector, download the full 2025 GAUGE Report.
About the Authors
-
-
Author
Christine Williamson
Partner, Government Contracting Industry, CohnReznick