February 21, 2025 - As 2025 unfolds, the federal government is navigating significant shifts in policy, procurement, and workforce dynamics. These changes are shaping how agencies operate, how contracts are awarded, and how businesses—both large and small—engage with the government. Whether you're a government contractor, industry leader, or federal employee, staying informed on these trends is crucial.

1. Information technology: Artificial intelligence, cybersecurity, and emerging technology

   • Automating administrative tasks (e.g., contract reviews, fraud detection, and customer service chatbots).
   • Enhancing defense and intelligence operations with AI-powered data analysis and predictive modeling.
   • Improving procurement and financial oversight by detecting anomalies in spending.
   • Cybersecurity remains a top priority in 2025, with:
     • Full-scale Zero Trust adoption across agencies.
     • Greater investments in post-quantum cryptography to prepare for future threats.
     • Increased scrutiny on cloud security for federal contractors and vendors.
     • Agencies and businesses working with the government must prioritize cyber resilience and align with federal security frameworks like CMMC 2.0 and FedRAMP.

2. Workforce changes: Return-to-office and diversity, equality, and inclusion shifts

   • Return-to-office
     • The federal workforce is experiencing a strong push toward return-to-office (RTO) policies, with agencies enforcing in-person requirements after years of hybrid and remote work models. While some flexibility remains, expect increased on-site requirements for federal employees and contractors working within government spaces.
   • Diversity, equality, and inclusion (DEI) policy adjustments
     • DEI initiatives have been a focus in federal agencies in recent years, but 2025 brings some shifts:
       • More scrutiny and restructuring of DEI programs within agencies.
       • Possible reduction in mandatory DEI training and hiring requirements.
       • Emphasis on merit-based hiring while maintaining diversity initiatives.
   • For federal contractors, understanding each agency’s stance on RTO and DEI will be crucial when shaping workforce strategies and contract proposals.

3. Small business: Agency specific goals are gone

   • One of the biggest shifts in federal procurement is the removal of individual agency small business goals. In previous years, each federal agency had its own unique small business set-aside targets, ensuring diverse participation across different government entities. Now, agencies must adhere to an overall government-wide small business contracting requirement instead.
   • Small business contract allocations will become less predictable, increasing competition for set-aside contracts as agencies consolidate procurement. This shift creates new opportunities for strategic partnerships, including subcontracting and joint ventures with larger firms.

4. Agency changes: The rise of DOGE (Department of Government Efficiency)

   • One of the most notable structural changes in 2025 is the introduction of the Department of Government Efficiency (DOGE). This new agency is tasked with streamlining federal operations, cutting redundant programs, and improving cross-agency collaboration.
   • DOGE’s stated focus:
     • Reducing bureaucratic inefficiencies and improving inter-agency coordination
     • Modernizing procurement processes to eliminate waste and speed up acquisition cycles
     • Driving digital transformation across federal agencies
     • Budget prioritization on defense spending, cybersecurity, AI, border security and immigration, and some infrastructure projects

Staying competitive in 2025

With evolving small business policies, workforce dynamics, IT modernization, and contract consolidation, government contractors must stay ahead of the curve. Leveraging market intelligence, competitive analysis, and Price-To-Win (PTW) strategies are essential for navigating these shifts. By proactively assessing market trends, refining your pipeline, and strategically positioning pursuits, you can maximize your win potential in the changing federal landscape.

Want to learn more?

The Government Contracting Specialty Advisory Services Practice at Citrin Cooperman provides competitive intelligence and Price-To-Win support to provide guidance on how you can optimize your federal pursuits. Contact Kyle Hutchison or Joel Murphy for more information. For all other government contracting needs please contact Sirena Johnson, National Practice Leader, Government Contracting Industry Practice, for more information.