April 3, 2025 - With a new administration, ongoing continuing resolutions, and evolving acquisition strategies, the next 12–18 months will be critical for government contractors. Workforce reductions, budget pressures, and heightened competition are reshaping procurement, making it essential for companies to align with shifting agency priorities. From streamlined RFPs to increased pricing pressures, firms must adapt their bid strategies, cost structures, and risk approaches to stay competitive.

A few key takeaways as you and your team plan ahead:

• The impact of workforce reductions on procurements: The reduction in government personnel due to retirements, early separations, and hiring freezes isn’t just delaying procurements — it’s reshaping how they will be structured and evaluated. Agencies will need to issue solicitations that require less hands-on evaluation, leading to more streamlined RFPs, straightforward and low-risk selection criteria, and scoring methodologies that favor more quantifiable factors, like price, making bid strategy alignment even more critical.
• Budget pressures and competitor portfolio risks: Government funding is tightening, as agencies are being forced to reassess priorities. Programs tied to non-mission-essential IT modernization, workforce support, and agency operations are increasingly at risk, while national security, AI/ML, cybersecurity, mission critical and critical infrastructure programs should remain well-funded. Certain competitors with heavy exposure to discretionary or low-priority programs may struggle to maintain their revenue base. Primes will work to protect their core programs driving increased price competitiveness on recompetes. New programs will also be very price competitive. Understanding where funding will flow — and where it will dry up — will be key to making strategic bid/no-bid decisions and competitive pricing adjustments.
• Companies are reexamining cost structures amid price pressure:  With downward price pressure intensifying, companies across the market — whether they are losing base contracts due to DOGE realignments or simply preparing for a more competitive landscape — are making shifts. While most firms already operate leaner than they did in past downturns, many are now looking for additional efficiencies to drive WRAP rates down.
• Fee and risk strategies: With price playing a bigger role in awards, more companies will be inclined to take an aggressive pricing stance. However, the operational environment will heighten execution risks, effecting fee decisions and putting into doubt on the effectiveness of any future “get well” plans. Expect more use of firm fixed price procurements, shifting risk to the contractor and making protests harder to win.

In these uncertain times, an effective Price-to-Win (PTW) strategy is more important than ever. Understanding where the market is moving, how competitors will respond, and what price will truly be competitive is essential. Our team specializes in delivering data-driven insights that help clients protect revenue, maximize competitiveness, improve PTW, and ensure sustainable growth.

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.