Thriving in Transition: Adapting to Change in the Government Contracting Industry

In government contracting, the rules of the game are always changing—but lately, the pace of change has accelerated. Agency priorities are evolving, cost expectations are tightening and competition is becoming more sophisticated. Contractors who don’t rethink their approach risk being left behind—not just in losing bids, but in their ability to sustain long-term success.

It’s no longer enough to have a pricing model that simply checks the boxes. Government contractors need to adopt a more strategic mindset—one that accounts for shifting agency expectations, cost realism factoring in the reality of tariffs and the ability to demonstrate lasting value and margins. Those who navigate these complexities effectively will be the ones securing contracts in an increasingly scrutinized environment.

Overcoming Challenges Impacting Contract Pricing

Pricing in government contracts has always been complex, but recent events have introduced new levels of oversight and change. For those of us doing business with the federal government, it's critical to understand the key factors impacting the industry and their effects on our operations:

Navigating Economic Conditions

Inflation has been unpredictable, swinging between highs and lows, creating significant challenges for pricing strategies—especially for fixed-price contracts. With new tariff poloicies and uncertain effects of inflation, government contractors are left coping with these economic fluctuations, along with additional complexities such as potential supply chain disruptions. To stay competitive and ensure long-term sustainability, contractors must adapt their pricing models to account for these shifting economic conditions.

Adjusting to the New Administration

Under the Trump administration, federal agencies are experiencing significant shifts in their approach to contracting, especially when it comes to budget allocations. This heightened oversight demands greater precision in pricing strategies. Government contractors, regardless of size, must carefully structure their pricing to balance delivering margins to stakeholders while remaining competitive in their bids. Some agencies will be growing and investing, giving more margin opportunities to compaiens while other agencies will likely be contracting and putting lots of pressure on contractor pricing. This challenge is particularly evident in fixed-price contracts, which require contractors to account for all potential costs upfront, leaving little room for adjustments as projects evolve.

Meeting Compliance Requirements

Over the past five years, the compliance landscape has changed significantly, particularly with the introduction of new cybersecurity requirements like CMMC. These changes are reshaping how companies manage contracts and safeguard unclassified information, often increasing overhead costs. Additionally, many RFPs now require compliance with specific business systems, ISO certifications and CMMI standards. As a result, the growing emphasis on compliance is influencing how government contractors need to structure overhead costs and refine their pricing strategies.

Refining Cost Structures

When working under tight deadlines for a specific opportunity, it’s crucial to have a solid grasp of your cost structure. You need to account for the impact of compliance regulations and any additional costs they may bring. But just as importantly, you must anticipate future expenses—those that could arise in the next year or two—and integrate them into your pricing strategy.

Too often, companies rush into pricing without a robust strategy in place, leading to missed opportunities and financial setbacks. To avoid this, it’s essential to develop a comprehensive pricing plan that not only accounts for current costs but also adapts to potential changes in the future.

Strategies to Keep Contractors Competitive

The future of pricing in the government landscape starts now. It's all about having command of your systems, leveraging cutting-edge technology and refining your pricing strategies. As we move forward, staying ahead means not just overcoming the challenges but anticipating them. Government contractors looking to compete and win contracts need to evolve how they are approaching their business.

Optimizing Robust Systems for a Competitive Advantage

If you're waiting weeks or months to understand the impact of a data set on your pricing, you'll be at a disadvantage. Therefore, government contractors with robust systems and processes that can swiftly leverage data will have a significant edge in this market.

To stay competitive, it's essential to gather and analyze data rapidly, enabling you to build your pricing efficiently. The ability to quickly adapt to new information and integrate it into your pricing strategy is key to maintaining a competitive advantage.

Integrating Artificial Intelligence for Better Business Outcomes

One of the most transformative factors impacting pricing will be the integration of artificial intelligence (AI). AI has the potential to revolutionize government services, making them more efficient and effective. The administration is adopting a more aggressive stance on integrating AI into its processes, especially as the government workforce declines in size. With this shift, contractors will be expected to bring AI automation and capabilities to help the government operate more efficiently and effectively.

By making AI a core capability, government contractors can increase margins through improved automation and reduced costs, driving better business outcomes and more competitive bids.

Embracing Digital Procurement for Enhanced Efficiency

It’s no secret that the federal government has been slow to adopt digital procurement, remaining largely paper-driven and process-oriented. However, progress is being made, and agencies are increasingly looking to companies for help in transitioning to digital processes that comply with requirements.

Digital procurement offers more latitude for creative pricing strategies, allowing agencies to receive pricing data in digital formats. This enables them to manipulate, manage and evaluate prices more effectively and efficiently. As agencies embrace digital procurement, contractors that can provide innovative solutions and streamline pricing data will stand out.

Navigating Pricing Complexities

As you can see, government contracting is undergoing a major transformation, and the need for pricing professionals to stay agile and well informed has never been greater. One of the best ways to stay ahead is having the right tools. 

Deltek ProPricer is specifically designed to assist government contractors in streamlining their pricing strategies, ensuring both compliance and competitiveness. With its robust data analysis capabilities and integration of advanced technologies like AI, ProPricer empowers contractors to make informed decisions quickly and efficiently. By leveraging this powerful solution, you can optimize your cost structures, meet compliance requirements, and maintain a competitive edge in the market.

To learn how Deltek ProPricer can transform your pricing strategies and help you secure more contracts, talk to one of our industry experts.