Summary
AI in GovCon takes center stage on the latest Deltek Podcast episode. Per the 17th Annual Deltek Clarity study, 73% of firms are still in the early stages of AI governance. The takeaways cover proposal speed, firm size, integration, and compliance risk. AI adoption isn't the differentiator anymore. Governance is.
5 Things Every GovCon Leader Should Know
Fewer companies are competing for government contracts this year, but the ones that remain are moving faster, bidding smarter, and looking for every possible advantage. As competition intensifies, AI is quickly becoming a competitive imperative for contractors looking to do more with less. That reality sets the stage for a recent conversation between Kevin Plexico and Noura Bashshur on the latest episode of the Deltek Podcast.
Drawing on market data, industry research, and firsthand experience with AI-powered proposal development, the two discuss what's driving AI adoption across GovCon, where contractors are seeing the greatest returns, and what distinguishes firms experimenting with AI from those transforming how they compete.
1. The Market Created the Urgency—AI Is the Response
The GovCon landscape has split into what Kevin calls the haves and have-nots. Firms concentrated in DOGE-impacted agencies like USAID and the Department of Education have faced terminated contracts and real profitability pressure. While those in DOD and DHS have operated in a largely insulated environment. Fewer companies are competing overall — but the ones still in the market are more sophisticated, working harder on IDIQ contracts, and competing more aggressively than before. That combination of cost pressure and elevated competition has made AI less of a strategic option and more of a practical necessity. Firms need it to stay competitive without growing headcount.
Why it matters: The urgency around AI in GovCon is market-driven, not technology-driven. Firms that frame their AI investment around specific competitive pressures will build more durable capabilities than those that chase the technology itself.
The move: Before evaluating any AI tool, map the pressures your firm felt most acutely in the last 12 months. Capture everything from proposal turnaround and compliance overhead to cost competitiveness. That map is your investment case.
2. IDIQ Timelines Have Changed What Proposal Operations Need to Be
The expansion of IDIQ contracting has compressed capture cycles that used to run months into weeks, and for task order responses specifically, timelines have compressed to days. A $100 million task order response—incorporating past performance, teaming relationships, and compliance documentation—can now be expected in under a week.
AI can’t replace the human relationship that gets a firm into the conversation for the best opportunities. But it can handle proposal drafting, compliance gap analysis, and iterative quality checks, so that experienced people can focus on strategy rather than content generation.
As Kevin put it directly: this is a very unforgiving market with very complex documents and AI changes what a lean proposal team can realistically accomplish inside a compressed window. With the average proposal costing teams 84 hours to develop, and 94% of business development teams already planning to use AI for RFP/RFI analysis, these tools aren’t optional anymore—they’re how the timeline gets met.
Why it matters: Small businesses are already using AI to close the capability gap that has long favored larger contractors. Mid-market and large firms moving slowly on this are ceding ground that won’t be easy to recover.
The move: Review your last three task order pursuits and identify where time was lost. Content generation and compliance review are two different problems with different solutions. Conflating them leads to buying the wrong capability.
3. Company Size Shapes How—Not Whether—You Adopt AI
Kevin’s read on the market is that small businesses have a genuine first-mover advantage in AI adoption. An entrepreneurial CEO with a lean BD staff can move quickly once the right data protection agreements are in place with providers like OpenAI, Anthropic, and Microsoft.
While larger firms need to be more methodical given their governance obligations and organizational complexity. The risk isn’t being methodical; it’s letting methodical become indefinite. The firms navigating this well at scale are the ones that separate the compliance and security evaluation from the deployment decision, establish the guardrails first, and then move with conviction.
Why it matters: The competitive separation over the next 18 months won’t be between large and small firms. It will be between firms that have deployed AI with intention and those still in planning mode, regardless of size.
The move: If your AI rollout has been in governance review for more than 90 days, identify one function, one use case, and one measurable outcome. Treat that as a deployment commitment, not a pilot.
4. The Real Gains Are in Iteration and Integration—Not Just Generation
Content generation gets the most attention in AI discussions. But Kevin points to a broader set of use cases delivering real returns: compliance reporting, subcontracting management documents, program status updates, and the iterative quality checking that runs throughout a proposal cycle. The critical distinction for GovCon specifically, you cannot use AI to replace a government-compliant business system like an EVMS (such as Deltek Cobra), but you can use AI inside one extensively. The value is in tight integration with the systems contractors already need to operate, not in replacing them.
That gap is real: only 5% of firms describe their AI as “fully developed,” and just 25% have advanced or established governance models. As Noura framed it: the goal is helping people work to the top of their skill set—freeing a skilled proposal professional from content library management so they can focus on writing and strategy.
Why it matters: Firms getting the most from AI aren’t automating the most tasks, they’re removing the work that was consuming their highest-skill people. That’s a workflow design question as much as a technology one.
The move: Identify one role on your proposal or program team where significant time goes to structured, repeatable document work. That’s your first integration target—measure hours recovered in 60 days and use that data to build the case for the next use case.
5. Adoption Without Governance Is a Risk, Not an Advantage
This year’s GovCon Clarity findings confirm what most contractors already sense: companies are progressing on AI, investing significantly, and not done. In fact, 73% of firms are still in the early stages of AI governance, and data privacy or security risk remains a top AI concern industry-wide, cited by 37% of respondents. The gap between individuals using general-purpose tools for personal productivity and companies integrating AI into corporate systems like quarterly close, the proposal platform, and board reporting is where the next stage of competitive separation will happen.
In GovCon specifically, that gap has a cybersecurity dimension that can’t be ignored. CMMC is underway. FedRAMP is a real procurement requirement. AI tools that aren’t FedRAMP-authorized or CMMC-compatible aren’t productivity investments; they’re liabilities that can undo years of carefully built compliance posture. The focus should be on bringing AI into the organization thoughtfully, reinforcing the security and governance practices that already protect the business.
Why it matters: Compliance maturity and AI maturity aren’t competing priorities. Firms treating them as a unified investment are building the most durable competitive advantage in this market.
The move: Before your next AI platform decision, confirm three things: Is this solution FedRAMP authorized at the right impact level? Does it support your CMMC posture? Can it be audited? Vendors who can’t answer yes to all three aren’t the right partners for a GovCon AI investment.
Access the 17th Annual Deltek Clarity GovCon Industry Study
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The Opportunity Is There — Getting After It Is Going to Take Work
The market has more clarity than it did 12 months ago. DOGE has wound down, the agencies driving demand are identifiable, and the technology to compete more efficiently is proven and available. As Kevin closed: once you have that compliance framework in place, you can open the door to a lot of opportunities across government. The firms that treat this moment as a call to raise their game—not wait it out—are the ones that will be cited as high performers in next year’s Clarity study.
