7 Federal Contracting Trends Shaping FY 2026

The federal contracting landscape is shifting faster than ever. Between new Executive Orders, cybersecurity mandates, and changing acquisition strategies, FY 2026 looks very different from even two years ago.

Here are the 7 biggest trends shaping federal contracting this year — and what they mean for your business.

1. CMMC Enforcement Gets Real

After years of preparation, CMMC (Cybersecurity Maturity Model Certification) requirements are now appearing in actual DoD solicitations. This isn't a drill anymore.

What's happening:

• CMMC Level 2 requirements in new defense contracts
• Primes requiring subcontractors to certify
• C3PAO assessment backlogs growing

What to do:

• If you haven't started compliance, start now
• Budget $50K-$200K for Level 2 certification
• Schedule your C3PAO assessment 6+ months out

Contractors who delayed are now scrambling. The ones who prepared early have a competitive advantage.

2. Commercial-First Acquisition Strategy

Executive Orders 14271 and 14275 are pushing agencies toward commercial solutions over custom government builds. This is a fundamental shift in how the government buys.

What's happening:

• Agencies required to prioritize commercial items
• FAR revisions to streamline commercial acquisition
• Less custom development, more COTS integration

What to do:

• Position your offerings as commercial items where possible
• Consider GSA Schedule if you haven't already
• Emphasize proven commercial track record in proposals

If you can demonstrate that your solution works in the commercial market, you're suddenly more attractive to federal buyers.

3. AI Industry Partnerships Accelerating

The Department of Defense and other agencies are rapidly seeking AI capabilities. This isn't just for tech giants — there's opportunity across the supply chain.

What's happening:

• DoD prioritizing AI deployment partnerships
• New AI-focused acquisition vehicles emerging
• Demand for AI/ML in logistics, maintenance, analytics

What to do:

• Even if you're not an AI company, explore how AI enhances your services
• Look for teaming opportunities with AI specialists
• Track AI-related solicitations in your NAICS codes

You don't need to build AI to benefit. Agencies need help integrating, managing, and supporting AI solutions.

4. GWAC Consolidation Continues

GSA is pushing more work through government-wide acquisition contracts (GWACs) like OASIS+, Alliant 3, and GSA Schedule. Many agency-specific IDIQs are quietly not being renewed.

What's happening:

• Agency IDIQs expiring and not recompeting
• Work shifting to OASIS+, GSA MAS, 8(a) STARS III
• Consolidation means fewer but larger vehicles

What to do:

• Prioritize getting on major GWACs over niche agency contracts
• If you're not on OASIS+ or GSA Schedule, evaluate your strategy
• Monitor recompete timelines for contracts you depend on

The contractors who positioned for GWACs will capture work that used to flow through smaller vehicles.

5. Small Business Set-Aside Scrutiny

DoD issued guidance to increase review of small business set-asides and 8(a) contracts over $20 million. This doesn't mean fewer opportunities — it means more scrutiny.

What's happening:

• Two-stage review for larger small business awards
• Increased documentation requirements
• Focus on ensuring legitimate small business participation

What to do:

• Ensure your size status is current and defensible
• Document your capabilities thoroughly
• Be prepared for longer evaluation timelines on large awards

This is about accountability, not reducing small business spending. Well-documented, legitimate small businesses benefit.

6. SBIR/STTR Reauthorization Through 2031

Good news for R&D-focused small businesses: the Small Business Innovation and Economic Security Act reauthorized SBIR and STTR programs through September 2031.

What's happening:

• Programs extended with stable funding
• Emphasis on commercialization of funded technologies
• Continued focus on domestic innovation

What to do:

• If you have innovative technology, explore SBIR/STTR
• Phase I awards ($50K-$275K) are accessible for small teams
• Phase II can lead to significant follow-on contracts

SBIR/STTR remains one of the best paths for technology companies to enter federal contracting.

7. Supply Chain Security Tightening

The BIOSECURE Act and related policies are restricting use of certain foreign (particularly Chinese) companies in government supply chains. This affects more contractors than you might expect.

What's happening:

• Restrictions on specific foreign companies
• Increased supply chain documentation requirements
• Scrutiny of component sourcing

What to do:

• Audit your supply chain for prohibited entities
• Be prepared to document country of origin
• Consider domestic alternatives where possible

Supply chain compliance is becoming a competitive differentiator. Contractors who can demonstrate clean supply chains win trust.

What This Means for Your FY 2026 Strategy

The common thread? Preparation and positioning matter more than ever.

Successful contractors in FY 2026 will:

• Have CMMC compliance sorted before it's required
• Position commercial solutions for federal buyers
• Hold positions on major GWACs
• Document capabilities and supply chains thoroughly
• Build relationships before opportunities post

The reactive approach — waiting for solicitations and scrambling to respond — is increasingly a losing strategy.

Where to Focus

Based on these trends, here's where we see the best opportunities for prepared small businesses:

• Defense cybersecurity — CMMC implementation creates demand
• AI integration services — Agencies need help deploying AI
• Commercial IT products — Preferred over custom development
• Supply chain services — Documentation and compliance support
• Technical services on GWACs — Work flowing to consolidated vehicles

Next Steps

1. Assess your positioning — Where do you stand on GWACs, compliance, certifications?
2. Identify gaps — What do you need to compete in FY 2026?
3. Build your pipeline — Find opportunities aligned with these trends
4. Start relationships now — Don't wait for solicitations

The government is spending over $750 billion on contracts. The trends above tell you where that money is flowing. Position accordingly.