The 2026 Government Contracting Forecast: Trends, Opportunities, and How to Prepare

Welcome to 2026—a year that promises to reshape federal contracting in fundamental ways. From AI transforming how agencies evaluate proposals to critical CMMC compliance deadlines, contractors who understand these shifts will be best positioned to capture their share of the market.

With the federal government projected to award over $773 billion in contracts annually, the stakes have never been higher. Here's what you need to know to navigate 2026 successfully.

Trend 1: AI Transforms Federal Procurement

If there's one theme defining 2026, it's the integration of artificial intelligence into the procurement process itself. According to federal contracting analysis, "federal contract automation isn't futuristic; it's happening now, with 2026 projected as the decisive year for large-scale deployment."

What This Means for Proposal Evaluation

AI systems are increasingly automating the technical review of proposals. Instead of lengthy manual reviews, agencies are deploying machine-generated insights that score submissions against predefined benchmarks in minutes rather than weeks.

This shift has practical implications:

• Structured data matters more: Proposals need to be machine-readable. Clear formatting, consistent terminology, and explicit requirement mapping become even more important.
• Quantitative metrics win: Abstract claims carry less weight than specific, measurable results. AI systems can verify quantitative assertions against past performance data.
• Past performance signals amplify: Agencies are building dynamic vendor risk profiles that incorporate past performance trends, pricing behavior, compliance history, and workforce readiness.

The $32 Billion AI Opportunity

The National Security Commission on Artificial Intelligence has recommended doubling federal nondefense funding for AI research and development to reach $32 billion annually by 2026. Defense AI investments add billions more.

For contractors with AI capabilities—or the ability to support agencies implementing AI—this represents substantial opportunity.

Trend 2: CMMC Phase 2 Arrives

October 1, 2026 marks a critical milestone: the Department of Defense plans to include CMMC requirements in all applicable solicitations.

The Timeline Contractors Must Know

The CMMC implementation follows a phased approach:

• Now through October 2026: Phase 1 with selective CMMC requirements
• November 10, 2026: Phase 2 begins—solicitations require Level 2 Certification for CUI handling
• November 10, 2027: Phase 3—Level 3 certification requirements begin
• November 10, 2028: Phase 4—All contracts include applicable CMMC levels

The Bottleneck Problem

Here's the challenge: fewer than 85 C3PAOs (Certified Third Party Assessment Organizations) can assess for CMMC, while more than 80,000 organizations need assessments.

The math doesn't work for procrastinators. Level 2 certification typically requires 6-12 months of preparation. Organizations that wait until Q3 2026 to begin may find themselves locked out of DOD opportunities due to certification backlogs.

Action Items for 2026

If you handle CUI and haven't started CMMC preparation:

1. Assess your current state against NIST SP 800-171 requirements
2. Identify gaps and develop a remediation plan
3. Engage a C3PAO now—the queue is growing
4. Budget accordingly—certification costs can range from $50,000 to $200,000+ depending on scope

Waiting is not a strategy. The contractors who achieve certification early will have access to opportunities that latecomers cannot pursue.

Trend 3: The FAR Revolution Continues

The "Revolutionary FAR Overhaul" (RFO) continues to simplify federal acquisition regulations. According to policy analysts, the overhaul "strips the FAR to statutory essentials, grants contracting officers broader discretion, and mandates commercial-first approaches."

What This Means in Practice

• Faster procurements: Simplified regulations enable quicker awards
• More contracting officer discretion: Individual judgment plays a larger role in source selection
• Commercial solutions prioritized: Existing vehicles favored over new procurements
• Reduced compliance burden: Some traditional requirements may be eliminated

For contractors, this creates both opportunity and uncertainty. Faster procurements reward those who can respond quickly. Greater CO discretion emphasizes relationship building. Commercial-first approaches favor those already on established vehicles.

Trend 4: Contract Vehicle Landscape Evolving

Several major contract vehicles are reshaping the competitive landscape in 2026.

OASIS+

GSA's next-generation contract vehicle combines the scope of legacy OASIS programs with new service areas. Solicitations are expected to open in mid-January 2026.

For contractors on existing OASIS vehicles, this represents continuation and expansion. For those seeking access, this may be the on-ramp opportunity.

Multiple Award Schedule (MAS)

The MAS Program opens access to opportunities exceeding $39 billion annually. For small and medium-sized businesses seeking federal market entry, MAS remains the most accessible path.

IT GWACs

GSA's IT governmentwide acquisition contracts continue to serve as primary vehicles for enterprise technology procurements. Small business set-aside GWACs provide dedicated pathways for socioeconomic credit.

Trend 5: Small Business Set-Asides Under Scrutiny

2025 brought significant changes to small business programs, and 2026 continues the evolution. According to industry observers, programs including 8(a), women-owned small business, veteran-owned small business, and HUBZone designations face ongoing review.

The SDVOSB Opportunity

One bright spot: the 5% SDVOSB contracting goal is now law. This represents a 67% increase from the previous 3% goal, translating to billions in additional set-aside dollars for service-disabled veteran-owned businesses.

Navigating Uncertainty

For small businesses relying on socioeconomic set-asides, 2026 requires:

• Staying current on program rule changes
• Maintaining certification compliance
• Building capabilities beyond set-aside status
• Developing competitive positioning for full-and-open competitions

Trend 6: Defense Remains the Anchor

With a projected defense budget approaching $1.01 trillion, including substantial investments in artificial intelligence, missile defense, and cybersecurity, DOD continues to drive federal contracting volume.

Top Opportunity Areas

Defense priorities creating contractor opportunities include:

• AI and machine learning applications
• Cybersecurity and zero-trust architecture
• Missile defense systems
• Space systems and satellite communications
• Autonomous systems
• Supply chain resilience

DIU and SBIR Expansion

The Defense Innovation Unit (DIU), Accelerate the Procurement and Fielding of Innovative Technologies (APFIT), and Small Business Innovation Research (SBIR) programs represent approximately $1.3 billion in dedicated innovation funding.

Trend 7: IT Modernization Accelerates

IT modernization remains the federal government's most consistent growth area. GSA has publicly emphasized the need to accelerate automation and AI adoption across agencies.

Key IT Spending Areas

• Cloud migration and optimization
• Cybersecurity enhancement
• Legacy system modernization
• Data analytics and business intelligence
• Customer experience improvement
• AI and automation implementation

For contractors with IT capabilities, 2026 offers continued strong demand across civilian and defense agencies.

Preparing for 2026: The Action Plan

Given these trends, what should contractors do to position for success?

1. Assess CMMC Readiness Now

If DOD is part of your market, CMMC preparation cannot wait. Start assessment and remediation immediately to avoid the certification bottleneck.

2. Optimize for AI-Driven Evaluation

Structure your proposals for machine readability. Use clear formatting, explicit requirement mapping, and quantifiable metrics. Ensure your past performance data is current and well-documented.

3. Strengthen Vehicle Positioning

Evaluate your contract vehicle portfolio. Are you positioned on the vehicles where agencies are buying? If OASIS+ on-ramps open, assess fit and prioritize accordingly.

4. Invest in Proposal Efficiency

With faster procurements becoming the norm, the ability to respond quickly is increasingly competitive. Organizations that can compress proposal timelines without sacrificing quality will capture opportunities that slower competitors cannot.

5. Build Relationships Before RFPs

As contracting officer discretion increases, pre-solicitation positioning matters more than ever. Engage with customers during market research phases. Understand their priorities before requirements crystallize.

6. Monitor Policy Changes Actively

The regulatory landscape continues to evolve. Subscribe to acquisition news sources, participate in industry associations, and engage with your agency customers to stay ahead of changes that affect your business.

The Year Ahead

2026 brings both challenge and opportunity to federal contractors. AI is changing how agencies evaluate proposals. CMMC deadlines create urgency for cybersecurity investment. Regulatory simplification accelerates procurement timelines.

The contractors who thrive will be those who:

• Adapt quickly to changing evaluation methods
• Meet compliance requirements proactively
• Position on the right contract vehicles
• Respond efficiently to shortened timelines
• Build relationships that inform better proposals

The federal market remains robust. The question isn't whether opportunities exist—it's whether you're positioned to capture them.