AI Could Help Small GovCons Curb Growth Struggles, Deltek Study Suggests

AI technologies such as generative AI could help small GovCons improve efficiency in light of weak growth forecasts, according to a Deltek executive.

The Deltek Clarity 2025: Government Contracting Industry Study found that small GovCons are negative on future growth in the U.S. and could take drastic measures such as consolidation or divestiture in response. Michael Greenman, Deltek senior manager for cloud solutions, told an audience during the GovCon Wire State of Government Contracting in 2025: Industry Insights from the Deltek Clarity Study webinar that improving efficiency is a priority for small businesses as President Trump in his second term in office has prioritized efficiencies and reducing waste in government contracting. 

Greenman said small GovCons should be wary of slashing labor costs, and instead, should leverage technological innovation such as AI to make a workforce better, faster and stronger. Small companies could also come up with a better supply chain to find better sources for materials, which could require consolidation.

“Another subhead of this Clarity study … it’s not so much ‘change is the new normal,’ it’s ‘is this the market shakeup that was needed to come up with the efficiency and technology innovation to move our economy [and government] forward,” Greenman said.

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What Is the GovCon Growth Forecast?

Greenman said that market conditions for small businesses are tumultuous and that small businesses had indications prior to President Trump’s second inauguration in January that growth was slowing or stalled. A general market condition, he said, among all businesses was that consolidation was the future.

“The status quo is no longer going to be acceptable for these businesses that depend on government contracts,” Greenman said. “A lot of times, small businesses are the most accurate indicator of [the] actual market conditions.”

The 2025 Deltek Clarity Study said that nearly half of all respondents, 44 percent, plan to diversify their products and services. Respondents identified strengthening teaming partnerships, expanding subcontracting opportunities and refining capture strategies as their top priorities for growth. Attracting top talent dropped from third in last year’s survey to seventh, suggesting that recruitment is no longer viewed as a major hurdle.

Greenman said increased scrutiny of small business efforts was another concern from small GovCons, which are those with less than $50 million in revenue. The Trump administration is targeting funding programs, 8(a) business development and diversity efforts with a goal of rooting out waste and creating efficiencies. Pausing or eliminating funding for these programs, he said, creates market uncertainty.

What Is AI for Government Contracting?

AI and machine learning were by far the top technologies companies targeted for investment. Additionally, 40 percent of survey respondents, a six-percent increase compared to the previous year, reported using AI for innovation and product development. Beyond primary use cases, respondents cited a range of additional AI applications, including compliance, proposal writing, data analysis and others.

Greenman said the future of generative AI is performing services such as strategic information and not just helping GovCons identify contracts. For strategic information, he said, genAI takes information from a company and its competitors and creates new content such as data outputs, insights, trajectory and predictability. Greenman said GovCons are starting to see genAI for strategic information show up in government contracts, promising to further disrupt traditional technology and business methods.

GovCons and CMMC 2.0

The Pentagon in President Trump’s second term is putting more focus on Cybersecurity Maturity Model Certification, which is designed to enforce the protection of sensitive unclassified information shared by the department with its contractors and subcontractors. Greenman said he was stunned to read that almost 70 percent of survey respondents planned to have an official CMMC third-party assessment in 2025.

This, he said, demonstrates that defense GovCons are taking CMMC 2.0 seriously. CMMC assessments are expensive and can cost around $100,000 for a Level 2 assessment, which must be repeated every three years.

“You can fully expect there to be disruption and change in the defense industrial base when it comes to CMMC as it rolls out,” Greenman said. “You can expect that the wider federal government is going to have CMMC-type requirements in the near future as well.”

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