Why Strategic Planning Matters More in 2025

Fiscal shock therapy. DOGE cancellations already top $60B in “book” savings with limited true savings realized, while the FY-26 blueprint would push defense spending past $1T for the first time and slash non-defense outlays to the lowest share of GDP since 2000.
Procurement bottlenecks. Retirements and RIFs inside acquisition corps are lengthening PALT; NPR reports some of the contracts DOGE killed were actually modernization efforts, foreshadowing potentially re-buys under crisis timelines.
Political leverage. A full-year FY-25 CR plus broad transfer authority lets the White House redirect idle balances quickly once agency spending plans clear OMB, creating two “lumps” of solicitations (unfrozen FY-25 then reconciliation-fueled FY-26).
Implication. Firms that refresh their capture plans before the May-June solicitation wave—and pre-answer emerging RFP clauses on cyber, supply-chain security and AI ethics—will vault slow-moving incumbents.

Watch our webinar from May 7, 2025 in partnership with GrantExec

Key Market Takeaways

Washington’s post-DOGE landscape is in flux: >8,000 contracts and 9,000 grants have already been axed, federal payrolls are falling fast and a $163B defense-and-border plus-up is being financed by a historic 22 % cut to non-defense agencies.
The upheaval and detailed agency expenditure reviews that were due April 29th have frozen many procurements — but it simultaneously opens a once-a-decade window for firms that can close capability gaps, automate workloads and deliver verifiable ROI inside tight appropriations caps.
Winners will be vendors positioned on defense, homeland security, technology, particularly cyber/AI/automation, VA digital health and “break-fix” surge services for agencies hit by significant loss of institutional knowledge/brain-drain (FEMA, IRS, HUD, Education, EPA).
The playbook below translates those shifts into concrete pipeline strategies, pricing levers and teaming tactics you can execute in Q3-Q4 FY25 to capture FY26 spend.

Trump 2.0 Administration & DOGE’s Mandate

Under the second Trump Administration, the Department of Government Efficiency (DOGE) has been empowered to slash what it considers wasteful federal programs. The approach includes:

Freezing or Halting Expenditures: Delaying or rescoping pending programs to align with evolving political objectives.
Terminating Grants and Contracts: Open and awarded agreements related to foreign assistance, climate resilience, environmental justice, abortion, gender, diversity, equity, inclusion, and accessibility face broad cancellation under DOGE’s directive to purge perceived inefficiencies.
Auditing Contractor Roles: Hundreds of thousands of contractor positions could be eliminated, particularly those deemed nonessential.
Canceling Non-Essential Consulting: A Government-wide initiative now targets any contract that “merely generates a report, research, coaching, or an artifact.”

While these measures aim to curb unnecessary spending, the ripple effects can be far-reaching, destabilizing programs central to public health, foreign aid, and other core missions. The recent surge in USAID contract terminations, for instance, illustrates how swiftly entire agencies can be upended.

Strategic Opportunity Map
Key Winners with New / Expanded Funding in FY26

Key FY26 Takeaways

Defense-Border Swap. The reconciliation bill that Republicans have begun drafting would drive $119B into DoD (including $6B for NNSA nuclear programs) and $43.8B into DHS. To keep total discretionary BA roughly flat at $1.61T, the same $163B would be cut from non-defense base accounts.
Scale of the Cuts. Base non-defense funding would fall 16.6% overall and 25% when DHS border money is removed—about $162B less than FY25. The remaining non-defense top-line would settle at $601.2B.
Winners & Losers.
1. Biggest gains: DoD +13 % (first-ever $1T budget) and DHS +65% (mass-removal campaign, wall completion, tech & fleet refresh).
2. Modest gains: VA discretionary +4 % (+$27.6B incl. Toxic Exposure Fund) and DOT +6 % (+$1.5B).
3. Deep cuts: State –48 %, HUD –44 %, HHS –26 %, Labor –35 %, EPA –55 %, NSF –56 %, NASA –24 %.
Political Mechanics. By using reconciliation (simple-majority vote), the White House aims to boost defense and border accounts. Failure to secure all 50 GOP votes + VP would erase the hikes and prolong FY25 stop-gap funding into winter 25-26.
Market Signal. New reconciliation money will be front-loaded in high-priority missions—border security, missile defense/golden dome, industrial base, FAA ops/NAS, port and rail infrastructure, VA digital health—while a handful of “protected” functions inside shrinking agencies (trade enforcement, drinking-water safety, MAHA public health) still receive niche plus-ups.

Recommended Strategies For Contractors

Rebuild Strategic Opportunity Pipeline: After thousands of DOGE contract cancellations and procurement freezes – strong need to refresh top opportunities to align with administration priorities and top growth areas
Flexibility & Adaptability Through Partnerships: In a shrinking budget environment, teaming with larger primes or specialized partners can improve your competitive edge and give access to strategic contract vehicles/GWACs
Proactive Strategic Scenario Planning: Monitor regulatory and budget signals weekly. Anticipate possible funding disruptions and pivot quickly.
Emphasize ROI and Cost-Efficiency: Agencies facing intense scrutiny need solutions that demonstrate immediate or near-term returns, particularly in fraud prevention, data analytics, and strategic cost containment.
Explore Stable & Growth Areas: Even as civilian programs face cuts, defense, homeland security, and select infrastructure projects remain comparatively robust.
Diversification & Resilience: Small and mid-sized firms should explore alternative markets and state/private funding sources, especially as more than 200 federal grant programs have vanished.
Plan for Rebuilding: Position solutions to address the eventual pivot from downsizing to modernization, helping agencies fill skill gaps and update legacy systems.