Crucial Elements for a Government Contractor to Prosper in the Years 2025 and Beyond
In a rapidly evolving federal landscape, government contractors (GovCons) are facing significant financial challenges, with finding new revenue sources topping the list, according to the latest 2025 GAUGE Report. The report, released by Unanet and CohnReznick, delves into best practices, priorities, challenges, and opportunities for GovCons in five key areas: government compliance, accounting, utilization, growth, and efficiency.
One of the key findings from the report is the transformation in resource utilization, which remains the top project management challenge for GovCons for the fourth consecutive year. The report notes a notable shift away from reliance on spreadsheets towards increased automation and modern tools. Spreadsheet use for labor forecasting dropped from 72% in 2024 to 58% in 2025, marking a significant industry-wide shift in embracing automation to improve efficiency.
The competitive landscape has intensified, making it more difficult for firms to win new contracts. The report encourages contractors to become smarter by leveraging market intelligence, automation, and expanding their business development efforts.
A strong recommendation from the report is for firms to establish Project Management Offices (PMOs) and focus on utilization to improve operational efficiency and win rates. GovCons with a PMO average 10 more proposals annually than those without a PMO, and those with a PMO are 1.5 times more likely to report effective communication.
Portfolio forecasting is emphasized as a best practice that moves contractors from reactive to proactive planning. This approach provides visibility into upcoming work, resource needs, and revenue potential by uniting capture, delivery, and finance teams around a unified forecast that incorporates contract, proposal, and pipeline data. This approach improves win-rate forecasting accuracy, labor utilization, profitability analysis, and contract compliance.
Despite these improvements, challenges persist, such as a shortage of experienced project managers and difficulties in accurately forecasting project costs, schedules, and resources. This suggests that project management maturity is an ongoing journey.
Integration of AI and automation into resource management and project workflow processes is highlighted as a critical enabler for reducing manual efforts and empowering teams to focus on higher-value work. More than half (54%) of GovCons report using AI in some capacity, with business development, operations, and IT being the areas in which GovCons are most actively applying AI.
The report is based on a survey of 1200 upper-level decision-makers from various government contracting organizations. The findings underscore a transformative shift in government contracting resource management from manual, spreadsheet-driven processes towards automated, data-driven project management supported by PMOs, portfolio forecasting, and AI integration, all within an increasingly competitive market environment that demands efficiency and agility.
- In the intensifying business environment, government contractors (GovCons) are advised to leverage technology, especially AI and automation, to enhance resource management and project workflow processes, thereby enabling them to focus on higher-value work and compete more effectively.
- As the 2025 GAUGE Report reveals, GovCons are urged to implement Project Management Offices (PMOs) and prioritize portfolio forecasting to improve operational efficiency, win rates, and project management maturity, while also embracing automation to streamline labor forecasting and resource utilization.
