Two key ingredients a GovCon must have to thrive in ’25 and beyond

BlackHays

24 hours ago

Originally published Two key ingredients a GovCon must have to thrive in ’25 and beyond on August 16, 2025 03:48 by https://federalnewsnetwork.com/commentary/2025/08/two-key-ingredients-a-govcon-must-have-to-thrive-in-25-and-beyond/ at Federal News Network

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Among all the ways to gauge the health of a government contractor, few are more telling than resource management — essentially, how efficiently a firm commands its resources. In fact, as findings from the latest GAUGE benchmarking report make clear, a mastery of resource management is a common thread among high-performing GovCons.

The 2025 GAUGE Report released this summer by Unanet and CohnReznick concludes that “efficient utilization and optimized project and resource management will be critical not only to government contractors’ continued growth and profitability, but to their continued survival” in the face of extreme uncertainty.

Based on a survey of 1,200 upper-level decision-makers from a broad cross-section of government contracting organizations, the ninth GAUGE report digs into best practices, priorities, challenges and opportunities for GovCons in five key areas: government compliance, accounting, utilization, growth and efficiency.

Looking at the big picture, 65% of the execs surveyed indicated they are optimistic about the current GovCon environment, a drop of 8.5% from 2024 that is not surprising considering the volatile business landscape. Among the challenges that keep GovCon execs awake at night, the current political environment tops the list, followed by the overall economy and increasing competition for contracts.

GovCons and resource management: A complicated relationship

Government contracting is a project-based business, and for the fourth consecutive year, resource management tops the list of project management issues for GovCons, with 48% citing it as their top project management challenge despite the fact that they ostensibly have more tools than ever to throw at the problem. Meanwhile, upticks in the share of GovCons identifying forecasting and lack of project status visibility as project management challenges (to their highest levels since 2022) illustrate the ongoing issues many GovCons have with accurately predicting and tracking resources in real time. These are two critical elements of a strong resource management practice.

Troublingly, we haven’t seen measurable gains in how government contractors view the maturity of their resource management practices. In fact, quite the opposite. In this year’s report, we saw the share of GovCon execs who rate their overall resource management as mature drop to 60%, lower than in the previous three years.

Resource management can be especially challenging without the right tools. However, only about one-third of GovCons express some level of satisfaction with their current resource management tools, while roughly half have a neutral view of those tools — a sign that many view them as merely “good enough” rather than as a positive difference-maker within their company. Among the factors that GovCon execs view as critical to improving resource management, better project planning and forecasting capabilities topped the list, followed by better communication and collaboration tools.

In a similar vein, GovCon execs name communication challenges and information bottlenecks as the two biggest impediments to efficient resource management.

As for the source of those challenges and bottlenecks, a continued reliance on old-fashioned (and efficiency-crushing) spreadsheets is a major culprit. For example, spreadsheets remain the most commonly used tool for labor forecasting according to the 2025 GAUGE Report. Small and midsize GovCons in particular tend to rely on spreadsheets much more than their larger counterparts. There are signs of progress on this front, as GovCons’ use of tools integrated into timekeeping systems nearly doubled while use of spreadsheets dropped 20%. GovCons that consider themselves mature in terms of their resource management practices are 40% less likely to rely on manual forecasting methods than those that are less mature in this area, illustrating a strong connection between organizational maturity, technology and rigor.

In general, companies that identify as having mature resource management practices have a clear edge over their less mature counterparts in a range of key indicators of overall business success, a testament to the connection between resource optimization and growth. Indeed, the benefits of mature resource management practices resonate across a government contracting organization, from improved predictability and understanding of overall performance, to more efficient communication within project teams and senior leadership, to better project outcomes, which equate to more delighted customers.

Primacy of the PMO

Besides resource management maturity, we identified the presence of a formal project management office (PMO) as another important indicator of overall GovCon health. A PMO is an organizational unit that sets project standards and supports execution through oversight, resource coordination and performance tracking. It can be centralized, managing the project management practice across an organization, or decentralized, with multiple independent offices embedded within departments or business units.

More than three quarters (77%) of the GovCons we surveyed have a PMO of some sort, including 54% that have a centralized PMO. There’s a broad divide in this category between small and midsized businesses (SMBs) and their larger counterparts, as just under 30% of SMBs report having a PMO, compared to more than 80% of larger GovCons. This speaks to a wide discrepancy in project management maturity between smaller and larger companies.

The presence of a PMO appears to give GovCons an edge in several key measures of business success. For example, having a PMO correlates with a higher growth expectation for the year ahead, as 81% of companies with a PMO anticipate growth in the next year compared to 68% of those without a PMO.

On the business development front, GovCons with a PMO average 10 more proposals annually than those without a PMO. What’s more, those with a PMO are 1.5 times more likely to report effective communication than those without, which makes sense given the PMO’s role in aligning and coordinating resources.

GovCons with a PMO are nearly 40% more likely to use integrated tools and 40% less likely to perform manual calculations than those without a PMO.

Surging AI usage and other revelations

From expanding use of AI to expected win rates, here’s a look at other key findings from the 2025 GAUGE Report:

AI adoption is accelerating among GovCon respondents, more than half (54%) of whom report using AI in some capacity. Business development, operations and IT are the areas in which GovCons are most actively applying AI. Using AI tools to comb the landscape and identify new business opportunities that closely match with strategic priorities looks like an especially promising application on the business development side, as does employing AI capabilities in development of actual proposals.
As it did last year, finding new revenue sources tops the list of most significant financial challenges for GovCons. The share of companies identifying uncertain federal spending as a top-two concern jumped significantly from last year, highlighting the deep anxiety and uncertainty GovCons feel about the future.

Close to 80% of GovCon execs said they’re concerned about obtaining and winning new contracts, an increase of 10% over last year. Still, the share of companies expecting win rates of more than 50% in the year ahead is holding fairly steady above 40%.

If nothing else, government contractors remain a buoyant bunch, even in the face of extreme uncertainty, though their ability to sustain that buoyancy certainly will be tested throughout the remainder of 2025.

Kim Koster is vice president of product marketing at Unanet.

Originally published Federal News Network