As we ring in 2026, government contractors face a landscape that is more complex and competitive than ever before. Federal priorities are shifting toward modernization, cybersecurity, and resilience while attempting to accelerate the acquisition system with regulatory reform. At the same time, technological innovation and workforce dynamics are reshaping how contractors operate and deliver value.  

Organizations that align with federal priorities, strengthen operational resilience, and embrace innovation will be best positioned to thrive in this dynamic environment. Below, we outline six critical areas to focus on in 2026, along with actionable steps for every government contractor to implement.   

1. CMMC compliance and cybersecurity readiness 

Cybersecurity remains a top priority for federal agencies, and CMMC compliance will become mandatory for many contracts. Noncompliance can result in lost opportunities and reputational risk. 

Action steps: 

• Conduct a gap analysis against CMMC requirements based on your required Level. 
• Implement multifactor authentication and endpoint security measures. 
• Schedule regular cybersecurity training for employees. 
• Develop and test an incident response plan.

2. Strengthening supply chain risk management 

Supply chain transparency and resilience are under increased scrutiny, especially for defense and critical infrastructure projects. 
 
Action steps: 

• Map your supply chain to identify critical dependencies. 
• Assess supplier compliance with DFARS and other federal requirements. 
• Establish contingency plans for disruptions and diversify sourcing. 
• Use technology for real-time monitoring of supplier performance. 

3.  National security budget priorities 

The FY2026 federal budget prioritizes cybersecurity, defense modernization, and infrastructure, which means more funding for DOD, intelligence, and DHS. Contractors should review strategies with these agencies. 
 
Action steps: 

• Review agency-specific budget allocations and procurement forecasts for contract consolidations. 
• Identify growth sectors and adjust business development plans accordingly. 
• Monitor legislative updates for shifts in funding priorities, such as FAR overhaul activities and the FY26 NDAA language. 
• Prepare proposals early to align with anticipated solicitations. 

4. Workforce challenges 

Skills gaps in cybersecurity, project management, compliance, and data analytics persist, making talent retention and development critical. 
 
Action steps: 

• Conduct a workforce skills assessment to identify gaps. 
• Invest in training and certification programs for high-demand roles. 
• Offer flexible work arrangements and competitive benefits. 
• Develop succession plans for key positions. 

5. ERP implementation and optimization 

Modernizing ERP systems is essential for efficiency and compliance. Outdated systems can hinder reporting and scalability. 
 
Action steps: 

• Audit current ERP capabilities and identify pain points. 
• Explore cloud-based solutions for scalability and security. 
• Integrate automation tools to streamline reporting and compliance while using AI and tech stacking. 
• Create a phased implementation plan with stakeholder buy-in. 

6. M&A activity and strategic growth 

Mergers and acquisitions remain a key growth strategy in the GovCon sector. Understanding valuation and integration planning is critical. 
 
Action steps: 

• Define strategic objectives for potential acquisitions or divestitures. 
• Conduct thorough financial and operational due diligence. 
• Plan for cultural and systems integration early in the process. 
• Monitor market trends to identify attractive targets or buyers, such as small business policy changes. 

Looking ahead 

The year ahead offers significant opportunities for proactive, adaptable government contractors who remain proactive and adaptable. While compliance and regulatory requirements will continue to be nonnegotiable, success in 2026 will depend on more than meeting minimum standards – it will require strategic thinking and operational excellence. CohnReznick can help you assess your readiness, invest in resilience, and position your organization to seize the opportunities ahead.