The Traits That Make Government Contracting Firms Great

Chris Crowder, GovCon Business Unit Leader

What qualities enable a government contracting firm to thrive in the face of heightened procurement pressure, mounting and rapidly shifting regulatory requirements, deep market uncertainty, profound technological change and other destabilizing forces?

In findings from the forthcoming (and 10th annual) GAUGE benchmarking report from Unanet and CohnReznick (click here to access the report free of charge), one attribute in particular stands out for its ability to help government contractors navigate the headwinds they’re encountering in 2026. That attribute is maturity in the deployment of artificial intelligence.

Based on a survey of about 1,200 GovCon executives and leaders, this year’s GAUGE report finds that AI-mature firms (those that have integrated AI into their business operations, along with policies and controls) are outperforming their less AI-mature counterparts in key areas like win rate and profit. These companies more frequently report win rates above 50% on new business pursuits and enjoy profit margins exceeding 10%, well above the industry averages of 39% and 7.6%, respectively.

AI as Force Multiplier

Not surprisingly given the correlation between firm performance and AI maturity, AI usage has increased significantly among GovCon firms, with 70% indicating they use it in some capacity here in 2026, up from 54% in 2025 and 33% two years ago. What’s more, about three-quarters (74%) of respondents believe AI and process automation will do more to transform government contracting than any other force on the horizon. Today firms are employing AI most frequently for business development and marketing functions. They’re also relying increasingly on AI for compliance, with more than one-third (36%) of firms now actively using it for that purpose, up sharply from 14% last year.

All of which highlights a growing gap between firms with mature AI and data-usage programs and those without. As the latest GAUGE report findings underscore, firms that invest in AI maturity and connected, structured data are pulling away from the field. They’re winning more contracts, earning stronger margins and generally putting themselves in better position to succeed.

There’s an important qualifier regarding AI usage among GovCon firms, however, and that’s the extent to which firms take measures to govern their AI implementations with formal policies and procedures. While the 36% of firms that say they use AI with formal policies and procedures in place is up significantly from 12% in 2024, it highlights an important and potentially perilous disconnect in which many firms are adopting AI capabilities without adequate guardrails in place. That’s a critical consideration for GovCon firms and their CIOs. A lack of governance and support for AI not only can undermine AI investments, it can also cast doubt on the outputs AI produces for a firm and its government customers.

Another Major Differentiator: Operational Maturity

The 2026 GAUGE Report reveals a range of other key factors that separate top-performing government contracting firms from the crowd. One is operational maturity. That shows up in the project management office (PMO). More than half (57%) of GovCon execs rate their PMO function as mature; 43% say there’s room for improvement; and just 10% say their PMO is fully optimized.

Here’s another area where CIOs have an opportunity to make a big impact by arming their companies with better digital tools and foundations, connected core systems (customer relationship management, enterprise resource planning, etc.) to enable data-driven decision-making and on-point forecasting, and integrated project and workforce visibility. Today, 86% of firms lack a unified platform that connects these systems and the offices that use it, including PMO, business development and the C-suite.

Win-rate is another sign of operational maturity. What’s clear in our GAUGE findings this year is that firms with higher win rates tend to be:

• Less affected by procurement slowdowns.

• Better able to avoid workforce reductions.

• More focused on key issues like cybersecurity and human capital strategy.

In fact, landing new government contracts is the most concerning operational issue for GovCon firms, followed by winning pricing strategies.

Compliance Carries Increased Competitive Weight

Once viewed merely as an obligatory part of doing business, compliance readiness also emerges as a competitive differentiator for GovCon firms in this year’s GAUGE Report. With new requirements, policy revisions and ongoing updates to key regulations like the Revolutionary Federal Acquisition Regulation (FAR) Overhaul (RFO), CMMC (Cybersecurity Maturity Model Certification), and the Federal Risk and Authorization Management Program (FedRAMP), compliance is now a continuous, cross-functional discipline and a factor that federal agencies weigh heavily in assessing the performance of government contractors. That means a firm’s ability to win new government work depends in part on their compliance posture. Excelling at tracking, understanding and operationalizing compliance responsibilities is a clear competitive differentiator. Trust wins contracts.

AI can support a strong compliance posture when it’s embedded directly into organizational workflows. In the GAUGE Report, 36% of GovCon firms indicate they are actively using AI to support compliance, while another 42% are exploring the use of AI for compliance. They’re using it to monitor and report on regulatory changes in real time, interpret new regulatory language, and map that language to contracts and business processes. They’re also using it to help with audit readiness, to assess subcontractor compliance and risk, and to ensure internal policies keep pace with changing regulations.

Today a majority of GovCon firms say they operate at least at CMMC Level 2 readiness, including 48% at Level 2 and 12% at Level 3.

Compliance Carries Increased Competitive Weight

On the audit front, nearly half of firms perform internal audit reviews annually, while others are moving toward more continuous review cycles. GovCon firms most often face audit challenges to rates, followed by CAS (cost accounting standards) compliance.

From the CIO’s perspective, investments in scalable compliance infrastructure and data-management capabilities can improve both resilience and operational confidence in compliance.

Making Forecasting and Capture Count

Strong workforce planning and operational forecasting also play an important role in distinguishing government contracting firms from their peers.

A small share (15%) of GovCon firms say they can forecast staffing requirements out by more than six months, while another 30% can do so within a four-to-six-month window. The remaining majority have a cloudier picture of staffing needs, which can factor heavily into project outcomes and profitability over the long run.

On the growth front, just over half of the executives we surveyed describe their capture processes as consistent, while 44% say their processes remain inconsistent or informal. This points to another opportunity for CIOs to modernize operations in ways that better support firm growth.

Modernization is indeed the watchword for government contracting firms and their CIOs here in 2026. Those that can leverage AI, integrated digital environments and data will be best positioned to slice through the headwinds that may well persist well into 2027.

Chris Crowder leads Unanet’s GovCon business unit. He is responsible for collaborating with Unanet customers, partners, key industry stakeholders, and his colleagues in product, sales, customer success, partner success, and marketing to grow and enhance our GovCon customers’ experience with Unanet. https://unanet.com/