Government Contracting Update: Key Issues and Upcoming Changes
Introduction
As we transition through the final quarter of 2025, critical developments loom on the horizon that will directly affect government contractors nationwide. Staying informed and agile is essential to maintaining compliance, competitiveness, and profitability. This update explains the essential legislative, regulatory, and operational shifts and looks ahead to upcoming learning opportunities designed specifically for you.
1.Budget Moves and Foreign Aid
A recent attempt was made to utilize a new budget mechanism known as a “pocket rescission” to cancel approximately $5 billion in foreign aid without congressional approval. This move is unusual and has sparked legal challenges, as such decisions have traditionally required the consent of Congress.
For government contractors working on defense or foreign aid projects, this could affect whether funding continues and whether new contracts get awarded. It’s important to keep track of how this plays out.
2. Defense Contracts Under Review
A Department of Defense watchdog has called for a close review of 11 security contracts related to Ukraine, worth $5.6 billion. The review found problems such as weak price justifications and poor record-keeping by contracting officers.
This shows that the government is tightening oversight on contract costs. For contractors, it means you must keep clear records, solid pricing explanations, and thorough documentation in all proposals and contract work..
3. Collective Bargaining and Worker Rules
The administration is pushing forward with an order to take away collective bargaining (union) rights from about two-thirds of federal workers, adding more agencies under this rule and citing national security reasons.
However, there are ongoing legal challenges, which may delay or change how this rule is applied.
For contractors, this could affect how federal teams work with you, subcontractor arrangements, and labor compliance rules, so be prepared for possible changes.
4. Workforce Training and AI Skills
The U.S. Department of Labor is launching programs to improve AI skills among workers using federal training grants. At the same time, some older non-discrimination rules under workforce laws have been removed.
For contractors, this means you should get ready for new training priorities and changing compliance rules, especially if your business works across multiple states.
5. Regulatory Reforms and Federal Acquisition Changes
Significant updates have been released to the Federal Acquisition Regulation (FAR) Parts 28 (Bonds and Insurance), 30 (Cost Accounting Standards Administration), and 48 (Value Engineering), effective November 3, 2025. These clarifications and restructurings aim to enhance clarity and remove obsolete provisions. Awareness and integration of these changes will be vital for all contractors to ensure compliance and competitive positioning on GSA schedules and federal solicitations.
Additionally, the Department of Defense has issued a class deviation withdrawing the requirement to include Cybersecurity Maturity Model Certification (CMMC) level clauses in new solicitations, reflecting ongoing adjustments to cybersecurity compliance expectations.
What Federal Contractors Should Do Now
Conclusion
As we navigate the final month of the last quarter of 2025, government contracting is facing big changes in funding, labor rules, workforce training, cybersecurity, and federal acquisition regulations. For contractors, this means both challenges and opportunities. The key is to stay informed, stay compliant, and stay agile.