It has been an eventful year for government contractors, who have had to navigate significant changes in the industry landscape. From new cybersecurity requirements to the changing world of artificial intelligence in contracting, 2024 has brought major developments that will continue shape contracting into the new year. Here’s our breakdown of the five most impactful GovCon stories of the year.
1. CMMC 2.0
The Cybersecurity Maturity Model Certification (CMMC) program reached a critical milestone in 2024, with the final rule published in the Federal Register on October 15. This marks a definitive shift from preparation to implementation, affecting every contractor in the Defense Industrial Base.
The new rule streamlines the previous system. Level 1 contractors will require basic cyber hygiene practices for contractors handling Federal Contract Information, Level 2 mandates third-party assessments and advanced security measures for those dealing with Controlled Unclassified Information, and Level 3 implements advanced requirements for critical defense programs.
The new CMMC rule became effective on December 16, but will not enter contracts until mid-2025. Despite this, contractors, especially small businesses, are advised to start preparing immediately. The implementation costs can range from $10,000 to $50,000 for technology upgrades, plus additional expenses for third-party assessments, ongoing maintenance, and training.
2. The AI Revolution
Artificial intelligence is reshaping government contracting, with agencies and contractors alike exploring its potential and risks. Mike Parrish, Chief Acquisition Officer at the Department of Veterans Affairs, emphasized a crucial point: data quality determines AI success, and we must “keep the human in the loop.”
While the Federal Acquisition Regulation (FAR) doesn’t explicitly prohibit AI use in proposals, industry experts caution against over-reliance on this technology. AI can serve as a valuable first-draft tool, particularly for small businesses, but contractors must carefully review all AI-generated content and ensure their data security measures meet government standards.
3. Government Shutdown Concerns
While continuing resolutions have temporarily maintained government funding, budget uncertainties continue to create challenges for contractors. Maintaining robust cash flow management strategies remains crucial for contractors to weather potential future disruptions.
These CRs have shifted from exceptional stopgaps to business as usual in federal contracting. This perpetual state of budgetary limbo is reshaping how agencies operate and fundamentally changing the contracting landscape. It will be key to continue to watch how this trend continues and evolves into the new year under a new administration.
4. SBA Certification Changes
The launch of MySBA Certifications has transformed how small businesses apply for and manage their federal contracting certifications. SBA Administrator Isabel Casillas Guzman introduced the platform as part of a broader modernization effort, bringing improvements like unified applications, reduced paperwork, and faster processing times.
While 40% of small businesses qualify for multiple certifications, only 10% currently hold more than one. The streamlined process through MySBA Certifications aims to make it easier for businesses to pursue and manage multiple certifications.
5. 2024 Presidential Election
As with previous election years, government contractors should prepare for potential changes in federal procurement priorities with a change in administration on the horizon. Historical patterns suggest the importance of maintaining flexible business strategies and diverse contract portfolios during transition periods. With President-elect Trump preparing to take the helm again, it’s important to stay up to date on any policy and funding changes that could alter the federal contracting landscape.
As we look ahead to 2025, contractors who demonstrated adaptability and forward-thinking approaches have positioned themselves well for continued success. The past year emphasized the critical importance of cybersecurity compliance, AI integration, strong financial management, SBA certification maintenance, and agile business strategies.
As your trusted financial partner, Parabilis remains committed to helping government contractors navigate whatever challenges and opportunities 2025 may bring. Contact our team of government contracting experts today to discuss how we can help your business succeed in the evolving federal marketplace.