Government Contractors NAICS 23, 54, 56, 61, 517, 5182, 7223

May 5, 2025 - President Trump Executive Order Impacts Government Contractors

• The US Army has halted several IT contracts for review to ensure alignment with President Trump’s March 20 executive order on improving efficiency in Federal contracting, according to MeriTalk. The largest procurement affected by the hold is the Marketplace for the Acquisition of Professional Services (MAPS) contract, which was set to have a multibillion-dollar ceiling and serve as the Army’s primary source for staff augmentation and tech support. The Army is delaying both a pre-solicitation meeting and the final draft RFP for MAPS. Other contracts on “indefinite hold” are the Army Data Platform 2.0, a multi-award contract for enterprise data platforms that will enable self-service data management and scalability across the Army, and the New Modern Software Development contract, a $10 billion contract for acquiring rapid software development services.
• Technology giants that have taken the lead in the development of AI are increasingly involved in bringing the technology to government agencies. The shift comes as competition intensifies between the US and China in developing advanced AI capabilities, according to AI news site Maginative Plus. Meta has announced that it will now provide its Llama AI models to US government agencies and defense contractors, marking a significant shift in how tech giants are approaching military applications of AI. The partnership includes major players in the defense and technology sectors, with companies like Lockheed Martin, Palantir, and Microsoft joining forces to implement Llama in national security applications. These implementations range from aircraft maintenance optimization to mission planning and threat analysis. Reuters has reported that Chinese researchers had used Meta's Llama 2 model to develop AI systems for China's military.

• Defense contractors and companies in the DOD supply chain can expect the US Department of Defense (DOD) to increase the amount of resources dedicated to monitoring merger and acquisition (M&A) activity in the market and to increase its scrutiny of transactions, according to the Holland & Knight law firm. The DOD's stated policy is to review M&A activity for potential risks to national security, innovation in the defense industrial base, higher costs to the federal government, and antitrust concerns, but the Government Accountability Office (GAO) found that this is generally not occurring. The DOD is also not routinely reviewing transactions for the potential benefits of M&A, such as improving the financial health of key suppliers or monitoring longer-term outcomes of M&A after a transaction closes. The GAO has made recommendations regarding the DOD's approach to M&A review. The DOD concurred with these recommendations and has outlined certain actions that it intends to undertake to address them.
• Nondefense spending by the federal government increased 4.8% year over year and 1.2% month over month in April 2023, according to the US Bureau of Economic Analysis. Government contractor industry sales are forecast to grow at a 3.29% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.