Federal Workforce Cuts Are Jamming the Procurement Pipeline—Here’s What Small Contractors Should Do About It
The federal government is downsizing fast. Entire departments are laying off thousands of employees, contracting offices are stretched to the breaking point, and procurement cycles are slowing to a crawl. If you’re a small business counting on federal contracts, this isn’t just a bureaucratic shakeup—it’s a direct threat to your cash flow, capture pipeline, and survival.
Here’s what’s happening, why it matters for small contractors, and what you should be doing right now to stay in the game.
What’s Going On: Mass Layoffs Across Civilian Agencies
Under Executive Order 14222, the newly created “Department of Government Efficiency” (DOGE) is driving government-wide cost-cutting and headcount reductions. Agencies were told to eliminate positions “not required by law.” That’s led to:
EPA eliminating entire offices and putting 170+ employees on leave
Education cutting its workforce in half and potentially shutting down
HUD, HHS, Interior, and SBA issuing sweeping RIFs and consolidations
Even DoD is trimming up to 60,000 civilian roles
This is no small ripple. Agencies are being forced to slash their operations down to FY2019 levels or lower. And yes, procurement teams, OSDBUs, and program managers are among those being let go.
Why You Should Care: Procurement Is Slowing—and It’s Hurting Small Businesses First
Fewer staff means fewer RFIs, fewer RFPs, and longer wait times for everything from contract awards to payments. Some key effects:
RFIs and industry days are getting canceled or postponed
Proposal evaluations are backlogged without enough reviewers
Option years and recompetes are lapsing due to missed deadlines
Payment approvals and debriefs are slower or skipped entirely
Communication with COs and PMs is down across the board
For small businesses that rely on predictable awards and fast-moving capture timelines, this environment creates existential risk. You don’t have the luxury of waiting six months for an award or burning $20,000 chasing an RFP that gets canceled without notice.
Here’s How to Stay Ahead of the Disruption
This moment calls for strategy, agility, and bold relationship-building. Below are five moves you should make immediately:
1. Deepen Agency Relationships Beyond the CO
Your contracting officer might be swamped—but the program manager, COR, or OSDBU specialist might still be able to talk. Build connections wherever possible. A quick check-in email or 15-minute call can surface intel you won’t find on SAM.gov.
2. Be the Least Burdensome Option
Highlight your agility. Make it clear you can get started fast, require minimal handholding, and offer solutions that save time and money. If you’re 8(a), on GSA MAS, or under a GWAC—say so.
3. Watch Forecasts Like a Hawk
Use SAM.gov, agency forecasts, and alert systems to track changes in solicitation dates and scope. Agencies are quietly modifying their plans. Adjust your pipeline in real time.
4. Diversify Your Agency and Vehicle Mix
Don’t rely solely on one agency—especially those hit hardest by layoffs. Focus on DoD, VA, USDA, and others with more stable funding. Get on GSA schedules or team with a prime who is. Many agencies are shifting work to existing vehicles like OASIS+ and SEWP.
5. Prepare for Last-Minute Chaos
Q4 may still bring a surge in spending—but expect it to be rushed, delayed, or redirected. Keep your proposal materials “turnkey ready.” Assume some RFPs will cancel mid-process. Be ready to pivot to teaming or subcontracting.
The Big Picture: This Is a Stress Test—and an Opportunity
The federal procurement machine is under pressure. That means small businesses who can stay visible, helpful, and agile will have an edge. While others sit back and wait for things to settle, you should be leaning in—nurturing relationships, tracking every shift, and positioning yourself as the solution to government’s staffing shortfalls.
Yes, the cuts are painful. But many agencies still need to get things done—and they’re going to need contractors to do it. If you stay proactive, visible, and flexible, your business can weather the turbulence and come out stronger on the other side.
👉 Want more insights on staying competitive? Check out “The Email You Should Be Sending Every Week to Contracting Officers (But Probably Aren’t)” to keep your agency relationships alive even during a slowdown.
If you aren't a Squared Compass partner, what are you waiting for? From getting your business set up with specific government set aside programs at both the State and Federal level, to being empowered by a Fractional Capture team to win government contracts, to receiving tailored government contract opportunities Squared Compass delivers immense value which helps propel our partners to success. Schedule a chat with our team today.
