FY2025: The Year of Contract Consolidation—and What It Means for Small GovCons
If it feels like the federal contracting landscape is shrinking around you, you're not imagining it. FY2025 is shaping up to be the year of contract consolidation. Fewer, bigger contract vehicles. Less room to compete. More pressure on small and mid-sized businesses to scale up—or get pushed out.
What’s behind the shift? New executive orders, efficiency mandates, and a growing government appetite for bundling services under mega-contracts. Agencies are simplifying procurement by rolling multiple requirements into single awards. That might sound efficient—but for small businesses, it’s a tightening squeeze.
Let’s break it down, explore what’s driving the trend, and lay out some hard-earned strategies to help you stay competitive.
What Is Contract Consolidation (and Why It’s Different from Bundling)?
Contract consolidation happens when an agency combines two or more smaller procurements into one large contract—think janitorial + HVAC + security becoming one big facilities contract. It’s about streamlining, reducing costs, and “simplifying” procurement from the agency’s perspective.
Bundling, however, is when consolidation takes away opportunities previously held by small businesses. That’s where the real risk comes in—and that’s where SBA scrutiny is supposed to apply. Unfortunately, oversight is weak, and the burden of justification often falls by the wayside.
Then there’s category management. It doesn’t merge contracts, but it does funnel spending into “best-in-class” (BIC) vehicles—massive contract platforms like GSA MAS, OASIS+, or SEWP. The result? Fewer unique solicitations and fewer opportunities for small firms outside the big clubs.
Why Small Contractors Should Care
Fewer Prime Opportunities: Even though federal spending is up, the number of prime awards is shrinking. Small businesses face a shrinking pool of addressable contracts.
Higher Barriers to Entry: Consolidated contracts come with higher requirements—more past performance, deeper pockets, broader geographic reach.
Set-Asides Are Getting Scarce: Agencies no longer have agency-specific small business goals—just a federal-wide goal. This reduces the pressure to carve out dedicated small biz awards.
Risk of Becoming “Just a Sub”: More small businesses are being pushed into subcontracting roles where visibility and profit margins take a hit.
How to Compete (and Win) in a Consolidated Market
You can’t control consolidation, but you can control how you respond to it. Here’s how smart contractors are adapting:
Team Up to Scale Up
Join forces with complementary firms. The SBA All Small Mentor-Protégé Program lets you create joint ventures with larger partners while still qualifying as small. Strategic partnerships can help meet scope, staffing, and compliance demands you couldn’t handle alone.Find Your Niche—and Own It
You don’t need to do everything. You just need to do something exceptionally well. Be the go-to expert in a high-value niche (think cybersecurity, drone tech, AI analytics). It’s easier to be a critical subcontractor or even win carve-outs when you’re a specialist, not a generalist.Leverage Your Certifications
8a certification assistance, women business certification, SDVOSB or HUBZone status—these can still be your foot in the door. Highlight them to partners and primes. Also, invest in compliance and quality credentials (ISO, CMMC, NIST 800-171) to show you’re ready for big leagues.Work the Subcontractor Angle Strategically
Can’t win it outright? Get on the team. Research likely prime awardees early. Make your value clear—whether it's technical depth, geographic coverage, or socio-economic set-aside help. Subcontracting is still a pathway to revenue, relationships, and past performance.Use the Right Tools for Opportunity Tracking
Don’t just wait for SAM.gov RFPs. Use forecasts, FPDS data, USAspending trends, and platforms like Deltek GovWin or Bloomberg Government to spot consolidations early. If you’re reacting when the RFP drops, you’re already behind.Stay Agile and Build Internal Capacity
Prepare to scale quickly. Consolidated contracts may span multiple states, require surge hiring, or impose new reporting burdens. Invest in your systems, cross-train your teams, and show you can handle the administrative complexity of big awards.
Bottom Line: Adaptation Is the Advantage
Yes, the field is changing. But that doesn’t mean you’re out of the game.
Contract consolidation is real, and it's accelerating in FY2025. But so are the opportunities for contractors who know how to team, specialize, and position strategically. Don’t just chase the same old playbook—adapt to the new one. That means early capture planning, smarter networking, and showcasing your value as either a nimble prime or a vital subcontractor.
For those who stay informed, connected, and confident in their capabilities, the federal market is still open—it’s just playing by new rules.
👉 Want more help navigating the changing federal landscape? Read our follow-up: The Best NAICS Codes for Small Businesses Going After SLED Contracts in 2025 — it breaks down where small contractors are winning and how to position your firm by industry and code.
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.
