Trump’s ‘pincer maneuver’ reshapes federal contracting landscape

The Trump administration is following a two-pronged approach in their efforts to reduce budgets and shrink the size of the federal government.

First, there are the top-down agency reductions like what happened at the U.S. Agency for International Development and what has started at the Education Department.

“They’re coming top-down at some agencies and they’re basically collapsing them to the minimum allowed by law,” said Kevin Brancato, a senior vice president at TechnoMile, a provider of tools that help contracts track opportunities and manage contracts.

Prong number two bottom-up review that has resulted in a slowing of new awards and modifications, and in some cases the halting payments and invoices.

“Traditional reformers try to shrink budgets by cutting programs, but the Trump administration is actually undertaking a pincer maneuver,” Brancato told us. “This has gotten everyone’s attention.”

The impacts can be crushing for contractors at the targeted agencies. TechnoMile’s analysis of USAID found that 81% of that agency's contractors are at high risk because their work is almost solely concentrated there.

A majority – 71% – may lose everything because there is just one customer for the skills and services they provide. Unlike IT contractors who could find similar work at other agencies, USAID contractors largely do not have that option.

“It’s terrifying,” Brancato said. “They wake up in the morning and their industry is gone.”

While it may not be as drastic as USAID, Brancato said contractors at the Education Department and other agencies will face similar challenges through this bottom-up review that the Trump administration and the Department of Government Efficiency are looking to drive.

Brancato does not expect the Homeland Security Department or the Defense Department to undergo the same kind of reviews and pressures as other civilian agencies, but added they are not immune.

“The effect of DOGE will be different in those areas,” he said. “I think they are going to look towards radical transformation using technology.”

DOGE has not been afraid to take on missions that are important to the Trump administration but is asking this bigger question Brancato posed: “How can you do a lot more with the same people or the same with a lot fewer people?"

For contractors facing those questions, he has four pieces of advice:

• Justify your value
• Prepare for increased competition
• Seek new partnerships
• Embrace innovation

DOGE also has a focus on speed.

The government must bring new technologies and innovations to bear more quickly especially if it is going to radically change how the government operates. That is why Brancato thinks DOGE and Trump administration need to disrupt the procurement system to achieve their goals.

“We have a business process dedicated to preventing corruption that actually slows things down dramatically. On the acquisition side, the budgeting side, the contracting side, things are slow and they're slow intentionally,” he said.

Brancato said that the adoption of technology, such as artificial intelligence, could radically alter the buying and contracting process. That could also move contracting officers away from paperwork- and bookkeeping-type tasks to higher-value work.

More transparency into contracting decisions is also needed to keep corruption at bay, he said.

“If they are going to streamline processes on one side, they absolutely need to increase transparency on the other,” he said.

The Trump administration has yet to release its proposed fiscal year 2026 budget, so the extent of the coming cuts is unknown.

“I suspect that the administration wants to keep as many missions as possible and drive efficiency on top of them,” Brancato said. “We are about to see something we can’t predict.”