Key topics covered in this article:

  • Preparation for FY26: Government contractors should focus on building flexibility into operations, assessing backlog risks, and ensuring visibility into revenue and costs to navigate uncertainty effectively.
  • Operational Maturity and Talent Risk: Clear processes, strong controls, and proactive talent management are critical for maintaining stability and inspiring confidence during uncertain times.
  • Scenario Planning: Resilient contractors prepare for multiple outcomes, invest selectively, and align leadership around facts rather than waiting for perfect clarity.

 

There’s a phrase I hear regularly in conversations with government contractors at the moment.

“We’re waiting to see what happens.”

It’s understandable. No one wants to move too quickly when funding, timing, and priorities all feel unsettled. But in government contracting, waiting for clarity before acting has never been much of a strategy. FY26 will arrive regardless, and contractors will either be ready to respond or reacting under pressure.

Preparation, in this market, isn’t about pessimism. It’s simply part of running a disciplined business.

Preparation Is About Giving Yourself Choices

Uncertainty isn’t new to this industry. Continuing resolutions, delayed awards, shifting agency priorities, and drawn-out protests are all familiar territory. What has changed, though, is the pace at which conditions can move and how exposed some organizations are when they have not built flexibility into their operations.

The contractors that tend to perform best in these periods aren’t trying to predict exactly how things will unfold. They are focused on making sure they have options when circumstances change. That difference matters more than most people realize.

Start With the Questions That Don’t Always Make the Agenda

Preparing for FY26 usually starts with a few conversations that leadership teams are sometimes tempted to defer.

How concentrated is the business, really, whether by agency, by vehicle, or by contract type? Look at the backlog to see how much is actually funded, and how much depends on timing assumptions. If awards slow or funding tightens, where would the strain appear first?

Strong revenue numbers can be reassuring, but they don’t always tell the full story. Revenue can look healthy on paper but, may still mask underlying pressure. We have seen contractors with impressive growth still struggle to explain what their next twelve months will actually look like. In an uncertain environment, visibility matters far more than scale.

Take a Hard Look at the Backlog While There’s Still Time

Backlog has a way of reassuring people. It creates momentum and a sense that things are under control, until schedules start to shift.

The more experienced leadership teams will challenge their own assumptions early on Not because they’re nervous, but because they’d rather surface issues while there’s still room to respond. That often means walking through a few relatively straightforward scenarios. What would happen if awards took longer than expected to land? How long could the business carry costs ahead of revenue before it becomes uncomfortable? And which contracts would feel the impact first if approvals or funding slow down?

Conversations like these are not about expecting the worst. They’re about avoiding surprises, and they’re far easier to have before pressure starts to mount.

Indirect Rates Deserve Attention Before They Become Urgent

In stable markets, indirect rates rarely attract much attention. When conditions tighten, they tend to become very important very quickly.

Contractors that stay competitive through uncertainty usually have a solid understanding of their cost structure well in advance. They know where there’s flexibility, how rates change as revenue shifts, and whether their current model still supports the direction the business is heading.

Leaving those discussions until year-end often reduces the number of viable options and forces decisions to be made too quickly. And decisions made in a rush rarely serve the business well.

Operational maturity Still Matters – Perhaps more than ever

Operational maturity doesn’t tend to attract much attention when markets are stable. In less certain periods, it becomes far more noticeable.

Clear processes, sensible controls, and documentation that actually reflects, how the business operates, help some contractors move steadily while others feel constantly under pressure. Being audit-ready isn’t just about getting through a review more efficiently. It reduces the day-to-day noise, gives leadership better information, and makes it easier to respond when questions arise. Teams respond faster when opportunities present themselves, and heightened scrutiny tends to cause far less disruption.

Customers pick up on that sense of stability as well. When competition tightens, organizations that feel stable and well-run tend to inspire more confidence.

Operational maturity sends a quiet signal, but it’s a powerful one.

Talent Risk Shouldn’t Be an Afterthought

People risk often sits lower on the list until it suddenly becomes the issue no one can ignore.

There is also a people dimension that deserves attention sooner rather than later. Preparing for FY26 requires a clear view of where essential knowledge sits, whether succession plans would hold up in reality, and whether leadership capacity genuinely matches the ambitions of the pipeline.

Uncertainty has a habit of revealing stress points that were already there. The organizations that keep their talent are usually the ones that stay measured and organized when things feel unsettled. That outcome is rarely down to luck.

What the More Resilient Contractors Are Doing

Across the market, contractors navigating uncertainty most effectively share a few common traits. They don’t commit themselves to a single outcome and hope for the best. They think through more than one scenario. They continue to invest selectively rather than freezing altogether. And they keep leadership teams aligned around facts, not noise.

Most importantly, they don’t wait for perfect clarity before taking action.

A Final Thought

Look, FY26 success will not be determined in the first quarter of the fiscal year. It’s being shaped now by how organizations assess risk, structure costs, support their people, and prepare for more than one possible outcome.

Uncertainty isn’t going away. But with the right preparation, it doesn’t have to slow you down. In government contracting, being ready often matters far more than being right. For guidance on how to prepare your organization for FY26, contact Neena Shukla, Government Contracting Team Leader, at PBMares.