Five ways smaller GovCons can use AI to win more – and better – business

As a smaller government contracting firm, you could choose to dwell on how your company’s size limits its ability to compete with larger firms for new projects. You could grumble about how bigger companies always seem to have better insight into available opportunities than your company does. You could lament the constraints on your firm’s capture capabilities and proposal capacity.

Or you could do what many small, but mighty GovCons are doing heading into 2026 to close the competitive gap with larger firms: Use the built-in edge they have to move quickly, nimbly and decisively by deploying modern, intelligent business development tools. A fresh wave of AI-driven capabilities built specifically for GovCon business development, marketing and proposal teams are leveling the playing field.

Smaller GovCons have always been pressed to do more with less. Today, that pressure is more acute as rising overhead erodes margins and compliance responsibilities grow --  forcing many firms to divert resources away from business development, even as the competition for new business increases. As we found in the 2025 edition of the Unanet/CohnReznick GAUGE benchmarking report (available for free download here), that’s an issue for smaller GovCons with less than $10 million in annual revenue, 49% of which face BD resource challenges.

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With a stronger set of AI-forward BD tools tailored for them, smaller GovCons can turn those challenges into strengths. In the 2025 GAUGE Report, we saw a 10 percentage-point jump in the number of GovCon firms using AI, and more than two-thirds of GovCons said they either are using, or in the next year plan to use, AI in BD and marketing. Here’s a look at five ways smaller GovCons can put AI to work to generate new business:

1. Opportunity identification and forecasting to be your eyes and ears in the marketplace. The goal for any GovCon firm is to leave no stone unturned in the quest to find new project opportunities in the company’s wheelhouse. That’s no easy task, however, given the volume of information that companies have to sift through on platforms like SAM.gov and the Federal Procurement Data System (FPDS), as well as in agency forecasts and teaming networks. Using AI tools, firms can quickly and comprehensively comb the landscape to identify new business opportunities that closely match with strategic priorities and parameters. A 10-person company focusing on opportunities within the small business innovation research program could, for example, use an AI market intelligence tool to uncover subcontract solicitations that are part of an IDIQ (indefinite delivery/indefinite quantity) contract. Such a tool can eliminate blind spots and keep companies a step ahead in finding opportunities their competitors might miss.
2. Capture management and prioritization. Not only do GovCons need to be target-rich, they also need to be target-smart, prioritizing pursuits that make the most sense for the business in terms of winnability, resource availability, profitability, geography, market segment and other parameters. AI-driven predictive analytics can help companies create and apply a scoring system and decision matrix to their go/no-go decisions, keeping BD resources focused on pursuits that align best with company strategy and prevailing market conditions. What kinds of projects tend to hit or exceed a company’s profitability targets? What types of projects have yielded the most repeat business? AI can digest a huge amount of past pursuit and project data to provide quick answers to questions like these, helping companies put a finer point on their pursuits and keeping them from burning resources on pursuits that aren’t in their wheelhouse. Go/no-go decisions are informed more by solid data than gut instinct. The result: a pipeline filled with the type of projects a company covets most.
3. Boosted proposal output and quality. Being target-rich and target-smart will get a company only so far. They can also use AI to drive quantitative and qualitative improvements with their proposals, tasking it to handle much of the heavy lifting when it comes to gathering, verifying, organizing and tailoring information to meet the exacting and highly nuanced requirements of an RFP/bid solicitation. Instead of people burning hours on data collection and verification, updating documentation, and making sense of complex contractual compliance language, AI can do all that on their behalf, freeing them to focus on the parts of a proposal where a higher human touch is particularly important. Ultimately, with natural language processing, AI can turn all that information into a coherent whole and create a “pink” draft that’s 70% complete. According to data provided by our customers, capabilities like these can cut average RFP time-to-draft by 70% and slice potentially six-figure proposal-generation costs in half, while increasing a firm’s overall proposal capacity 15 to 20% — without increasing headcount or compromising win rate.
4. Relationship, pipeline and partnership insights. Which partner or partners represent the best fit to bring into a specific project RFP given their experience, track record, rate structure, etc., in light of the parameters specified in the RFP? Whom within your organization has the best contacts with a potential teaming partner? Are there potential teaming partners out there you should be contacting for potential inclusion in an RFP but haven’t? AI capabilities can query your internal systems as well as external sources to find quick answers to questions like these.
5. Pricing and wrap-rate modeling. These days, just 32% of firms report having adequate estimating systems. ​AI can change that for the better. Drawing from past proposal and project data and other sources, and a deep understanding of the requirements inside an RFP, intelligent modeling capabilities can suggest optimal pricing and rate strategies for a proposal. They can even recommend optimal wrap rates based on past data, projections for direct and indirect costs, target profit margin and the like.

There is, in fact, a lot that AI can do to equip smaller government contractors to compete on equal footing with larger firms. Here in 2025, more than half (54%) of GovCons with annual revenue under $10 million say they win 50% or less of the bids they submit. The sooner that smaller firms get comfortable with agentic AI, generative AI and other intelligent capabilities in a business development context, the quicker they can start boosting their win rate and landing projects they once deemed out of reach.

Steve Karp is Chief Innovation Officer for Unanet, a Northern Virginia-based software company that provides enterprise resource planning and customer relationship management solutions for organizations in the government contracting, architecture, engineering, construction and professional services markets.