As America begins a new year, it seems appropriate to outline some noteworthy changes, challenges and opportunities that will be especially impactful in 2026. The challenges and opportunities will touch both private sector firms and government officials. Now is the time to plan and prepare.
A few of the changes that currently appear to be most impactful include artificial intelligence (AI), regulatory realignment, energy transition, government contracting, political issues, emergency management, and workforce disruption.
AI is the immediate hot topic. Some predict AI technology will be more impactful than the Industrial Revolution. Others genuinely fear AI and currently advocate for guardrails to be established. The current Administration appears to prefer limited regulation – unless it is later standardized by the federal government. It also appears possible that a federal regulatory framework could be put in place to standardize many aspects of AI.
Regulatory realignment is considered by some to be a significant risk. To others, the thought of less regulation is a good thing. While there have been discussions at the federal level about shifting FEMA responsibilities to each of the individual states, no action has been taken. That shift could happen soon, and it would be very disruptive. States are not yet prepared to take on emergency management or regulatory oversight of anything that was overseen by federal authorities in the past. States are also not budgeted for the costs that would be associated with any type of new responsibility the federal government might hand off. If either regulatory or emergency response responsibilities are shifted to state leaders, there will be an abundance of change.
University leaders felt the pain of significant mandated changes in 2025. Government executives at the federal level of government also have experienced big changes as they lost an abundance of power and autonomy. Many agencies are currently seeking ways to compensate for both employee losses and major budget cuts. Changes like this are expected to continue during 2026.
There seems to be little consensus between federal officials and state officials over climate change. However, while consensus is being discussed, the past year provided a sobering look at the incredible power and destructive force weather events can unleash. Many changes will occur as officials work to protect public assets, improve sustainability, and provide safety to citizens.
Infrastructure investments are expected to remain strong but primarily because IIJA funding is available through 2026 for roads, bridges, transit-oriented- development, health related facilities, water, battery storage, and renewable energy, ports, and airports. Many critical infrastructure projects were launched in past years but there is much more to be accomplished. There is a strong probability that federal funding in the future for large, complex projects will require some percentage of private sector funding as well.
Government contracting changes announced a few months ago for federal agencies were not only surprising, but also immediate, confusing, and shocking – as least to the many companies trying to adjust quickly just to be able to respond. Calls for clarification are ongoing, and technology firms, small businesses, minority-owned firms and other contracting companies are in dire need of assistance. For instance, the new rules that abolish certifications (which have been in existence for decades) conflict with statutes and laws that have also been in existence for decades. Lawsuits have already started.
America’s power grids are incorporating renewable energy power sources, battery storage capabilities, and nuclear power into existing power systems. Energy diversification will remain a hot topic that will be discussed more in 2026. Big data centers, cryptocurrency facilities, and chip factories are being constructed throughout the U.S., and they need massive amounts of power. Government officials are rushing to find innovative ways to meet critical and escalating power demands.
Cybersecurity remains a major concern for airports, seaports, water plants, hospitals, and research centers. It is also a significant concern for space agencies, defense and military operations, and every business or any size. Many states are consolidating cybersecurity standards for all jurisdictions. Federal standards are being discussed as well. This is a national concern related to cyber safety, so changes will likely continue in 2026.
Workforce disruptions have been significant. The new ICE operations have shut down companies, disrupted farm work, and impacted many small businesses. Companies, such as day care centers, restaurants, and construction firms, have lost employees, and global firms have lost talented technicians and researchers. The disruptions are not yet stabilized.
One last noteworthy issue is simply the uncertainty that exists as businesses and governmental entities welcome in a new year. The greatest fear for some government contractors is that an existing federally funded contract could be shut down with funding stopped at any time. Public executives fear the same thing. Businesses worry about tariffs, supply chain fragility, and product deliveries, while economists are concerned about inflation.
All these issues contribute to the uncertainty and that is troubling for all industry sectors and every jurisdiction of government. Such issues, however, are not uncommon. American government and business leaders have faced worse in the past so, on a more positive note, it must be pointed out that there are huge opportunities related to each unsettling change.
AI will likely reduce operational costs for businesses and governmental entities. It will also play a huge role in global competitiveness if leaders make a commitment to ethical excellence immediately.
Regulatory changes will speed up the launch of projects by cutting the time between planning and delivery. If regulatory responsibility is handed down to the state, new jobs will be created and coordination between parties will be localized.
Energy transitions will result in thousands of new contracting opportunities. The cost of power will be reduced, and grid reliability will be enhanced by new technology and through innovation. The escalating demand for power will become controllable.
Public-private partnerships will be in high demand as new types of initiatives are required. There will be more opportunities for all types of contracting pursuits. America will continue to be vibrant and welcoming to businesses that partner with government officials.
Interestingly, there are suggestions and a bit of guidance for success in 2026 that can be pulled from past years. The following list offers advice that worked well in the past when public officials and businesses of every type were confronted with massive changes, significant challenges, and uncertainty similar to what the country is experiencing today. The following advice and guidance is not listed in any order of priority:
Pay close attention to what is happening – the daily news (from diverse sources) is a critical component of success.
Get acquainted intimately with AI. It is the future and successful leaders in every environment must understand what it offers and use it.
Adapt as quickly as possible to changes that are announced because even if the changes are rescinded later, they are in place in the short term and success will be tied to compliance.
Government contractors should carefully factor leading edge technology into all pursuit and planning documents presented to governmental entities. Almost every project in 2026 will have some type of technology aspect and public evaluators will focus on the company’s research and development along with the technology that is offered. Officials will seek modernization capabilities, risk mitigation, credibility based on experience, ethical AI compliance, and cost reductions.
Private sector firms and public sector officials should look now for partners. Major initiatives and complicated projects will call for all types of expertise, and partnerships wrapped up before joint efforts are needed will be the strongest.
Investors of all types – banks, insurance firms, large companies, public trusts, non-profits, and investment firms should begin to seek out projects of interest for potential investments. The chances are that the federal government will require some percentage of private sector funding in projects that receive federal funding support in 2026. Private sector investment will likely be necessary for vibrant economies, and it may be necessary for companies to win large contracting opportunities. Competitiveness in some cases will come down to private sector investment coupled with expertise and experience.
Positioning will be a critical component of success for contracting firms. Meetings with officials before solicitation documents are released is a basic component of success.
There is no doubt that 2026 will be not only a year of change but also perhaps a year that pushes America to be even more innovative, collaborative, resourceful, and laser focused on successful outcomes.
Photo by Brett Sayles from Pexels
This story is a part of the weekly Texas Government Insider digital news publication. See more of the latest Texas government news here. For more national government news, check Government Market News daily for new stories, insights and profiles from public sector professionals.
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