President-elect Donald Trump’s goal to shrink the government workforce, which is being championed by the advisory Department of Government Efficiency, could give a boost to federal contractors who otherwise face a tough outlook under the incoming administration.

“DOGE has forecast that if they decrease regulations, there’ll be less agency activity, so you’ll need fewer government employees. But at the same time, there’s still going to be certain tasks that the government needs to do,” said Aaron Ralph, a government contracts and disputes partner at Pillsbury law firm, during a Tuesday webinar. “In the past, when we’ve seen the government cut the federal workforce, we’ve seen an increase in government contractors.”

The law firm pointed to research from 2008 and 2017 that shows the number of government contractors in recent decades has increased while the number of federal employees has mostly stayed the same.

Likewise, political scientist Paul C. Light, writing for the think tank Brookings Institution in 2020, found that the number of employees supported by federal contracts and grants increased from 4.8 million in 2017 to 6.8 million by the time Trump’s first administration ended. In contrast, the federal workforce remained at a little more than 2 million individuals.

Overall, however, Ralph contended that an effort to reduce contractor spending is trending.

“We expect a continuing focus on trying to make sure that contractors aren’t profiting more than people believe they ought to be, which is a controversial issue as to what is an appropriate profit,” he said.

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