The annual reports deliver critical performance benchmarking insights gleaned from nearly 1,800

government contracting and architecture and engineering industry respondents

HERNDON, Va., May 12, 2026 -- Deltek^®, the intelligent platform for project-based businesses, today released the 17^th Annual Deltek Clarity Government Contracting Industry Study and the 47th Annual Deltek Clarity Architecture & Engineering Industry Study, the company's long-running annual benchmarking reports for project-based businesses.

Each year, these data-driven reports help firms benchmark their performance across the full project lifecycle. They surface proprietary insights for various departments and functions, from business development, pricing, and compliance, to project delivery, workforce management, financial performance, and technology strategy.

Deltek Clarity is the foundation behind Deltek's data-driven perspectives, grounded in proprietary insight and expert perspectives. Built on survey responses from 917 government contractors and 896 A&E firms across the U.S. and Canada, the latest reports provide leaders doing mission-critical work with actionable data about what's changing, what's working, and where risk is rising.

Across industries, the latest Clarity findings reveal a shared paradox: firms are growing on paper while the foundations underneath are under strain:

• Firms are moving faster, while prioritizing control, visibility, and predictable outcomes.
• Artificial intelligence has quickly moved from experimentation to expectation, yet operational readiness, governance, and measurable ROI remain inconsistent.
• Integrated systems have become more of a competitive requirement as complexity rises, and growth is no longer a proxy for health; leaders are increasingly prioritizing disciplined execution, sustainability, and margin performance alongside topline results.
• Talent and skills, especially AI literacy and data fluency, continue to be the limiting factor, constraining delivery capacity even as demand remains strong.

Key Findings from the 17th Deltek Clarity Government Contracting Report

Growth is holding, but performance pressure is rising. Revenue gains are increasingly accompanied by margin strain and declining financial indicators.

• Firms saw 15% average revenue growth in 2025, with 16% projected growth in 2026.
• Nearly 90% of respondents reported at least one declining financial metric
• Primary drivers of decline: Rising labor costs (31%), higher overhead expenses (28%), increased subcontractor/vendor costs (24%)

AI is everywhere, but governance and measurable outcomes are lagging. The near-universal push to adopt AI is outpacing enterprise readiness, increasing risk and uncertainty.

• 90% of respondents are now using, or planning to use, AI in at least one business function in 2026, with generative AI adoption exceeding 90%. However, 45% of respondents report being unclear on the return on investment for leveraging AI.
• According to IT and Security teams, only 5% of respondents say they are "fully developed" in AI maturity. Most are still piloting (37%) or scaling (38%) AI in their business.
• 95% of IT professionals are concerned about using AI in IT/security, and overall, the top concerns about AI are: data privacy/security (37%), the potential for inaccurate forecasts (29%), and difficulty validating AI-provided insights (26%).

Compliance and cybersecurity are becoming revenue gatekeepers. Meeting requirements are increasingly tied to eligibility, audit outcomes, and competitive positioning.

• 96% of survey respondents expect compliance costs to remain elevated or increase.
• 59% of firms anticipate CMMC will apply to them, and of those, 58% expect to need Level 2 certification in the future.
• The top audit risk areas for government contractors are cybersecurity and cost allocation.

"Government contractors are entering a new era where speed, compliance, and cost control must align. Our findings show that while firms are rapidly adopting AI and automation, many are still working to translate that investment into measurable outcomes while maintaining control," said Kevin Plexico, SVP of Information Solutions at Deltek. "The defining challenge contractors are facing is closing the gap between adoption and execution. Organizations that can better integrate their systems, strengthen data visibility, and embed governance across the project lifecycle will be able to stay competitive in an increasingly complex and regulated environment."

Key Findings from the 47th Deltek Clarity Architecture & Engineering Report

Demand is steady, but delivery capacity is a constraint. Firms are planning for growth, yet capacity and productivity pressures are shaping execution. Additionally, talent and productivity pressures are tightening. Limited workforce growth and high employee turnover are constraining scale, underscoring the need for better visibility into project performance throughout the project so firms can adjust as needed.

• Firms are forecasting 9.5% net revenue growth in 2026, and backlogs are softening from recent highs.
• Firms reported staff growth of only 1.2%, combined with a persistent high staff turnover rate above 13%.
• Firms reported strong financials, but are showing signs of softening, with utilization declining to just under 60% and operating profit falling to 16.7%.

AI adoption is accelerating, but measurable impact remains inconsistent. The opportunity for A&E firms is shifting from experimenting broadly to operating with intent: clear use cases, integration, and measurable objectives. When thinking about AI, firms are looking for better data, faster decisions, and improved predictability, but some core processes remain manual.

• Adoption of AI for A&E firms has risen from 53% to 70% year-over-year, and generative AI usage specifically rose from 64% to 78% year-over-year.
• However, only 38% of respondents reported measurable positive business impact tied to AI use.
• 39% said it's too early to see AI-driven benefits or that they're still piloting the technology, but a majority (59%) agree that successful AI implementation will create a significant competitive advantage and could expand service offerings.

Digital transformation urgency is rising, alongside cyber risk. Firms recognize the competitive stakes but still face practical barriers to operationalizing new technology.

• 93% reported experiencing a cyber attack attempt in the past three years, with 1 in 5 firms reporting a successful attack that resulted in financial or reputational damage.
• 42% believe they could lose market share within two years without significant digital transformation (up from 33% in 2025).
• Firms report that the top AI challenges are where and how to apply emerging tech (62%), integrating AI systems (56%), and data and cybersecurity (52%).

"In the A&E industry, firms are still optimistic, but the focus has shifted from growth to cost control and improving margins. Firms are facing increased constraints around talent, capacity, and profitability," said Megan Miller, Senior Director, A&E Industry Insights Lead at Deltek. "What we're seeing is a shift from growth at all costs to more disciplined, performance-driven operations. Leading firms will need to focus on surfacing better data, embedding AI directly into delivery workflows, and bringing discipline to how they manage and measure project performance."

Access the Latest Deltek Clarity Reports

The Deltek Clarity studies include detailed benchmarking data, longitudinal trend analysis, and industry-specific guidance across workforce, technology, security, and business development. Download the full reports and explore educational webinars at the Deltek Clarity Hub.

About Deltek

Deltek is the intelligent platform that powers the project lifecycle—from ERP and accounting to project bidding, planning, delivery, and analysis. Trusted by 30,000 organizations across government contracting, aerospace and defense, architecture and engineering, construction, and consulting, Deltek delivers the speed, clarity, and control project-based businesses need to win more, deliver better, and grow. Learn more at www.deltek.com.

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