The transition of administrations in the United States brings inevitable shifts in policies, priorities, and operational dynamics. For government contractors, these changes are more than political footnotes; they are pivotal moments that influence their operations, funding, and strategic planning.
The good news is that the transition to Donald Trump’s conservative government is not expected to have a major impact on ongoing government contracts and the risks faced by contractors, according to experts from Alliant Insurance Services.
Major policy shifts, such as the demobilization in Afghanistan, can have a bigger impact on contractors than an administration transition. At the same time, cyber attacks are an increasing source of concern in this sector.
But when it comes to day-to-day operations, the contractors are equipped to pivot to the new administration's focus areas, said Bryan Salek (pictured above left) and Angela Kirby (pictured above right), senior vice presidents who have been brought on to lead Alliant’s new specialized practice for government contractors.
This adaptability was evident during the previous Trump administration, which emphasized infrastructure under its Build Back America initiative. Contractors were tasked with addressing these domestic objectives while simultaneously managing global projects.
Shifting political landscapes often create ripple effects in the operational theatres where contractors work. For instance, the Trump administration’s foreign policy had direct implications for contractors operating in areas like the Middle East, Africa, and even the Asia-Pacific region.
Alliant noted an increased footprint within New Zealand, Australia, and a ramp-up of potential conflict with China and Taiwan. This geopolitical focus meant contractors had to be prepared for projects in locations with unique challenges and risks.
Remote operations, particularly in regions far from medical, logistical, or diplomatic resources, are a perennial challenge for contractors. These challenges became more pronounced as new projects emerged in isolated areas.
“The work our clients undertake is highly location-specific, driven by government priorities. Historically, much of this work has been in regions like the Middle East and parts of Africa,” said Salek. The most challenging locations are those far from essential resources such as hospitals, airports, consulates, or embassies.
For example, projects in remote areas like Antarctica or the Marshall Islands present unique difficulties, Salek noted. In these locations, planes might take hours to arrive, making it significantly harder to respond promptly when an employee experiences an injury or illness.
At the same time, operational risks are not confined to geography. The expectations placed on contractors by the US government amplify these challenges.
“The government expects contractors to act swiftly and efficiently, sometimes even faster than they can realistically manage,” Kirby said. “For instance, clients in a remote location need insurance solutions that allow them to act immediately to address situations involving their employees. There should be no coverage gaps or delays in claims determination before action can be taken.”
The Trump administration’s focus on cybersecurity added a new dimension to the risk landscape. Contractors faced increasing scrutiny over their cyber hygiene and response capabilities, driven by the growing frequency and sophistication of cyberattacks targeting defense secrets, blueprints, and technology.
“Unlike typical cybercrimes focused on personal identifiable information, credit card theft, or financial gain, these attacks have entirely different objectives,” said Salek. The situation is further complicated by the fact that many of these attacks are government-backed or funded, specifically targeting the defense sector.”
The rollout of frameworks like the Cybersecurity Maturity Model Certification (CMMC) aimed to establish minimum standards for cybersecurity, though implementation remained slow. Contractors, for their part, were keen to enhance their cyber defenses, both through increased insurance limits and improved systems.
While the frequency of these attacks is not necessarily increasing year over year, their persistence and the sophistication of their origins are becoming more evident, underscoring the need for a robust and proactive cybersecurity approach.
"The risk management strategy will need to evolve continuously to stay ahead of cyber threats," Kirby said. "Part of this evolution involves increasing coverage limits, but a significant focus must be placed on enhancing systems and anticipating future attack strategies."
Overall, core risks and exposures faced by government contractors, such as operating in remote locations, providing immediate medical response, and navigating compliance with local laws, are not expected to change significantly during the Trump transition.
Kirby and Salek highlighted the importance of adequate insurance coverage for firms as the significant backlog of contracts issued by the US government. This backlog ensures steady funding and activity, even as new priorities emerge amid the transition.
“We don’t foresee any downshift in US federal government funding,” said Salek. “It’s just going to be about where and when.
Alliant’s new specialized practice is focused on managing “people-related” risks for government contractors, which involves coordinating four key types of coverage:
“Our team ensures seamless coordination among these coverages by providing a single point of contact and a unified vendor response for all types of claims,” Salek told Insurance Business.
“Whether the issue is a heart attack or a fall from a ladder, our priority is to ensure employees receive medical treatment as quickly as possible, regardless of the nature of the claim.”
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