For companies that work with the government, new rules keep appearing—and with them, more responsibilities to stay compliant.
Constant updates to the Federal Acquisition Regulation (FAR) mean government contractors must quickly adapt to how federal agencies buy goods and services. The Cybersecurity Maturity Model Certification (CMMC) 2.0 is getting closer to being enforced, bringing stricter cybersecurity rules and added duties. FedRAMP standards are also becoming more demanding. On top of that, recent executive orders have introduced new limits and possible penalties related to diversity, equity, and inclusion (DEI).
This major shift in regulations has turned compliance from occasional check-ins into an ongoing, company-wide effort. What used to be a behind-the-scenes task now directly affects how firms win contracts, carry out projects, and handle audits. In this fast-changing environment, companies that are good at tracking, understanding, and acting on compliance requirements have a real advantage when it comes to winning government work—and they’re less likely to face audit problems, fines, or project delays.
More and more firms are finding that using artificial intelligence (AI) built into their compliance processes can help make compliance a natural, proactive part of daily operations—not just a last-minute scramble. According to early results from Unanet’s upcoming 2026 GAUGE benchmarking report, 36% of government contractors are already using AI to help with compliance, while another 42% are looking into it.
Here are five key ways AI can improve compliance for government contractors:
Creating a real-time compliance system. With CMMC 2.0 and major FAR changes, the rules are constantly shifting. FAR updates, in particular, are happening faster than ever, affecting contracts, clauses, and how work gets done. That’s why companies need a centralized, AI-powered way to track regulations—so they can stay on top of new executive orders and agency-level changes. AI tools can watch for regulatory updates as they happen, explain new rules (like FAR changes), and connect those rules to specific contracts and business processes.
Outcome: Firms can align their work with new rules more quickly, lowering compliance risks and avoiding delays.
Staying audit-ready at all times. Audits are becoming more serious—thanks to CMMC enforcement and updated FAR rules—and the government is taking a tougher stance. Old-style, static paperwork won’t cut it anymore.
Instead, companies should aim to be continuously ready for audits. AI can help by making documentation a company-wide habit and linking proof of compliance directly to internal controls. AI can also check for missing or outdated documents caused by new rules, suggest ways to fix gaps, and automatically create audit trails as work progresses.
Outcome: Better audit results, with less stress, disruption, and wasted time preparing for them.
Taking subcontractor compliance seriously. The FAR now requires more U.S.-made content under “Buy American” rules (65%, rising to 75% by 2029), and CMMC rules must flow down to subcontractors—especially if they handle Federal Contract Information (FCI) or Controlled Unclassified Information (CUI). This means prime contractors must closely monitor their subcontractors’ certifications and compliance status and sort them by risk level. AI can manage all of this—and even predict where subcontractor risks might arise across projects.
Outcome: Lower chance that subcontractor issues will hurt a firm’s ability to win prime contracts.
Updating policies to match today’s rules. From new cybersecurity standards to changed federal buying practices and DEI restrictions, policies written just a year or two ago may already be out of date. Companies need to regularly review policies across HR, IT, cybersecurity, finance, and project accounting. AI can compare current policies against new regulations, highlight what needs updating, and even suggest specific changes. AI can also check that projects follow the latest rules—especially in tricky areas like allowable costs, indirect rates, and job classifications, where old policies can quickly lead to compliance problems.
Outcome: Policies stay current with the latest rules, reducing the risk of falling out of compliance.
Improving and maintaining data quality—because compliance depends on it. For government contractors, reliable data is now just as important as compliance itself. New rules demand clear, accurate, and traceable reporting—so firms must be confident that the data they share with regulators (and use internally) is timely, complete, and verifiable. This becomes much easier when core systems are connected, breaking down data silos and replacing error-prone spreadsheets with smooth data flow across the organization.
With one trusted source of truth, companies can ensure their data is consistent and defensible during audits and reporting. And when systems are linked and data is solid, AI can step in to catch missing documents, billing mistakes, cost misclassifications, and other issues before an audit even begins.
Outcome: Firms can trust their AI tools because they trust their data.
Whether it’s wasted time hunting for documents, poor audit results, or losing contract opportunities due to subcontractor issues, the stakes are too high for government contractors to take compliance lightly.
In a world where federal agencies increasingly judge contractors based on compliance performance, companies that use AI effectively in these areas can turn strong compliance into a real competitive edge—helping them win more work, deliver projects smoothly, and operate with confidence in a fast-changing, high-pressure government environment.
Chris Crowder is executive vice president of government contracting solutions at Unanet.
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