Deltek released its latest annual Clarity studies for government contractors and architecture and engineering (A&E) firms, finding organizations are expanding their use of artificial intelligence while continuing to face labor shortages, rising costs and cybersecurity concerns.
The reports are based on survey responses from 917 government contractors and 896 A&E firms across the U.S. and Canada.
Among government contractors, firms reported average revenue growth of 15% in 2025, with 16% growth projected for 2026. However, nearly 90% said at least one financial metric declined, citing rising labor, overhead and subcontractor costs as key challenges.
AI adoption also continued to grow. About 90% of respondents said they are using or planning to use AI in at least one business function in 2026, though only 5% considered their organizations fully mature in AI implementation. Data security, privacy and measuring return on investment remained top concerns.
For A&E firms, Deltek found projected net revenue growth of 9.5% in 2026, but staffing levels increased just 1.2% while employee turnover remained above 13%. Firms also reported declining utilization and operating profit compared with previous years.
AI adoption among A&E firms increased from 53% to 70% year over year, though only 38% reported measurable business benefits. The report also found 93% of firms experienced a cyberattack attempt within the past three years, highlighting the growing importance of cybersecurity and digital transformation.
