The government contracting industry is undergoing one of the most significant transformations in its history. Artificial intelligence is reshaping software development. Federal agencies are demanding outcomes instead of labor hours. Emerging technologies are redefining national security, healthcare, and public services. And for entrepreneurs willing to adapt, panelists at “Startup Bazaar: GovCon,” the opportunities have never been greater.
That was the central theme of a panel discussion titled “Winning in GovCon: Opportunities for businesses of all sizes,” held June 13 at the University of Maryland’s Robert H. Smith School of Business.
Moderated by Rohit Tripathi, principal at VU Capital, the panel brought together three leaders whose careers span entrepreneurship, government contracting, innovation, and technology commercialization: Anil Sharma, CEO of 22nd Century Technologies; Dan Lagana, CEO of Building Momentum; and Sanjay Puri, founder of AutoNebula and founder of Regulating AI.
The discussion explored how businesses can enter the GovCon ecosystem, navigate procurement, build strategic partnerships, and position themselves for long-term growth. But it quickly evolved into a broader conversation about the future of technology, the changing nature of government contracting, and the opportunities emerging at the intersection of AI, hardware, cybersecurity, and public-sector modernization.
One of the first questions Tripathi posed concerned a challenge familiar to many entrepreneurs: How much should companies react to opportunities as they arise, and how much should they proactively shape their own future?
Sharma’s answer drew heavily on the experience of building 22nd Century Technologies into one of the nation’s largest government contractors, employing more than 6,500 people and serving federal, state, and local government clients across the country.
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When his company entered the federal marketplace in 2009, Sharma said, conventional wisdom suggested that success depended on extensive capture management and deep customer relationships before pursuing contracts.
“If I would have done that, probably I would have spent two more years doing nothing,” he said.
Instead, the company initially pursued a largely reactive strategy, identifying opportunities through government procurement platforms and aggressively competing for work. Its first contract was a modest $43,000 project for the U.S. Army at Fort Belvoir.
“I was personally delivering that also to Fort Belvoir,” Sharma recalled.
The project involved converting Excel files to Microsoft Access databases — hardly the type of work that generates headlines. Yet it became the foundation for a long-term relationship.
That first contract eventually led to more than $200 million in work from the same agency over the following 15 years.
For Sharma, the lesson was clear. Small companies often cannot afford to wait years building capture pipelines before pursuing opportunities.
“You have to balance between that combination of it,” he said. “Don’t give up all the reactive work at the start.”
Over time, however, successful firms must transition toward a more proactive model.
Today, Sharma estimates that approximately 70 percent of his company’s business development efforts are proactive. Yet he still sees value in pursuing unexpected opportunities that emerge through changing government priorities and budget cycles.
Building capability instead of selling labor
Dan Lagana described a markedly different approach.
Building Momentum, which develops engineering solutions, prototypes, hardware systems, and innovation programs, rarely pursues opportunities without first establishing customer intimacy and understanding the underlying problem.
“We evaluate our opportunities internally,” Lagana said. “If we don’t have a high degree of confidence, we just cut it off and move on.”
Rather than selling labor, Building Momentum focuses on delivering capabilities.
Lagana explained that customers increasingly want partners who can rapidly translate ideas into tangible solutions. His organization regularly works with companies that have software concepts but need physical products, prototypes, or hardware implementations.
The firm’s Alexandria, Virginia,-based accelerator enables software entrepreneurs to transform digital ideas into physical form factors in a matter of weeks rather than months.
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For Lagana, the future of government contracting is less about staffing contracts and more about solving problems.
“We provide capabilities to our clients,” he said.
That shift is occurring across both commercial and government markets.
Customers no longer want contractors simply to perform tasks. They want organizations that can help them achieve outcomes.
Innovation as a business strategy
The panelists agreed that innovation is no longer optional.
Government agencies increasingly expect contractors to bring intellectual property, technology solutions, and creative approaches to the table rather than merely providing personnel.
According to Sharma, the traditional government contracting model — often described as “people, process, and contracts” — is rapidly evolving.
“It is changing into what you call IP-enabled services,” he said.
In response, 22nd Century Technologies established a dedicated innovation lab several years ago.
The lab operates as a startup within the company, with its own objectives, governance structure, and investment strategy. Delivery teams identify recurring customer pain points and feed them into the innovation pipeline, where solutions are developed, tested, and commercialized.
One of the company’s most notable successes emerged through an Internal Revenue Service initiative.
The IRS initially issued a request for information seeking innovative approaches to processing tax returns. Twelve companies responded. Five were selected and awarded $75,000 to demonstrate their concepts. Three companies advanced to the next stage, receiving $500,000 to develop more sophisticated prototypes. Ultimately, one solution evolved into a production system supporting tax return processing.
The result was a contract worth hundreds of millions of dollars.
For Sharma, the story demonstrates how innovation is increasingly becoming the gateway to major government opportunities.
The end of “Butts in Seats”
Sanjay Puri, who founded and ran the government contracting firm Optimos, Inc for two decades, offered perhaps the most provocative observations of the session.
Drawing on his experience in both entrepreneurship and emerging technologies, Puri argued that one of the foundational assumptions of government contracting is rapidly disappearing.
“The whole method of putting butts in the seats is over,” he said.
For decades, many government contractors grew by providing labor. Agencies needed programmers, analysts, project managers, and specialists, and contractors supplied them.
Artificial intelligence is changing that equation.
Puri pointed to developments in software engineering, automation, AI agents, and cloud computing that are dramatically reducing the amount of labor required to perform many knowledge-based tasks.
As AI tools become increasingly capable, agencies are beginning to focus less on staffing levels and more on measurable outcomes.
“They’re not just looking for pure services,” Puri said. “What they are looking for is clear value.”
That shift creates both risks and opportunities.
Companies that continue relying solely on labor-based business models may struggle.
Organizations that embrace innovation, automation, and outcome-based delivery could thrive.
Throughout the discussion, artificial intelligence emerged as both the biggest opportunity and the biggest disruptor.
According to Puri, AI is not simply another technology trend.
It is fundamentally changing how products are built, how services are delivered, and how organizations create value.
Tools powered by large language models can now generate applications, create workflows, write code, and solve technical problems at unprecedented speed.
That does not eliminate the need for entrepreneurs. Instead, it changes where value is created.
Future success will increasingly depend on understanding business problems, integrating technologies, developing unique capabilities, and creating defensible intellectual property.
“AI is enabling you to come up with new medicines, new genes and things of that nature,” Puri said.
At the same time, AI creates new governance, security, and ethical challenges that must be addressed.
Opportunities beyond software
While much of the public conversation about AI focuses on software, the panelists emphasized the growing importance of hardware and physical systems.
Lagana highlighted a project involving drones designed to transport medical supplies between hospitals.
The concept addresses a practical problem: traffic congestion can delay the movement of critical materials such as blood products, pharmaceuticals, and potentially even organs for transplantation.
Such projects illustrate how emerging technologies are increasingly intersecting with healthcare, logistics, and public services.
The opportunity lies not simply in developing technology but in applying it to solve real-world problems.
That theme surfaced repeatedly throughout the conversation.
Technology itself is becoming commoditized.
Problem-solving remains scarce.
Healthcare, defense, and cloud
Asked which sectors offer the greatest opportunities, the panelists identified several areas experiencing rapid growth.
Defense remains a major driver.
The rise of autonomous systems, drones, advanced analytics, and AI-enabled decision-making is creating significant demand for innovative solutions.
Healthcare is another area attracting enormous investment.
Federal agencies such as the National Institutes of Health and Centers for Disease Control and Prevention are increasingly exploring how AI can improve diagnostics, accelerate research, and enhance decision-making.
Cloud modernization represents a third major opportunity.
Despite years of digital transformation efforts, many federal agencies continue operating legacy data centers.
According to Sharma, at the current pace it could take more than a decade to migrate all federal systems to the cloud.
The scale of that challenge creates significant opportunities for contractors capable of accelerating modernization.
As the conversation shifted toward entrepreneurship, the panelists painted a picture of a dramatically different future.
The traditional startup model — build a software application, raise capital, and scale rapidly — is becoming less effective.
Software alone is increasingly easy to replicate.
Competitive advantage must come from deeper understanding, stronger execution, and unique capabilities.
“Innovation will still be the key to entrepreneurship,” Sharma said.
The entrepreneurs who succeed in the next decade will likely be those who combine technical capabilities with domain expertise.
They will understand customer problems intimately.
They will build integrated solutions rather than standalone products.
And they will embrace technologies such as AI, robotics, cloud computing, and advanced analytics as tools rather than destinations.
Perhaps the most striking aspect of the discussion was the panelists’ shared belief that society is entering a period of profound transformation.
The changes being driven by artificial intelligence, automation, cybersecurity, advanced manufacturing, and digital infrastructure are not incremental.
They are structural.
Puri compared the moment to a major economic shift in which entire industries will be redefined.
“We are in for major shifts,” he said.
For entrepreneurs, government contractors, and innovators, that reality can seem daunting.
Yet the panelists viewed it primarily as an opportunity.
The government continues to spend billions of dollars addressing complex challenges.
New technologies are creating entirely new markets.
Agencies are seeking partners capable of delivering outcomes rather than simply supplying labor.
And businesses of all sizes have opportunities to participate.
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As Startup Bazaar attendees learned, winning in government contracting increasingly requires more than understanding procurement rules.
It requires understanding technology, innovation, customer problems, and the rapidly changing landscape in which all four intersect.
For those willing to adapt, the opportunities may be larger than ever.
The event was the third annual Startup Bazaar event hosted at UMD, building on the success of previous gatherings.
The keynote address by Atif Chaudhry, Maryland’s Secretary of General Services.