How Government Contracts and Revenue Risk Shape Pharmacy Tech Vendors

When your pharmacy’s clinical systems depend on a vendor with government-only customers, what happens if that revenue dries up?

For pharmacy leaders and procurement teams, the fear is real: a trusted software partner can suddenly become a single point of failure. Between supply-chain shocks, procurement slowdowns, and shifting federal priorities in late 2025 and early 2026, the BigBear.ai story has become a cautionary tale for the pharmacy sector. BigBear.ai eliminated debt and acquired a FedRAMP-approved AI platform — a clear capability boost — but the company also showed how reliance on government contracts can produce dramatic revenue volatility and operational risk.

Why pharmacies should care: vendor risk is patient risk

Pharmacies buying cloud-based pharmacy management, e-prescribing, medication adherence, or inventory automation systems must think like continuity planners. A vendor’s sudden financial stress or contract loss can cause service degradation, delayed integrations, or worst-case data access problems — all of which directly affect patient safety and regulatory compliance. In 2026, buying software isn’t just a feature checklist; it’s a business continuity decision.

Key threats that make government-dependent vendors risky

• Budget cycles and appropriations delays: Government spending operates on a cadence that doesn’t match commercial revenue patterns. A late appropriation or budget revision can delay payments and contract awards.
• Single-customer concentration: Vendors with a high percentage of revenue from one client or sector are vulnerable if that customer pauses or terminates work.
• Procurement audits and compliance risk: Federal contracts invite audits and remediation requirements that can be costly and disruptive.
• Political and policy change: Shifts in priorities, especially around AI procurement and national security, can reallocate funding mid-program.
• Flighty pipeline: Being able to say “FedRAMP-approved” helps win business, but it doesn’t guarantee long-term sales across commercial pharmacy markets.

The BigBear.ai example: growth and fragility

BigBear.ai’s late-2025 moves — paying down debt and buying a FedRAMP-certified AI platform — show a company repositioning for growth in government AI work. Those moves also reveal the tension: a vendor can be technically strong and simultaneously financially fragile. Investors noticed declining revenues and a customer mix heavily linked to government programs, which increased the company’s sensitivity to contract timing and recompete cycles.

When a vendor’s top-line relies on a narrow set of government contracts, a single missed award or procurement delay can reduce revenue and destabilize operations.

For pharmacies evaluating vendors in 2026, BigBear.ai’s case underlines one truth: technical credentials (FedRAMP, AI capabilities) matter — but they don’t replace the need to assess financial diversity, procurement risk exposure, and operational resiliency.

How government contracting creates revenue volatility — explained

Understanding the mechanics helps procurement teams ask the right questions. Government contracting causes volatility through:

• Non-linear cash flows: Large awards may be spaced out, with payments tied to milestones and acceptance tests, not steady recurring revenue.
• Contract scope changes: Task orders, change requests, or audits can expand costs faster than revenue.
• Recompetition risk: Many federal contracts have finite terms with competitive renewals that can be lost to rivals.
• Compliance-triggered pauses: Security findings or procurement protests can temporarily halt billing or performance.

What pharmacy buyers must evaluate — practical due diligence checklist

When your pharmacy considers a cloud vendor in 2026, add the following to your procurement RFP / vendor assessment. These items focus on vendor stability, not just product fit.

Financial & revenue health

• Ask for audited financial statements or a recent financial summary and key KPIs (gross margin, cash runway, EBITDA trend).
• Request a customer revenue breakdown — what percent of revenue comes from government contracts vs. commercial customers?
• Review pipeline quality: how many live contracts vs. proposals and expected close timing?
• Request indicators of revenue concentration (top 5 customers as percent of revenue).

Contracting & procurement exposure

• Ask whether the vendor depends on a single or dominant government prime / subcontractor. Subcontract structures add hidden risk.
• Check the vendor’s track record on contract renewals and recompetes — what win rate do they report?
• Get copies of typical government contract language and change-order processes so you can see how scope creep and billing cadence work.

Security, compliance, and certifications

• HIPAA is a strong indicator for handling federal data, but for pharmacy data you should also require SOC 2 Type II, and ideally HITRUST certification.
• Verify audit logs, penetration testing cadence, and how security incidents have been handled in the past 24 months.

Business continuity & exit protections

• Insist on a documented Disaster Recovery (DR) and Business Continuity Plan (BCP) with RTO (Recovery Time Objective) and RPO (Recovery Point Objective) metrics.
• Require data export and portability clauses with formats, APIs, and timelines — you must be able to access patient and prescription data if the vendor fails.
• Include termination assistance provisions, transition support hours, and pricing in the contract.
• Negotiate source code or data escrow for critical systems; this is increasingly standard for higher-risk SaaS relationships in healthcare.

Contract language to insist on (sample items)

Include these clauses to reduce supplier stress impact on your pharmacy:

• Service Level Agreements (SLAs) with financial service credits tied to uptime and data access — not only interface uptime but confirmation that e-prescribing queues are functioning.
• Termination Assistance requiring 90–180 days of operational support and all data exports at no extra cost.
• Data Escrow / Source Code Escrow triggered by insolvency events or long-term unavailability.
• Customer Concentration Disclosure — vendor must report if any customer becomes more than X% of revenue.
• Insurance & Indemnity minimums — cyber liability, professional liability aligned to pharmacy risk.

Operational strategies: reduce vendor single-point-of-failure

Beyond contract text, your operations team can build practical resilience:

• Maintain active backups: automate nightly exports of critical patient and prescription data into a secure, pharmacy-controlled repository.
• Test portability: annually validate that exports import successfully into a secondary system or a vendor-neutral staging environment.
• Implement dual-provider patterns: where possible, use redundant verification or payment routing services (e.g., secondary PBM connectors) so one vendor outage doesn’t stop fulfillment.
• Retain integration documentation: keep API keys, integration runbooks, and contact escalation lists in an encrypted vault accessible under corporate policy.
• Run quarterly vendor health reviews: combine financial monitoring with performance metrics and meet at least annually with vendor leadership to review roadmaps and contract risk.

Procurement tactics that reduce risk

Procurement should shift from “lowest total cost” to a blended evaluation that includes stability scoring. Use this scoring model in RFPs:

1. Product/technical fit (40%)
2. Security & compliance (20%)
3. Operational resilience & continuity (15%)
4. Financial strength & revenue diversification (15%)
5. Price & TCO (10%)

Insist on vendor transparency: ask for references from customers who migrated away from the vendor and ask why. Those stories often expose real reliability and transition issues.

Industry trends in 2026 that reshape vendor risk

Several developments through late 2025 and early 2026 have changed the calculus for pharmacy SaaS buying:

• Broader FedRAMP adoption for AI and analytics: More vendors claim FedRAMP or are pursuing it. This helps federal trust but does not ensure commercial market resilience.
• Heightened procurement scrutiny: Post-2024 procurement reforms increased oversight of AI and cloud spend; audits and longer award cycles have created uneven revenue timing for vendors.
• Financial market pressure on mid-market vendors: Investors expect SaaS revenue diversification; vendors still dependent on a narrow customer base face refinancing constraints.
• Regulation of AI in healthcare: New AI safety guidance affects vendor development costs and time-to-market, increasing fixed cost burdens.
• Interoperability and data portability law momentum: Governments and regulators are emphasizing data access and portability, which strengthens the buyer’s negotiating position.

Red flags: when to pause a deal

Not every risk is a dealbreaker. But these red flags should trigger a procurement pause or extra protections:

• Vendor refuses to disclose revenue concentration metrics or audited financials.
• Recent layoffs or repeated executive turnover, especially in engineering or security functions.
• Dependency on a government prime with opaque subcontracting tiers.
• Security incidents in the past 12 months with incomplete remediation evidence.
• Contract terms that limit your data portability or charge inflated fees for termination assistance.

Actionable next steps for pharmacy leaders

Start with these prioritized actions this quarter:

1. Update your vendor evaluation checklist to include financial concentration and business continuity criteria.
2. Ask current vendors for a one-page Vendor Health Summary covering revenue mix, certifications (FedRAMP / SOC 2 / HITRUST), recent incidents, and contingency commitments.
3. Negotiate data escrow and termination assistance in any new contract. If a vendor balks, require stronger SLAs or reduced initial commitment.
4. Run a tabletop DR/transition exercise to validate your team can switch providers or operate offline for critical functions for at least 7–14 days.
5. Work with legal to insert clauses that require notification within 10 business days of any material adverse financial events.

Final perspective: balance innovation with resilience

Vendors that win pharmacy business in 2026 will combine advanced capabilities (AI-enabled decision support, integrated PBM workflows, FedRAMP or equivalent security posture) with transparent financials and strong contract protections. The BigBear.ai story shows both sides: technology matters, but so does the company behind the tech. For pharmacies, the mission is clear — protect patients by buying from vendors that make continuity and data access central to the offering.

In procurement and IT strategy, prioritize contract diversification, enforceable continuity commitments, and repeatable exit plans. Those steps transform vendor relationships from fragile dependencies into resilient partnerships.

Call to action

Ready to harden your pharmacy’s vendor strategy? Start with a free Vendor Risk Readiness Checklist from our pharmacy procurement team and schedule a 30-minute briefing to review your top three vendor contracts for risk exposure. Protect patient care by making vendor stability a first-class procurement requirement.

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