Cut bacon in small pieces. Cook until slightly crispy. Remove bacon from skillet and set to the side.
Add diced onion and bell pepper to the skillet with the bacon grease. Sauté until onion starts to turn translucent. Add a splash of water (no more than a couple tablespoons) if needed and scrape the bacon bits off the bottom of the skillet.
Add sliced zucchini and squash to skillet with the onion and bell pepper. Season with salt, black pepper, and garlic powder.
Once zucchini and squash start to soften, stir in the cooked bacon. Continue cooking for another 5-10 minutes, or until zucchini and squash reach desired tenderness.