Think of nearly $800 billion—a sum equal to entire nations' GDPs—changing hands in a single year, and you’ll begin to grasp the immense scale and pivotal role of the U.S. federal contracting industry.
Key Takeaways
- In FY 2023, total federal contract obligations reached $791.6 billion, marking a 9.7% increase from FY 2022.
- Federal contract spending accounted for 28% of total federal discretionary spending in FY 2023.
- DoD obligated $466 billion on contracts in FY 2023, representing 59% of all federal contract spending.
- Lockheed Martin received $45.6 billion in federal contract awards in FY 2023.
- Boeing was awarded $26.8 billion in DoD contracts in FY 2023.
- General Dynamics secured $19.4 billion in federal primes in FY 2023.
- Small businesses won 23.1% of federal prime contract dollars in FY 2023 ($115.3 billion).
- In FY 2023, HUBZone-certified businesses received 3.3% of prime contract dollars ($16.5 billion).
- Women-Owned Small Businesses (WOSB) achieved 5.0% of federal contract spending in FY 2023 ($25 billion).
- OASIS contract vehicle had 40% small business set-asides by value in FY 2023.
- NASA SEWP VI awarded $20 billion ceiling with 70% small business participation.
- DoD's STRATCOM C2 vehicle obligated $5.2 billion in FY 2023.
- Federal contract obligations are projected to reach $850 billion by FY 2025.
- DoD contracting expected to grow 4% annually through 2028 due to modernization.
- Federal IT spending forecasted to hit $100 billion by FY 2026.
Federal contract spending significantly increased, dominating discretionary spending and heavily favoring services.
Contract Vehicles and Types
- OASIS contract vehicle had 40% small business set-asides by value in FY 2023.
- NASA SEWP VI awarded $20 billion ceiling with 70% small business participation.
- DoD's STRATCOM C2 vehicle obligated $5.2 billion in FY 2023.
- GSA's 8(a) STARS III GWAC had $15 billion in task orders in FY 2023.
- NETCENTS-2 Air Force IT contract vehicle awarded $3.8 billion in FY 2023.
- DHS's EAGLE Next Generation IDIQ reached $4.5 billion in obligations FY 2023.
- Army Vantage IDIQ obligated $2.9 billion for HR services in FY 2023.
- SeaPort-NxG Navy vehicle had $12 billion in task orders FY 2023.
- GSA MAS program facilitated $38 billion in sales in FY 2023.
- CDC ATS-5 contract vehicle awarded $1.2 billion in health IT FY 2023.
- FBI's ITSSS-2 GWAC obligated $900 million in FY 2023.
- VA's T4NG vehicle reached $22 billion ceiling with $6 billion tasked in FY 2023.
- DISA ENCORE III IDIQ awarded $7.5 billion in cloud services FY 2023.
- NIH CIO-SP3 GWAC had 75 small business awards totaling $20 billion.
- Air Force AFSO 21 vehicle obligated $4.1 billion for logistics FY 2023.
- GSA 36 Professional Services Schedule sales were $18 billion in FY 2023.
- DoD's $50 billion JEDI cloud contract was canceled in 2021 but influenced $10B follow-ons.
- HHS PSC III IDIQ obligated $3.4 billion in FY 2023.
- NASA's Solutions for Enterprise-Wide Procurement (SEWP) V had $18 billion tasked.
- Army's LOGCAP V awarded $5.8 billion initial task orders FY 2023.
- GSA's OASIS Small Business had $8 billion in awards FY 2023.
- DOT's SETA II vehicle obligated $1.8 billion in FY 2023.
- USAID's Global Acquisition and Assistance Services vehicle $2.2 billion FY 2023.
- EPA's Scientific, Technical, Engineering, and Modeling Support vehicle $900M FY 2023.
- IDIQ contracts represented 45% of total federal obligations by value in FY 2023.
- BPAs and BOAs facilitated $75 billion in orders in FY 2023.
- Federal IT GWACs grew 15% in obligations to $45 billion in FY 2023.
Contract Vehicles and Types Interpretation
While Uncle Sam is clearly betting big on a galaxy of IDIQs and GWACs to steer the federal ship, the real star of the show is small business, whose growing slice of this multi-billion-dollar pie proves that in the high-stakes world of government contracting, the best strategy is often to think small.
Market Size and Spending
- In FY 2023, total federal contract obligations reached $791.6 billion, marking a 9.7% increase from FY 2022.
- Federal contract spending accounted for 28% of total federal discretionary spending in FY 2023.
- DoD obligated $466 billion on contracts in FY 2023, representing 59% of all federal contract spending.
- Civilian agencies obligated $325.6 billion in contracts during FY 2023.
- In FY 2022, federal IT contract spending totaled $58.3 billion.
- The federal government awarded 12.5 million contract actions in FY 2023.
- Average federal contract value in FY 2023 was $63,400.
- Fixed-price contracts made up 88% of federal obligations by value in FY 2023.
- Federal R&D contract obligations were $72.4 billion in FY 2023.
- HHS obligated $55.2 billion on contracts in FY 2023, the highest among civilian agencies.
- NASA contract spending in FY 2023 totaled $25.1 billion.
- Federal construction contract obligations reached $38.7 billion in FY 2023.
- In FY 2023, 80% of federal contract dollars went to services contracts.
- Federal spending on professional services contracts was $192 billion in FY 2023.
- IT and telecom contracts obligated $97.5 billion in FY 2023.
- Total federal prime contract awards in Q1 FY 2024 were $176 billion.
- Federal contract obligations grew 11% year-over-year in Q4 FY 2023.
- In FY 2021, federal contracts represented 6.5% of U.S. GDP.
- DoD services contracts obligated $290 billion in FY 2023.
- VA healthcare contracts totaled $18.4 billion in FY 2023.
- Federal engineering and technical services spending was $45.2 billion in FY 2023.
- In FY 2023, 1.2% of contract actions accounted for 80% of obligations by value.
- Federal supply contracts obligated $112 billion in FY 2023.
- DHS contract spending reached $42.8 billion in FY 2023.
- DOE obligated $28.6 billion on contracts in FY 2023.
- Federal facilities maintenance contracts were $15.3 billion in FY 2023.
- In FY 2023, multi-year contracts represented 15% of total obligations.
- Federal education and training contracts obligated $4.2 billion in FY 2023.
- Transportation contracts totaled $22.1 billion in FY 2023.
- Federal environmental services contracts were $8.7 billion in FY 2023.
Market Size and Spending Interpretation
While the Pentagon’s $466 billion appetite proves warfighting is expensive, Uncle Sam’s real talent is quietly spending nearly $200 billion on professional advice and IT support to figure out how to spend the other $600 billion.
Small Business Participation
- Small businesses won 23.1% of federal prime contract dollars in FY 2023 ($115.3 billion).
- In FY 2023, HUBZone-certified businesses received 3.3% of prime contract dollars ($16.5 billion).
- Women-Owned Small Businesses (WOSB) achieved 5.0% of federal contract spending in FY 2023 ($25 billion).
- Service-Disabled Veteran-Owned Small Businesses (SDVOSB) got 4.4% ($22 billion) in FY 2023.
- 8(a) Program participants awarded 5.1% of prime contracts by dollars in FY 2023 ($25.5 billion).
- Small disadvantaged businesses (SDB) share was 10.2% of federal primes in FY 2023 ($51 billion).
- Number of small business prime contractors grew to 84,000 in FY 2023.
- DoD small business goal achievement was 24.5% of eligible contract dollars in FY 2023.
- Civilian agencies met 108% of small business goals in FY 2023.
- Alaska Native Corporations (ANCs) received $12.4 billion in FY 2023.
- Small businesses won 70.2% of prime contracts by number (8.8 million actions) in FY 2023.
- Emerging Domestic Marketplaces received 1.8% of contract dollars in FY 2023 ($9 billion).
- SBA's set-aside contracts for small businesses totaled $150.2 billion in FY 2023.
- WOSB set-asides accounted for 12% of small business actions in FY 2023.
- HUBZone sole-source contracts awarded $1.2 billion in FY 2023.
- SDVOSB verification led to $18.5 billion in verified awards in FY 2023.
- Small business subcontracting plans covered $400 billion in FY 2023 primes.
- Mentor-Protégé program pairs assisted 500 small businesses with $2.5 billion in FY 2023.
- Rural small businesses received 2.1% of small business dollars ($2.4 billion) in FY 2023.
- Joint ventures with small businesses won $35 billion in FY 2023.
- 8(a) graduates continued to receive $10 billion post-graduation in FY 2023.
- Small business participation in IT contracts was 35% by dollars in FY 2023.
- DoD HUBZone awards totaled $4.1 billion in FY 2023.
- WOSB federal goal increased to 5% for FY 2024-2025.
- Small business prime awards grew 8% year-over-year in FY 2023.
- GSA Schedule contracts had 45% small business participation in FY 2023.
- GWACs like Alliant 2 awarded 60% to small businesses in FY 2023 competitions.
Small Business Participation Interpretation
The federal government is finally starting to realize its best vendor might not be a corporate behemoth, but a spreadsheet of 84,000 small businesses where, yes, the goals are often met but the slices of the $115 billion pie are still tantalizingly small and fiercely fought over.
Top Contractors and Awards
- Lockheed Martin received $45.6 billion in federal contract awards in FY 2023.
- Boeing was awarded $26.8 billion in DoD contracts in FY 2023.
- General Dynamics secured $19.4 billion in federal primes in FY 2023.
- Raytheon Technologies (RTX) obligations totaled $18.2 billion in FY 2023.
- Northrop Grumman received $17.9 billion in DoD awards in FY 2023.
- Leidos Holdings won $11.5 billion in federal contracts in FY 2023.
- Huntington Ingalls Industries awarded $9.8 billion in FY 2023.
- McKesson Corporation received $9.2 billion in HHS contracts in FY 2023.
- Booz Allen Hamilton secured $8.7 billion in federal awards in FY 2023.
- Deloitte Consulting got $7.4 billion in civilian agency contracts in FY 2023.
- Accenture Federal Services awarded $6.9 billion in FY 2023.
- CACI International received $6.3 billion in DoD contracts in FY 2023.
- L3Harris Technologies won $6.1 billion in FY 2023.
- ManTech International (now part of Carlyle) awarded $5.8 billion in FY 2023.
- SAIC received $5.4 billion in federal primes in FY 2023.
- Peraton Labs secured $4.9 billion in intelligence contracts in FY 2023.
- Fluor Corporation awarded $4.7 billion in construction contracts in FY 2023.
- Jacobs Engineering got $4.5 billion in engineering services in FY 2023.
- KBR Inc. received $4.2 billion in DoD logistics contracts in FY 2023.
- Parsons Corporation awarded $3.9 billion in FY 2023.
- Amentum Services won $3.7 billion in O&M contracts in FY 2023.
- Chenega Corporation received $3.4 billion as a small business in FY 2023.
- ASRC Federal received $3.2 billion in NASA contracts in FY 2023.
- V2X Inc. awarded $3.0 billion in logistics in FY 2023.
- Palantir Technologies secured $2.8 billion in data analytics contracts in FY 2023.
- IBM received $2.6 billion in IT contracts in FY 2023.
- Top 100 contractors captured 58% of total federal contract dollars in FY 2023.
Top Contractors and Awards Interpretation
While the government’s $700 billion checkbook is technically open to competition, nearly 60% of it gets casually handed to a familiar circle of defense and tech giants, suggesting federal procurement is less a competitive market and more a very exclusive, astronomically expensive club with a strict guest list.
Trends and Forecasts
- Federal contract obligations are projected to reach $850 billion by FY 2025.
- DoD contracting expected to grow 4% annually through 2028 due to modernization.
- Federal IT spending forecasted to hit $100 billion by FY 2026.
- Cloud computing contracts projected to double to $20 billion annually by FY 2027.
- AI and machine learning federal contracts expected to reach $15 billion by FY 2025.
- Cybersecurity contract spending forecasted at $12.5 billion in FY 2024.
- Small business participation projected to rise to 25% by FY 2025.
- Sustainable procurement contracts expected to grow 20% yearly to $50B by 2030.
- Federal R&D contracting forecasted to increase 7% to $80 billion in FY 2024.
- Hypersonic weapons contracts projected at $10 billion through FY 2027.
- Telework IT support contracts to grow 12% annually post-COVID.
- Federal healthcare IT spending forecasted to $25 billion by FY 2026.
- Space domain awareness contracts expected to triple to $3 billion by FY 2028.
- Zero-trust architecture implementations to drive $8 billion in contracts FY 2024-2025.
- Federal supply chain resilience contracts projected at $5 billion annually.
- Quantum computing R&D contracts forecasted to $1.2 billion by FY 2025.
- Climate resilience and adaptation contracts to reach $15 billion by FY 2030.
- Federal 5G deployments expected to obligate $4 billion through FY 2026.
- Digital twins and modeling contracts projected to grow 25% yearly.
- Federal M&A activity in govcon sector up 15% in 2023, expected to continue.
- Software-defined networking contracts forecasted at $6 billion FY 2024.
- Federal electric vehicle infrastructure contracts to $2.5 billion by FY 2027.
- Blockchain for supply chain pilots expected to scale to $1 billion in contracts.
- Federal data analytics market projected to $18 billion by FY 2028.
- Edge computing federal obligations forecasted to $3.5 billion FY 2025.
- Federal construction backlog expected to drive 10% growth to $45B FY 2024.
- Micro-purchasing via smart cards projected to save $500M annually by 2025.
- Federal CMMC compliance contracts to exceed $2 billion in FY 2024.
- Open RAN telecom contracts forecasted at $1.5 billion for DoD by FY 2026.
Trends and Forecasts Interpretation
The federal marketplace is now a gold rush where everyone needs a next-generation shovel, from cloud-delivered artificial intelligence to cybersecurity force fields, all while Uncle Sam is trying to green the government and still beat everyone else to the moon.
Sources & References
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