While Uncle Sam’s $764 billion spending spree in 2023 proves the federal contracting arena is a financial behemoth, the real story lies in the seismic shifts beneath the surface, from AI mandates reshaping proposals to a $1.2 trillion backlog signaling both opportunity and obstacle.
Key Takeaways
- In fiscal year 2023, the total value of federal contract obligations reached $764 billion, marking a 4.5% increase from FY2022.
- Federal contracting accounted for 52% of total federal discretionary spending in FY2023.
- The Department of Defense awarded $457 billion in contracts in FY2023, representing 60% of all federal contracts.
- Lockheed Martin received $45.4 billion in DoD contracts in FY2023.
- Boeing was awarded $26.7 billion in federal contracts in FY2023.
- Raytheon Technologies (RTX) secured $24.1 billion in FY2023.
- Department of Defense accounted for 59.8% of all federal contract spending in FY2023.
- Department of Veterans Affairs awarded $48.2 billion in contracts FY2023.
- Health and Human Services (HHS) contracts totaled $55.1 billion in FY2023.
- Small businesses received 28.4% of federal prime contract dollars in FY2023, totaling $202 billion.
- Women-Owned Small Businesses (WOSB) got 5.1% or $36 billion in FY2023.
- Service-Disabled Veteran-Owned Small Businesses (SDVOSB): 3.7% or $26 billion FY2023.
- Federal contract employment totaled 5.3 million jobs supported in 2023.
- Government contracting workforce grew 2.1% YoY to 2023.
- Average salary in federal contracting: $95,000 annually in 2023.
Government contracting is a massive and growing sector dominated by large defense firms.
Contract Awards by Agency
- Department of Defense accounted for 59.8% of all federal contract spending in FY2023.
- Department of Veterans Affairs awarded $48.2 billion in contracts FY2023.
- Health and Human Services (HHS) contracts totaled $55.1 billion in FY2023.
- Department of Homeland Security (DHS) obligated $46.7 billion FY2023.
- Department of Energy (DOE) contracts: $38.4 billion FY2023.
- NASA procurement spending: $24.9 billion in FY2023.
- General Services Administration (GSA) awards: $42.3 billion FY2023.
- Department of Justice (DOJ) contracts: $12.8 billion FY2023.
- Department of Transportation (DOT) obligated $15.6 billion FY2023.
- Department of the Interior (DOI): $10.2 billion contracts FY2023.
- Department of Agriculture (USDA): $8.7 billion FY2023.
- Department of Education: $2.1 billion contracts FY2023.
- Environmental Protection Agency (EPA): $3.4 billion FY2023.
- National Aeronautics and Space Administration sub-agencies: 95% of budget via contracts.
- Army Corps of Engineers: $9.5 billion civil works contracts FY2023.
- Air Force: $62.3 billion procurement FY2023.
- Navy: $78.1 billion shipbuilding contracts FY2023.
- NIH (under HHS): $18.2 billion extramural contracts FY2023.
- FEMA (DHS): $12.4 billion disaster contracts FY2023.
- Treasury Department: $4.6 billion IT contracts FY2023.
- State Department: $11.9 billion overseas contracts FY2023.
- Commerce Department: $2.3 billion FY2023.
- HUD: $1.8 billion contracts FY2023.
- Labor Department: $1.5 billion FY2023.
Contract Awards by Agency Interpretation
In the grand bazaar of federal spending, the Pentagon is the 800-pound gorilla doing most of the shopping, while other agencies queue up with substantial, if less staggering, carts of their own.
Employment and Workforce
- Federal contract employment totaled 5.3 million jobs supported in 2023.
- Government contracting workforce grew 2.1% YoY to 2023.
- Average salary in federal contracting: $95,000 annually in 2023.
- STEM jobs in contracting: 1.2 million positions FY2023.
- Clearance-required jobs: 1.8 million in federal contracting 2023.
- Women in federal contracting workforce: 42% in 2023.
- Veterans employed by top contractors: 25% of workforce 2023.
- IT contracting jobs: 850,000 full-time equivalents FY2023.
- Engineering roles in DoD contracts: 450,000 jobs 2023.
- Acquisition workforce: 15,000 civilian positions in 2023.
- Contractor overhead rates averaged 35% in FY2023 audits.
- Remote work in contracting: 28% of positions post-COVID 2023.
- Turnover rate in federal IT contracting: 12% annually 2023.
- Unionized contracting workforce: 18% in 2023.
- Diversity hiring goals met: 35% minorities in new hires 2023.
- Cybersecurity certifications held: 300,000+ in workforce 2023.
- DoD contractor personnel: 700,000 overseas in 2023.
- Health IT contracting jobs: 120,000 FY2023.
- Logistics support roles: 650,000 jobs supported 2023.
- R&D scientist positions: 180,000 in federal contracts 2023.
- Administrative contracting jobs: 900,000 FTEs 2023.
- Training programs funded: $2.5 billion for workforce FY2023.
- Gig economy in contracting: 5% of workforce 2023.
- Age demographics: 45% under 40 in contracting 2023.
- Benefits cost as % of salary: 32% average 2023.
- Labor shortage in cleared IT: 50,000 openings 2023.
- Federal contracting supported 4.1% of U.S. manufacturing jobs in 2023.
- Cloud migration created 200,000 new jobs in FY2023.
- Sustainability/ESG roles: 15,000 new positions 2023.
- AI ethics specialists in contracts: 2,500 hires FY2023.
- Supply chain resilience jobs: 75,000 funded FY2023.
Employment and Workforce Interpretation
The federal government's $95,000-average-salary machine hums along with 5.3 million cogs—from cleared IT warriors and STEM experts to overseas logistics teams—proving it's a massive, evolving, and surprisingly balanced economic engine where your tax dollars both build fighter jets and fund the person who ensures their cloud software is ethically sourced.
Market Size and Growth
- In fiscal year 2023, the total value of federal contract obligations reached $764 billion, marking a 4.5% increase from FY2022.
- Federal contracting accounted for 52% of total federal discretionary spending in FY2023.
- The Department of Defense awarded $457 billion in contracts in FY2023, representing 60% of all federal contracts.
- From 2018 to 2023, federal contract spending grew at a compound annual growth rate (CAGR) of 3.2%.
- In FY2023, IT services contracts totaled $92 billion, up 7% year-over-year.
- Federal construction contracts reached $45.6 billion in FY2023.
- Healthcare-related federal contracts amounted to $68 billion in FY2023.
- The top 100 contractors received 25% of all federal contract dollars in FY2023, totaling $191 billion.
- Federal R&D contracts were valued at $58 billion in FY2023.
- Between FY2019 and FY2023, contract spending inflation-adjusted growth was 1.8% annually.
- In FY2023, indefinite-delivery contracts (IDVs) obligated $320 billion, or 42% of total.
- Fixed-price contracts made up 85% of federal obligations by value in FY2023.
- The average federal contract value in FY2023 was $1.2 million.
- Federal contracts under $250,000 numbered 8.4 million in FY2023.
- Multi-year contracts increased by 12% in number from FY2022 to FY2023.
- In FY2023, 78% of federal contract dollars went to services, 15% to products, and 7% to construction.
- Defense contracts grew 5.1% in FY2023 while civilian grew 2.8%.
- Total federal prime contract awards in FY2023: 11.2 million actions.
- Contract spending as % of GDP was 2.9% in FY2023.
- Projected federal contract spending for FY2024: $780 billion.
- In FY2023, GSA schedules obligated $38 billion.
- NASA contracts totaled $22 billion in FY2023.
- DHS contracts: $52 billion in FY2023.
- VA healthcare contracts: $29 billion in FY2023.
- DOE contracts: $34 billion in FY2023.
- Federal contract backlog estimated at $1.2 trillion in FY2023.
- IT contract ceiling value: $150 billion across GWACs in 2023.
- Professional services contracts: $120 billion in FY2023.
- Engineering services: $45 billion in FY2023 federal spend.
- Facilities support contracts: $28 billion in FY2023.
Market Size and Growth Interpretation
In the colossal $764 billion arena of federal contracting, where the Pentagon's $457 billion appetite dominates the table and a quarter of the pie goes to just the top 100 players, it’s a world of steady, inflation-chipped growth where the real action is in multi-year services deals and an Everest-sized backlog waiting to be climbed.
Small Business Participation
- Small businesses received 28.4% of federal prime contract dollars in FY2023, totaling $202 billion.
- Women-Owned Small Businesses (WOSB) got 5.1% or $36 billion in FY2023.
- Service-Disabled Veteran-Owned Small Businesses (SDVOSB): 3.7% or $26 billion FY2023.
- HUBZone small businesses: 3.3% share, $23 billion FY2023.
- Number of small business prime contractors: 84,000 in FY2023.
- Small business set-asides: 25% of actions, 28% by dollars FY2023.
- DoD small business goal achievement: 27.5% in FY2023.
- Civilian agencies small business: 29.8% FY2023.
- Subcontracting small business spend: $150 billion FY2023.
- 8(a) program awards: $28 billion FY2023.
- Mentor-Protégé program small business gains: $12 billion FY2023.
- Small business IT contracts: $25 billion FY2023.
- Construction small business share: 45% by number, 22% dollars FY2023.
- R&D small business: 35% of awards FY2023.
- Sole-source small business awards: 15% of small business dollars FY2023.
- Small disadvantaged businesses (SDB): 10.2% FY2023.
- Number of WOSB certifications: 45,000 in 2023.
- SDVOSB verified firms: 12,500 active FY2023.
- HUBZone designated areas: 11,000+ counties FY2023.
- Small business protest sustain rate: 2.1% FY2023.
- Federal cloud computing small business: 18% FY2023.
- Veteran-owned small business growth: 8% YoY FY2023.
- Minority-owned small business contracts: $85 billion FY2023.
- Small business penetration in top 100 agencies: 26% average FY2023.
- Emerging small business tech firms: 5,200 awards FY2023.
- Small business sustainability contracts: $4 billion FY2023.
- Cybersecurity small business set-asides: $6.2 billion FY2023.
- AI/ML small business R&D: $1.8 billion FY2023.
Small Business Participation Interpretation
While Uncle Sam tosses impressive billions at small businesses like he's feeding pigeons in the park, the persistent concentration of dollars—with women-owned, veteran-owned, and HUBZone firms getting just the crumbs—reveals we're still playing a game of economic Monopoly with too few players on the board.
Top Contractors
- Lockheed Martin received $45.4 billion in DoD contracts in FY2023.
- Boeing was awarded $26.7 billion in federal contracts in FY2023.
- Raytheon Technologies (RTX) secured $24.1 billion in FY2023.
- General Dynamics got $23.4 billion in federal awards FY2023.
- Northrop Grumman received $21.8 billion in FY2023 contracts.
- McKesson Corporation topped healthcare contractors with $37.2 billion in FY2023.
- Leidos Holdings Inc. awards totaled $14.5 billion in FY2023.
- Huntington Ingalls Industries: $11.3 billion in FY2023.
- Booz Allen Hamilton: $7.1 billion federal revenue FY2023.
- CACI International: $6.5 billion in contracts FY2023.
- ManTech (now part of Carlyle): $2.4 billion pre-acquisition FY2023.
- Deloitte Consulting: Estimated $8 billion federal FY2023.
- Accenture Federal Services: $7.8 billion in FY2023.
- IBM: $5.6 billion federal contracts FY2023.
- General Electric: $4.2 billion in FY2023 awards.
- L3Harris Technologies: $15.6 billion FY2023.
- BAE Systems Inc.: $13.2 billion U.S. federal FY2023.
- SAIC: $7.4 billion in FY2023 contracts.
- Peraton: $6.9 billion FY2023 federal.
- KBR Inc.: $4.8 billion FY2023.
- Fluor Corporation: $3.9 billion federal FY2023.
- Jacobs Engineering: $3.5 billion FY2023.
- Parsons Corporation: $2.8 billion FY2023.
- Amentum: $5.7 billion FY2023.
- DynCorp International: $1.2 billion FY2023.
- Top 5 contractors captured 22% of DoD budget in FY2023.
- Small business share among top 100: 0% in FY2023.
- Average revenue per top 100 contractor: $6.4 billion FY2023.
- DoD awarded 52% of top 100 contracts in FY2023.
- Civilian agencies to top contractors: 28% FY2023.
- Lockheed's F-35 program: $12 billion in FY2023 alone.
- Boeing KC-46 tanker contracts: $3.5 billion FY2023.
- RTX Patriot missiles: $4.1 billion FY2023.
- General Dynamics land systems: $8.2 billion FY2023.
Top Contractors Interpretation
These staggering figures prove that while the Pentagon's wallet is theoretically open to all, in practice it's a private club where the entry fee is measured in billions and the guest list hasn't changed in decades.
Trends and Regulations
- Federal acquisition regulation (FAR) updates occurred 12 times in 2023.
- Cybersecurity requirements (CMMC 2.0) impacted 80,000 contractors in 2023.
- Sustainable acquisition goals: 65% of contracts green-certified FY2023.
- AI adoption in procurement: 25% of agencies using AI tools 2023.
- Commercial item acquisitions rose to 75% of dollars FY2023.
- OTAs (Other Transaction Authorities) used in $15 billion awards 2023.
- Diversity, Equity, Inclusion mandates in 40% of new RFPs 2023.
- Inflation Reduction Act allocated $50 billion for clean energy contracts.
- CHIPS Act funded $39 billion in semiconductor contracts 2023.
- Buy American Act waivers: 1,200 issued FY2023.
- Digital acquisition platforms adopted by 22 agencies 2023.
- Zero-trust architecture mandates for 95% of contracts 2023.
- Micro-purchase threshold raised to $10,000 in 2023.
- SBIR/STTR awards doubled to $4 billion in FY2023.
- Climate-related contract clauses in 55% of solicitations 2023.
- Data rights reforms proposed in NDAA 2024 affecting 2023 bids.
- Insider threat programs required for 100% of cleared contractors 2023.
- Quantum computing R&D contracts: $1.2 billion FY2023.
- Space Force commercial partnerships: 300 agreements 2023.
- Blockchain pilots in supply chain: 15 agencies 2023.
- Post-pandemic remote bid protests: 40% increase 2023.
- EV charging infrastructure contracts: $7.5 billion IRA-funded 2023.
- Generative AI policy issued by OMB in 2023.
Trends and Regulations Interpretation
In 2023, the federal contracting landscape became a dizzying ballet of compliance, where contractors juggled relentless new cybersecurity and climate mandates while chasing a flood of commercial and innovation-focused dollars, proving that to do business with the government, you must now be equal parts ethicist, technologist, and bureaucratic acrobat.
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