How Much Does the Federal Government Spend on Contracts? ($681 Billion in FY2025 — Full Breakdown)
The federal government awarded $681 billion in contracts in FY2025. Here is exactly where it went — by agency, NAICS code, set-aside type, contract vehicle, and state.
$681 Billion in FY2025 — The Number Behind the Number
The federal government awarded $681.3 billion in prime contracts in FY2025 across 312,000+ individual awards. That makes the U.S. government the single largest purchaser of goods and services on Earth.
But the top-line number hides the real story. Where that $681 billion goes -- which agencies, which industries, which types of businesses -- determines whether there is opportunity for your company or not.
By Agency: Who Is Buying?
The top 10 contracting agencies account for 89% of all contract spending:
Department of Defense — $429.2 billion (63%)
This includes the Army ($148B), Navy ($121B), Air Force ($98B), and defense agencies like DISA, DARPA, and MDA. DOD buys everything from aircraft carriers to cybersecurity services to cafeteria management.
Department of Energy — $42.8 billion (6.3%)
Dominated by national laboratory management contracts (Los Alamos, Sandia, Oak Ridge) and nuclear weapons program support.
Department of Health and Human Services — $38.1 billion (5.6%)
CDC, NIH, CMS, and FDA. Fastest-growing civilian agency for IT modernization and data analytics contracts.
Department of Veterans Affairs — $36.4 billion (5.3%)
Medical supplies, healthcare IT, facilities management, and professional services. VA has the most aggressive small business targets of any major agency.
General Services Administration — $24.7 billion (3.6%)
GSA manages government-wide contract vehicles (GSA Schedule, GWACs). Many GSA dollars flow through to other agencies via task orders.
Department of Homeland Security — $21.3 billion (3.1%)
CBP, ICE, TSA, FEMA, CISA. Cybersecurity spending growing 15%+ annually.
NASA — $19.8 billion (2.9%)
Launch services, R&D, engineering, and IT. High barriers to entry but premium pricing.
Department of State — $12.1 billion (1.8%)
Diplomatic security, facility management, IT modernization.
Department of Justice — $9.8 billion (1.4%)
FBI, DEA, BOP. Incarceration services, IT, and professional services.
Department of the Interior — $8.3 billion (1.2%)
Environmental, construction, scientific research, wildfire management.
By Industry: What Are They Buying?
The top NAICS codes by contract value:
The trend is clear: services dominate federal procurement. IT services alone account for over $89 billion (combining 541512 and 541519). If you sell professional services, the federal market is massive.
By Business Size: Who Wins?
Large businesses: $502.9 billion (73.8%)
The top 100 contractors capture about $320 billion. Lockheed Martin leads at $52.8 billion, followed by RTX ($28.1B), General Dynamics ($24.6B), Boeing ($21.3B), and Northrop Grumman ($19.7B).
Small businesses: $178.3 billion (26.2%)
This exceeds the 23% statutory goal. Broken down by set-aside program:
The most important insight: small business contracting is not a consolation prize. $178 billion is larger than the GDP of 140 countries. And within specific NAICS codes and agencies, small businesses win the majority of awards.
Use the [NAICS Competition Analyzer](/dashboard/naics-analyzer) to see exactly how many firms compete in your space and what the dollars-per-firm economics look like.
By Contract Type: How Do They Buy?
Fixed-Price contracts: $298B (43.8%) — The government pays a set price regardless of actual costs. Most common for well-defined requirements. Lower risk for the government, higher risk for the contractor.
Cost-Reimbursable: $241B (35.4%) — The government reimburses actual costs plus a fee. Used when requirements are uncertain. Common in R&D and complex systems development.
Time & Materials / Labor Hour: $87B (12.8%) — The government pays hourly rates for labor and actual costs for materials. Common for IT support, maintenance, and advisory services.
Other (IDIQs, BPAs, etc.): $55B (8%) — Indefinite Delivery/Indefinite Quantity contracts and Blanket Purchase Agreements that establish ceiling values with individual task orders.
For pricing strategy, knowing the contract type distribution in your NAICS code is critical. The [Pricing Intelligence Engine](/dashboard/pricing) breaks down historical awards by competition type so you can benchmark your rates against what agencies actually pay.
By Competition: How Competitive Is It?
This means 43.6% of contract dollars are awarded without full competition. Sole-source awards and set-asides are not random -- they follow specific rules and patterns. Understanding who gets sole-source awards and why is a significant competitive advantage.
The Trend Line: Growing or Shrinking?
Federal contract spending has grown in 5 of the last 6 fiscal years:
The growth is concentrated in IT/cybersecurity (+12% CAGR), healthcare services (+9%), and professional services (+7%). Traditional categories like construction and manufacturing are roughly flat.
For FY2026, the enacted defense budget is $895 billion (up 3.1%), and civilian IT modernization funding is up across HHS, VA, and DHS. The market is expanding.
What This Means for Your Business
$681 billion sounds abstract until you narrow it to your specific opportunity:
The federal market is not one market. It is 300+ agencies, 1,100+ NAICS codes, and 5 distinct set-aside programs -- each with different dynamics. The firms that win are the ones who know exactly which slice is theirs.
[Find your slice of $681 billion →](/search)