December 2025 Federal Contracting Update

December 2025 saw $30.0B in federal contract obligations, marking month 3 of FY2026. This represents a +43% change from November's $21.0B.

Key Statistics: - Total Contract Obligations: $30.0B - Top Agency: Department of Veterans Affairs ($9.4B - 31.3% of total) - Leading Industry: Offices of Physicians (except Mental Health Specialists) ($6.8B) - Small Business Set-Asides: $1.1B combined

Notable Trends: - VA led spending with major program investments - Offices of Physicians (except Mental Health Specialists) saw strong contract activity - 8(a) Business Development program led small business awards at $776M

Federal contract spending in December 2025 totaled $30.0B. This is +43% compared to November's $21.0B.

FY2026 Month 3 Analysis: - November 2025 (Month 2): $21.0B - December 2025 (Month 3): $30.0B - Change: +43% increase

Spending Velocity: Contract obligations increased this month, reflecting typical federal spending patterns for FY month 3. Early fiscal year months typically see accelerating spending as new appropriations become available.

Department of Veterans Affairs led all agencies in December 2025.

Top 15 Agencies by Spending: 1. Department of Veterans Affairs (VA): $9.4B - 31.3% 2. Department of Homeland Security (DHS): $8.1B - 26.9% 3. Department of Energy (DOE): $2.3B - 7.6% 4. General Services Administration (GSA): $2.2B - 7.3% 5. Department of Transportation (DOT): $1.7B - 5.7% 6. Department of Health and Human Services (HHS): $1.2B - 4.0% 7. Department of Justice (DOJ): $993M - 3.3% 8. National Aeronautics and Space Administration (NASA): $973M - 3.2% 9. Department of Agriculture (USDA): $704M - 2.3% 10. Department of State (DOS): $501M - 1.7% 11. Department of the Treasury (TREAS): $484M - 1.6% 12. Department of Labor (DOL): $346M - 1.2% 13. Department of Commerce (DOC): $300M - 1.0% 14. Department of the Interior (DOI): $288M - 1.0% 15. Department of Education (ED): $99M - 0.3%

Agency Insights: - Department of Veterans Affairs spending reflects major program investments and ongoing operations - Department of Homeland Security maintained strong contract activity - Civilian agencies showed robust spending this month

Offices of Physicians (except Mental Health Specialists) led December contracting activity.

Top 10 Industries (by NAICS): 1. Offices of Physicians (except Mental Health Specialists) (621111): $6.8B 2. Commercial and Institutional Building Construction (236220): $4.8B 3. Computer Systems Design Services (541512): $1.7B 4. Ship Building and Repairing (336611): $1.5B 5. Facilities Support Services (561210): $1.1B 6. Engineering Services (541330): $845M 7. Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing (334511): $841M 8. Other Computer Related Services (541519): $815M 9. Direct Health and Medical Insurance Carriers (524114): $790M 10. All Other Professional, Scientific, and Technical Services (541990): $729M

Industry Analysis: - Offices of Physicians (except Mental Health Specialists) led with $6.8B in contract obligations - Professional services and IT continue to see strong federal demand - Healthcare services maintained steady investment levels

Small business set-aside programs recorded $1.1B in December 2025 obligations.

Set-Aside Performance: - 8(a) Business Development Program: $776M - Service-Disabled Veteran-Owned (SDVOSB): $343M - HUBZone: $17M - Women-Owned Small Business (WOSB): $6M

Analysis: The 8(a) Business Development program continues to lead small business contracting, with Service-Disabled Veteran-Owned (SDVOSB) showing strong performance.

Set-Aside as Percentage of Total: At 3.8% of total December spending, set-asides are below the 23% annual goal. This is typical for individual months—small business percentages are measured annually and often increase in Q3/Q4 as agencies push to meet goals.

January 2026 outlook and upcoming opportunities.

Expected Trends: - Continued ramp-up as new FY programs execute - IT modernization and cybersecurity contracts continue strong - Professional services demand remains robust across agencies

Opportunities to Watch: - Major agency IT modernization initiatives - Healthcare services contracts (VA, HHS) - Defense program task orders - Infrastructure and facilities management

Key Dates: - End of Q1 FY2026

Contractor Recommendations: 1. Monitor SAM.gov for new solicitations in your target agencies 2. Track agency forecast and procurement schedules 3. Prepare for upcoming recompetes and new requirements 4. Engage with small business offices for set-aside opportunities