January 2026 Federal Contracting Update

January 2026 saw $18.7B in federal contract obligations, marking month 4 of FY2026. This represents a -37% change from December's $29.5B.

Key Statistics: - Total Contract Obligations: $18.7B - Top Agency: Department of Homeland Security ($4.4B - 23.4% of total) - Leading Industry: Commercial and Institutional Building Construction ($3.0B) - Small Business Set-Asides: $1.1B combined

Notable Trends: - DHS led spending with major program investments - Commercial and Institutional Building Construction saw strong contract activity - 8(a) Business Development program led small business awards at $546M

Federal contract spending in January 2026 totaled $18.7B. This is -37% compared to December's $29.5B.

FY2026 Month 4 Analysis: - December 2025 (Month 3): $29.5B - January 2026 (Month 4): $18.7B - Change: -37% decrease

Spending Velocity: Contract obligations decreased this month, reflecting typical federal spending patterns for FY month 4. Mid-fiscal-year spending patterns reflect ongoing program execution.

Department of Homeland Security led all agencies in January 2026.

Top 15 Agencies by Spending: 1. Department of Homeland Security (DHS): $4.4B - 23.4% 2. Department of Veterans Affairs (VA): $3.0B - 15.8% 3. General Services Administration (GSA): $2.5B - 13.6% 4. Department of Health and Human Services (HHS): $1.5B - 8.1% 5. Department of Transportation (DOT): $1.5B - 7.9% 6. Department of Energy (DOE): $1.3B - 6.8% 7. National Aeronautics and Space Administration (NASA): $1.0B - 5.4% 8. Department of Agriculture (USDA): $661M - 3.5% 9. Department of State (DOS): $540M - 2.9% 10. Department of Education (ED): $416M - 2.2% 11. Department of the Treasury (TREAS): $415M - 2.2% 12. Department of Justice (DOJ): $356M - 1.9% 13. Department of Commerce (DOC): $346M - 1.8% 14. Department of the Interior (DOI): $229M - 1.2% 15. Agency for International Development (USAID): $112M - 0.6%

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

Commercial and Institutional Building Construction led January contracting activity.

Top 10 Industries (by NAICS): 1. Commercial and Institutional Building Construction (236220): $3.0B 2. Computer Systems Design Services (541512): $2.2B 3. Direct Health and Medical Insurance Carriers (524114): $1.1B 4. Engineering Services (541330): $886M 5. Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing (334511): $860M 6. Facilities Support Services (561210): $816M 7. Other Computer Related Services (541519): $687M 8. Security Guards and Patrol Services (561612): $679M 9. Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology) (541715): $639M 10. Automobile Manufacturing (336111): $500M

Industry Analysis: - Commercial and Institutional Building Construction led with $3.0B 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 January 2026 obligations.

Set-Aside Performance: - 8(a) Business Development Program: $546M - Service-Disabled Veteran-Owned (SDVOSB): $485M - HUBZone: $34M - Women-Owned Small Business (WOSB): $20M

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 5.8% of total January 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.

February 2026 outlook and upcoming opportunities.

Expected Trends: - Steady contract activity anticipated - 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: - Normal monthly contracting cycle continues

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