Q1 FY2026 Federal Contracting Summary

Q1 FY2026 (October-December) saw $58.6B in federal contract obligations. This represents a -80% change from Q4's $290.1B.

Quarterly Highlights: - Total Contract Obligations: $58.6B - Top Agency: Department of Veterans Affairs ($17.3B) - Leading Industry: Facilities Support Services ($7.8B) - Small Business Set-Asides: $2.3B (4.0% of total)

FY2026 Progress: Q1 establishes the baseline for FY2026. Early fiscal year spending reflects new appropriations and continuing programs.

Detailed analysis of Q1 FY2026 contract obligations.

Total Spending: $58.6B - Previous Quarter (Q4): $290.1B - Quarter-over-Quarter Change: -80%

Spending Distribution: - Defense Sector: $1.4B (2.4%) - Civilian Agencies: $57.2B (97.6%)

Spending Patterns: Q1 spending reflects new fiscal year appropriations and multi-year contract funding.

Top federal agencies by Q1 FY2026 contract obligations.

Top 15 Agencies: 1. Department of Veterans Affairs (VA): $17.3B - 29.6% 2. Department of Energy (DOE): $13.4B - 22.8% 3. Department of Homeland Security (DHS): $10.1B - 17.3% 4. General Services Administration (GSA): $3.5B - 6.0% 5. Department of Health and Human Services (HHS): $2.4B - 4.2% 6. National Aeronautics and Space Administration (NASA): $2.1B - 3.7% 7. Department of Transportation (DOT): $1.8B - 3.0% 8. Department of Justice (DOJ): $1.5B - 2.5% 9. Department of Defense (DOD): $1.4B - 2.4% 10. Department of Agriculture (USDA): $1.2B - 2.1% 11. Department of the Treasury (TREAS): $1.1B - 1.8% 12. Department of State (DOS): $531M - 0.9% 13. Department of Commerce (DOC): $507M - 0.9% 14. Department of the Interior (DOI): $430M - 0.7% 15. Department of Labor (DOL): $394M - 0.7%

Agency Sector Analysis: - Defense spending remains dominant at 2.4% of total - Healthcare agencies (VA, HHS) combined: $19.8B - Technology-focused agencies (GSA, NASA, DHS) active in modernization initiatives

Industry sector performance for Q1 FY2026.

Top 10 Industries (by NAICS): 1. Facilities Support Services (561210): $7.8B 2. Offices of Physicians (except Mental Health Specialists) (621111): $7.7B 3. Commercial and Institutional Building Construction (236220): $5.8B 4. Direct Health and Medical Insurance Carriers (524114): $2.5B 5. Research and Development in the Physical, Engineering, and Life Sciences (541710): $2.5B 6. Computer Systems Design Services (541512): $2.5B 7. Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology) (541715): $2.1B 8. Other Computer Related Services (541519): $1.7B 9. Ship Building and Repairing (336611): $1.5B 10. Pharmaceutical Preparation Manufacturing (325412): $1.5B

Industry Insights: - Professional and technical services dominate federal contracting - IT services continue strong growth across agencies - Healthcare and R&D sectors maintain robust demand - Construction and facilities services reflect infrastructure investments

Small business set-aside program performance for Q1 FY2026.

Set-Aside Spending: $2.3B (4.0% of total)

Program Breakdown: - 8(a) Business Development Program: $1.3B - Service-Disabled Veteran-Owned (SDVOSB): $1.0B - HUBZone: $26M - Women-Owned Small Business (WOSB): $19M

Small Business Analysis: Q1 small business spending at 4.0% is below the 23% annual goal. Quarterly figures often vary—annual totals are the key measure.

Program Trends: - 8(a) Business Development continues to lead small business contracting - Service-Disabled Veteran-Owned shows strong performance - Agencies increasingly using set-asides for IT and professional services

Outlook for Q2 FY2026 and beyond.

Expected Trends: - Continued program execution and new requirements - Steady contracting activity expected - Mid-year budget adjustments possible

Key Focus Areas: - IT modernization and cybersecurity investments continuing - Cloud migration and zero trust implementation - Healthcare services demand (VA, HHS) - Infrastructure and sustainability initiatives

Opportunities: - Monitor SAM.gov for new solicitations - Engage with agency small business offices - Track agency procurement forecasts - Position for upcoming recompetes

Contractor Recommendations: 1. Review agency strategic plans for FY priorities 2. Build relationships with program offices 3. Ensure compliance certifications are current 4. Prepare competitive pricing strategies 5. Develop past performance documentation