Q2 FY2026 Federal Contracting Summary

Q2 FY2026 (January-March) saw $74.7B in federal contract obligations. This represents a -51% change from Q1's $151.1B.

Quarterly Highlights: - Total Contract Obligations: $74.7B - Top Agency: Department of Homeland Security ($18.9B) - Leading Industry: Commercial and Institutional Building Construction ($12.2B) - Small Business Set-Asides: $3.7B (5.0% of total)

FY2026 Progress: With Q2 complete, FY2026 is at the halfway mark. Mid-year spending typically accelerates as programs execute.

Detailed analysis of Q2 FY2026 contract obligations.

Total Spending: $74.7B - Previous Quarter (Q1): $151.1B - Quarter-over-Quarter Change: -51%

Spending Distribution: - Defense Sector: $132M (0.2%) - Civilian Agencies: $74.6B (99.8%)

Spending Patterns: Mid-fiscal year spending patterns reflect ongoing program execution and new requirements.

Top federal agencies by Q2 FY2026 contract obligations.

Top 15 Agencies: 1. Department of Homeland Security (DHS): $18.9B - 25.3% 2. Department of Energy (DOE): $17.4B - 23.3% 3. Department of Veterans Affairs (VA): $10.3B - 13.8% 4. General Services Administration (GSA): $6.1B - 8.1% 5. Department of Health and Human Services (HHS): $4.1B - 5.5% 6. Department of Transportation (DOT): $3.2B - 4.3% 7. National Aeronautics and Space Administration (NASA): $3.1B - 4.1% 8. Department of Justice (DOJ): $2.0B - 2.7% 9. Department of Agriculture (USDA): $1.7B - 2.3% 10. Department of State (DOS): $1.4B - 1.9% 11. Department of the Treasury (TREAS): $1.2B - 1.6% 12. Department of the Interior (DOI): $1.1B - 1.4% 13. Department of Commerce (DOC): $976M - 1.3% 14. Department of Education (ED): $570M - 0.8% 15. Social Security Administration (SSA): $486M - 0.7%

Agency Sector Analysis: - Defense spending remains dominant at 0.2% of total - Healthcare agencies (VA, HHS) combined: $14.4B - Technology-focused agencies (GSA, NASA, DHS) active in modernization initiatives

Industry sector performance for Q2 FY2026.

Top 10 Industries (by NAICS): 1. Commercial and Institutional Building Construction (236220): $12.2B 2. Facilities Support Services (561210): $11.3B 3. Direct Health and Medical Insurance Carriers (524114): $4.8B 4. Computer Systems Design Services (541512): $4.8B 5. Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology) (541715): $3.5B 6. Research and Development in the Physical, Engineering, and Life Sciences (541710): $2.8B 7. Other Computer Related Services (541519): $2.8B 8. Security Guards and Patrol Services (561612): $2.5B 9. Engineering Services (541330): $2.4B 10. Process, Physical Distribution, and Logistics Consulting Services (541614): $2.0B

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 Q2 FY2026.

Set-Aside Spending: $3.7B (5.0% of total)

Program Breakdown: - 8(a) Business Development Program: $2.3B - Service-Disabled Veteran-Owned (SDVOSB): $1.3B - HUBZone: $62M - Women-Owned Small Business (WOSB): $85M

Small Business Analysis: Q2 small business spending at 5.0% 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 Q3 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