Federal spending on professional services is booming, offering significant opportunities for businesses. Here’s what you need to know:

• The federal government spent $759 billion on contracts in FY 2023, with $112 billion dedicated to professional services.
• Small businesses captured $176 billion (23.3%) of federal contracts in FY 2024, surpassing federal requirements.
• IT services and professional services dominate spending, with IT alone accounting for $27.26 billion in FY 2024 GSA MAS sales.
• Emerging trends include growing demand for AI, cloud services, sustainability consulting, and outcome-based contracting.
• Agencies like the Department of Defense and Veterans Affairs lead in professional services spending, with billions allocated annually.

Key takeaway: Understanding federal spending trends and leveraging tools like GSA eLibrary and USASpending.gov can help businesses identify lucrative opportunities and refine their strategies. Small businesses, in particular, can benefit from set-aside programs and GSA Schedule contracts to secure a share of this growing market.

Professional Services Schedule – What Can I Buy?

Why Professional Services Spending Data Matters

Understanding federal spending patterns can unlock opportunities that may reshape your business approach. In fiscal year 2024, the federal government awarded a staggering $773.68 billion in contracts, with $176.11 billion (23.3%) going to small businesses. This data doesn’t just highlight where services are in demand – it serves as a guide for making smarter, more strategic decisions. Let’s dive into how this information can drive impactful choices.

Finding High-Demand Service Areas

Federal spending data is like a treasure map for uncovering lucrative opportunities in government contracting. Take the MAS program, for example. With a contract value of $45 billion, small businesses secured over $13.5 billion in fiscal year 2020 alone. Even more impressive, GSA sales under this program have grown by more than 20% over the past five years.

Emerging market trends also point toward expanding opportunities. The global sustainability consulting services market, for instance, is projected to grow from $12.26 billion in 2023 to $43.32 billion by 2029, reflecting a compound annual growth rate (CAGR) of 26.38%. This growth highlights an increasing federal interest in sustainability and ESG (Environmental, Social, and Governance) consulting.

Additionally, more than one-third of professional services firms predict that at least 75% of their revenue will come from digital channels within the next three years. Meanwhile, federal agencies are ramping up their demand for expertise in cutting-edge areas like AI, machine learning, automation, and cloud-based solutions to modernize their operations. These trends underscore the importance of leveraging data to stay ahead in the market.

Making Better Business Decisions

Historical procurement data is a goldmine for spotting supplier trends, price fluctuations, and shifts in demand. Analyzing this data allows businesses to make informed predictions about future opportunities.

By reviewing NAICS/PSC codes, past award histories, and pricing data, companies can refine their bidding strategies and craft realistic, competitive proposals. This level of preparation can be the difference between securing a contract and missing out.

Improving Procurement Methods

Procurement methods provide a wealth of insights into how agencies manage spending. By analyzing spending data, businesses can identify preferred procurement strategies, such as the growing use of Government-Wide Acquisition Contracts (GWACs) and Indefinite Delivery/Indefinite Quantity (IDIQ) contracts. Monitoring expiring contracts or upcoming recompetes can also help small businesses pinpoint growth opportunities.

McKinsey & Company emphasizes the power of spend analytics:

"The most immediate task for spend analytics is to provide transparency and insight into where cash is spent… This begins with achieving visibility into external spend, making it easier for the organization to identify opportunities to reduce spending across supply markets".

For small businesses, this kind of transparency is a game-changer. It not only highlights areas to demonstrate value and efficiency but also reveals advantages like reduced competition for businesses on the GSA Schedule compared to open-market contracts. GSA Schedule contracts, in particular, provide long-term stability, making it easier to plan resources and strategize effectively.

GSA Spending by Service Category

In FY 2024, GSA MAS Contracts hit $51 billion in sales – a jump of 11% from the previous year and a 40% increase over the past five years.

Highest-Spending Service Categories

Information Technology dominated GSA MAS Contract sales in FY 2024, accounting for nearly half of the total. With $27.26 billion in sales, IT stands as the top category for federal spending.

Professional Services came in second with $13.92 billion in sales during FY 2024. This category continues to play a critical role in meeting the federal government’s demand for specialized expertise.

The detailed spending breakdown shows the broad range of federal procurement priorities:

These numbers highlight the wide-ranging needs of federal agencies. Within these categories, specific areas have shown exceptional performance. For example, IT Professional Services led all Special Item Numbers (SINs) with $12.88 billion in sales, followed by Management and Financial Consulting, which generated $6.56 billion.

Service Areas with Highest Growth

Federal agencies are increasingly adopting smarter procurement practices. In FY 2024, agencies collectively saved $16.7 billion through category management, a significant rise from $13.2 billion in 2020.

Some service areas have seen dramatic growth. Physiotherapy Apparatus (SIN A-70) experienced a staggering 683% growth from 2024 to 2025, highlighting how niche specialties can create unexpected opportunities.

The Department of Veterans Affairs (VA) emerged as a leader in spending growth, increasing its expenditures by 29% in Q1 2025, even as other agencies tightened their budgets. This trend reflects the VA’s dedication to enhancing healthcare and services for veterans.

Mike Derrios, deputy assistant secretary for acquisition and senior procurement executive at the State Department, commented on the evolving procurement strategies:

"Most agencies are trying to buy smarter these days and use best-in-class vehicles that are established out there. We’re certainly doing that".

Best-in-class contracting is gaining traction across federal agencies. For instance, the Social Security Administration expanded its use of these contracts by 16% in 2024, while the Office of Personnel Management saw a nearly 21% increase.

Annual Spending Patterns

Recent years reveal both growth and shifts in federal spending strategies. Professional services spending reached $112 billion in FY 2024, while GSA MAS purchases surpassed $41.1 billion in FY 2023.

However, Q1 2025 data paints a more conservative picture. GSA Advantage sales dropped 21% compared to 2024, and were 26% lower than the four-year average from 2020 to 2023, signaling a more cautious spending approach.

Spending patterns also vary widely among agencies. For example, best-in-class contracts account for 45.6% of contract spending at the Small Business Administration, while the Department of Energy uses these contracts for just 1% of its obligations.

Emerging areas like cloud computing and AI-enabled services are seeing increased investment as agencies modernize their infrastructure and strengthen cybersecurity. This shift toward outcome-based contracting reflects a broader focus on measurable results rather than traditional service models. These trends set the stage for a closer examination of agency-specific procurement strategies in the next section.

Federal Agency Spending Patterns

Delving deeper into federal spending trends, let’s take a closer look at how specific agencies allocate their budgets. Understanding these patterns can help contractors pinpoint lucrative opportunities and align their strategies accordingly.

Agencies with Largest Budgets

The Department of Defense (DoD) remains the top spender, setting aside $32.9 billion for professional services in FY 2024 alone. In FY 2023, the DoD’s spending on services soared to $230 billion, including $21.3 billion earmarked for support, professional, and engineering/technical services.

Here’s a snapshot of major federal agency budgets for FY 2023 and FY 2024:

The Biden-Harris Administration’s FY 2024 budget request reflects a 6.7% increase in funding for professional services firms, totaling over $70 billion.

Year-to-Year Spending Changes

Some agencies are seeing significant shifts in their spending habits. For instance, the U.S. Department of Treasury plans a 54% increase in professional services spending for FY 2024. Meanwhile, the Department of Veterans Affairs has seen its budget grow from $28.81 billion in FY 2019 to $66.90 billion in FY 2024. Notably, it has also cut back on non-essential consulting contracts, terminating 585 contracts worth approximately $1.8 billion.

Federal contract spending as a whole has seen remarkable growth, climbing from $598 billion in FY 2019 to $774 billion in FY 2024. Defense agencies remain dominant, accounting for nearly 59.87% of all federal contracts in FY 2024, which equates to roughly $464.2 billion.

"Based on available procurement data, we have identified the 10 highest paid consulting firms listed below are set to receive over $65 billion in fees in 2025 and future years. This needs to, and must, change."

Contract Award Methods

With these spending trends, agencies are refining their procurement strategies to ensure efficiency and cost-effectiveness. Performance-based acquisition has become the go-to method for acquiring services across federal agencies. The GSA’s OASIS program exemplifies this shift, with 4,744 task orders totaling $90.7 billion awarded since its inception in 2015. In FY 2024 alone, OASIS’s unrestricted version generated $11 billion in sales, while its small business and 8(a) versions added another $6 billion.

Fixed-price contracts continue to dominate federal procurement, representing an average of 63% of obligations between FY 2011 and FY 2015. Additionally, the adoption of Best-in-Class (BIC) contracts reflects a broader effort to streamline procurement processes and standardize pricing.

Agencies are also leaning toward multiyear contracts for services, allowing for better operational planning and potential cost savings through volume commitments. These approaches highlight the government’s focus on smarter, more strategic spending.

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Contract Awards by Business Type

Federal professional services contracts offer opportunities for businesses of all sizes. Small businesses, in particular, continue to secure a notable share of the market, holding their own even against larger competitors.

Small Business vs. Large Business Awards

In FY 2024, data from FPDS revealed that small businesses received approximately $176 billion, representing 23.3% of total federal contracting dollars. This marked an increase of nearly $4 billion compared to FY 2023 and exceeded the federal government’s mandated target of awarding 23% of prime federal contracting dollars to small businesses.

Within the GSA Multiple Award Schedule (MAS) program, small businesses achieved impressive results. They accounted for over $18.2 billion in GSA MAS sales, which is about 35% of the program’s total $51.9 billion in contract sales. Additionally, 42.10% of GSA’s prime contract dollars went to small businesses, surpassing established goals. Since 2013, federal small business contracting has nearly doubled, growing by 91% with an annual growth rate of 6%.

These numbers highlight the continued impact of small businesses and set the stage for examining socioeconomic set-aside programs.

Set-Aside Program Performance

Socioeconomic set-aside programs are essential for creating opportunities for disadvantaged businesses. In FY 2024, $33.32 billion in small business set-aside contracts were awarded, accounting for less than 5% of all federal contracts.

The 8(a) Business Development Program led the way, with $25.92 billion in set-aside spending – an increase from $24.96 billion in FY 2023. Other key programs included:

• Service-Disabled Veteran-Owned Small Business (SDVOSB): $8.5 billion
• Women-Owned Small Business (WOSB): $1.1 billion
• HUBZone set-asides: Less than $1 billion

The federal government has a goal of awarding at least 5% of all federal contracting dollars to women-owned small businesses annually. In FY 2023, GSA awarded more than $3.3 billion in contracts to small businesses and over $1.3 billion to small disadvantaged businesses.

Contract Award Distribution

Small businesses have shown strong participation in professional services contracts within the GSA MAS program. Below is a breakdown of key service categories where small businesses have excelled:

Professional services alone generated $2.0 billion in small business sales, making it the second-largest category after information technology. To further support small businesses, the GSA’s Office of Small and Disadvantaged Business Utilization hosts matchmaking sessions, fostering collaboration and opening new contract opportunities.

For small businesses exploring federal contracting, the data underscores the potential of securing a GSA Schedule contract. With 35.84% of MAS spending allocated to small businesses, this marketplace offers substantial opportunities. Organizations like GSA Focus provide essential support, assisting small businesses with document preparation, compliance, and contract negotiations to help them succeed.

How to Use This Spending Data

Spending data is a treasure trove for crafting effective business strategies, especially in the federal contracting space. The federal government offers several tools and resources to help businesses analyze market opportunities and fine-tune their capture strategies.

Research Tools and Databases

The GSA eLibrary is a go-to resource for contract award information. This platform provides insights into recent GSA contract awards, helping you analyze competitors’ pricing, services, and contract terms. You can search by company name, NAICS code, or service category to better understand how similar businesses position themselves.

GSA Advantage! simplifies federal purchasing while allowing you to study competitors’ pricing strategies, marketing tactics, and special designations.

The CALC tool is another key resource, offering up-to-date hourly rate data from awarded GSA and Veterans Affairs contracts. Since this data is updated by Contracting Officers on the day of award, it provides more current information than GSA eLibrary or GSA Advantage!.

USASpending.gov lets you explore government spending trends by agency, product, service, or industry. By identifying which agencies spend the most in your area of expertise and tracking multi-year trends, you can prioritize your business development efforts.

The Federal Procurement Data System (FPDS) is invaluable for digging into task orders awarded to competitors. It provides details on contract values, performance periods, and award methods, giving you a clearer picture of how agencies structure their acquisitions.

Schedule Sales Query Plus (SSQ+) helps you gauge market potential by showing sales volume data across various GSA Schedule categories. This tool reveals which categories generate the most revenue, helping you focus on the most lucrative opportunities.

With these tools, you can gather the insights you need to refine and strengthen your market strategy.

Building Your Market Strategy

Spending data can guide you toward high-demand service categories. For instance, IT services, cybersecurity, and management consulting are booming sectors, with the Multiple Award Schedule Professional Services category growing by over 17% in the past year.

When targeting agencies, align your offerings with those that show steady spending patterns. The Department of Defense, for example, led GSA Schedule spending with over $5.7 billion in fiscal year 2023. Smaller agencies, on the other hand, might present less competition and faster decision-making processes.

Timing is everything in business development. Agencies often plan major acquisitions 6–12 months in advance, so monitoring agency forecasts on SAM.gov and individual agency websites is critical. Engage early through Sources Sought Notices and RFIs to potentially influence the requirements.

Studying incumbent contractors’ performance can also provide valuable insights into pricing benchmarks and service expectations. Watch for contracts nearing expiration to identify recompete opportunities where you can offer a fresh approach.

Additionally, focus on outcome-based contracting opportunities. GSA Commissioner Josh Gruenbaum emphasized this approach, stating:

"All contracts that are deemed essential and recommended to continue following this review should be proactively restructured to be priced on an ‘outcome-based’ model."

When crafting proposals, highlight measurable results and value delivery rather than simply emphasizing labor hours.

GSA Focus Support

Navigating federal contracting can be complex, and expert support can make all the difference. GSA Focus specializes in helping small businesses acquire and manage GSA Schedule contracts through a streamlined, done-for-you process.

Their services cover everything from document preparation and compliance assurance to negotiation support, simplifying the often overwhelming GSA Schedule acquisition process. With a 98% success rate and a refund guarantee, GSA Focus reduces the time and effort required while ensuring your application meets all regulatory standards.

Once your contract is in place, GSA Focus offers advisory support to help you leverage spending data and identify the best opportunities within your GSA Schedule categories. Their secure online platform makes document uploads and communication easy, while their marketing services help promote your contract to federal buyers.

For small businesses that may lack the resources to analyze spending data and develop sophisticated strategies, GSA Focus provides the expertise to turn market insights into actionable business plans. Their guidance can be the difference between struggling to compete and successfully securing a share of the federal contracting market.

Final Thoughts

Main Findings

The federal professional services market is ripe with opportunities for businesses that can harness data effectively. In fiscal year 2023, GSA Schedule sales reached an impressive $41.1 billion, with robust participation from small businesses. Looking ahead, the FY 2025 Federal Budget Request earmarks nearly $136 billion for professional services – a 7.9% uptick from FY 2024 – pointing to steady growth in the sector.

These trends align with real-world success stories. For instance, a Virginia-based IT services company with just 8 employees and $450,000 in annual revenue scaled up to $2.3 million in three years after securing its GSA Schedule. The firm landed 11 new federal clients, including contracts with the Department of Defense. This example highlights the importance of understanding federal spending patterns and focusing on high-demand areas like IT and cybersecurity to carve out a competitive edge.

Future Market Trends

The professional services landscape is evolving, shaped by several notable trends. Outcome-based contracting is becoming the norm, with the GSA emphasizing contracts built around measurable deliverables instead of traditional labor-hour models. Contract consolidation is another shift, as agencies increasingly bundle smaller opportunities into larger, government-wide acquisitions.

Additionally, the Biden Administration’s emphasis on workforce development is boosting investments in services aimed at enhancing in-house government capabilities. Meanwhile, cybersecurity compliance is set to tighten, with the Cybersecurity Maturity Model Certification (CMMC) expected to feature in contracts by late 2025. Businesses that adapt to these changes will be better positioned to thrive in this dynamic market.

Why Spending Data Drives Success

The importance of granular spending data cannot be overstated. Federal spending data provides actionable insights, removing the guesswork from targeting opportunities. Jacquie Spearman, Director of SBTDC’s Government Contracting Assistance Program, explains:

"Small businesses that leverage data analytics are more likely to win federal contracts because they can: Identify high-potential contract opportunities more accurately, Understand agency buying patterns and preferences, Make competitive pricing decisions, Demonstrate past performance with concrete metrics".

With the federal government legally required to allocate at least 23% of prime contracting dollars to small businesses, the opportunities are vast. Programs like the SBA’s Empower to Grow have shown tangible results, with participating small businesses reporting an average 45% increase in annual revenue in 2023. To succeed, businesses must maintain full MAS compliance, actively monitor performance metrics, and stay informed about agency needs and spending trends.

The GSA Schedule opens doors to over 430 federal agencies, as well as state, local, and tribal buyers, significantly broadening market reach. By leveraging spending data, keeping an eye on emerging trends, and strategically positioning themselves, businesses can capitalize on a market that continues to grow and evolve. The tools are available, the data is accessible, and the opportunities are there for the taking.

FAQs

How can small businesses use federal spending data to win more government contracts?

Small businesses have a valuable resource at their fingertips: federal spending data. By digging into this information, they can figure out which government agencies are spending the most and spot trends in specific service categories. This insight allows businesses to align their offerings with what agencies need and zero in on the right opportunities.

Analyzing spending patterns also helps small businesses gauge the competitive landscape, fine-tune their strategies, and strengthen their capture planning efforts. Tools like GSA eLibrary and FPDS make this process easier, offering actionable insights that can boost their chances of thriving in the federal marketplace.

What key trends in federal professional services spending should businesses watch for in 2025?

In 2025, federal professional services spending is set to revolve around technology advancements and changes in contracting practices. Here’s what to keep an eye on:

• Boost in Technology Investments: Federal agencies are channeling funds into areas like artificial intelligence, cybersecurity, and Zero Trust frameworks to improve both operational efficiency and security. Notable allocations include resources for post-quantum cryptography and advanced automation tools.
• Shift Toward Contract Consolidation: Smaller contracts are being merged into larger ones, simplifying procurement processes. While this creates fewer opportunities overall, the competition for these contracts is expected to intensify.
• Uncertain Spending Patterns: Budget negotiations and shifting policies are contributing to unpredictable spending trends. Small businesses, in particular, may face challenges as agencies adapt to changing fiscal priorities.

To stay ahead, businesses should monitor these trends closely and adapt their strategies to maintain a competitive edge in the evolving federal market.

How do federal set-aside programs help small businesses win contracts, and which industries offer the most opportunities?

Federal set-aside programs are crafted to provide small businesses with a fair shot at securing government contracts. By reserving specific contracts exclusively for these businesses, programs like the 8(a) Business Development Program aim to reduce competition from larger corporations. Beyond just contracts, they offer valuable resources such as mentorship and training, equipping small businesses with the tools they need to thrive in the federal marketplace. These initiatives also encourage diversity by actively supporting participation from women-owned and minority-owned businesses.

Small businesses often shine in areas like IT services, management consulting, and construction. These industries value specialized expertise and fresh approaches, which small firms are well-positioned to deliver. Federal agencies frequently seek these services, creating a steady stream of opportunities for small businesses to establish themselves and expand in the government contracting arena.

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