Federal Contract Spending Grew 9% in 2018, Increasing for the Third Straight Year

Federal contract spending in fiscal 2018 increased for the third straight year to $559 billion, a 9% increase over 2017 spending and the highest level since 2010, when agencies spent $562 billion.  

The data, compiled by Bloomberg Government, include prime and unclassified contract spending. Bloomberg released the findings in the eighth annual BGOV200 report, which ranks the top 200 federal contractors. The report analyzes market trends, contrators’ performance and other dynamics among the 24 largest federal agencies in 27 purchasing categories during the prior fiscal year. 

Among the departments with the biggest gains in contract spending in fiscal 2018 were: Defense, Energy, Homeland Security and Transportation. Some of the top markets were weapons, professional services, aircraft parts and technology. 

The top six companies’ rankings didn’t change from fiscal 2017. They are: Lockheed Martin Corp, Boeing Co., General Dynamics Corp., Raytheon Co., Northrop Grumman Corp. and McKesson Corp. Previously ranked 20th in 2017, United Technologies Corp. is seventh in 2018. All but one of the companies in the top 10 are in the defense industry. 

“Not only is this the third consecutive year of federal contract spending growth, the outlook for federal contractors is promising in the coming year thanks to the multiple spending bills—totaling nearly $1.4 trillion—that Congress passed in fiscal year 2019,” said Donald Thomas, Bloomberg Government's vice president and general manager in a press release. “Companies concentrated in the professional services, information technology, facility services, and R&D categories have seen accelerated spending in recent years and 2018 continued that trend at an unprecedented growth rate.”

The 200 companies won the same share of total contacts as 2017, which was 64%. In 2018, 32 companies entered the top 200 for the first time. Trends affecting government spending during the last year included: consolidating spending to best-in-class contracts; expanding agencies’ rapid access to emerging technologies; and small businesses procuring more contracts on a service-needed basis. 

Bloomberg Government forecasts that fiscal 2019’s spending obligations could be one of the highest amounts ever, potentially reaching $565 billion. Congress on Thursday passed bipartisan legislation that would remove spending caps approved in the 2011 Budget Control Act, ensuring that both Defense and non-Defense agencies will see significant spending growth next year. President Trump is expected to sign the bill.