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Government Contracting and the Federal Budget

Track Agency Funding From Allocation to Contract

June 22, 2022

Building your government contracting pipeline requires a firm grasp on addressable markets and aligning your organization’s capabilities with federal agencies’ procurement needs.

Bloomberg Government analysts have recently found that the federal industrial base is shrinking. Even as contractors are asked to respond efficiently to increasingly complex requirements and crises, the count of prime vendors participating in federal procurement processes dipped below 100,000 last year for the first time in at least a decade.

When things are changing rapidly, what does your market look like, and how can you plan for success in an evolving industry? By understanding and tracking the flow from ideas to money – from the laws and policies established at the highest levels of government to actual contract spending.

Use Bloomberg Government’s focused data sets, proprietary tools, and expert analysis to fill your pipeline and grow your business.

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[With over $230 billion in contracting opportunities for FY22, our 2022 Government Contracting Playbook has the market intelligence you need to start strategizing your bids.]

What impacts federal procurement?

In a shrinking federal market, combined with agencies relying on larger contract vehicles on longer timelines, knowing how to spot opportunities and track agency trends is key. Many issues can impact procurement markets, including top-level government decisions, internal agency policies, and external factors.

Decisions affecting procurement happen at the highest levels of government and funnel down to the decisions contracting officers make.

  • Laws, policies, executive orders: A presidential policy directive, new law, or executive order can have a significant effect on the contracting landscape. As a recent example, the Biden administration launched the Made in America Council in January to help maximize the domestic content of federal purchases as agencies implement administration initiatives.
  • Agency missions and strategic plans: When considering new openings in a specific market, look at an agency’s internal goals and objectives. If you’ve previously worked with one agency component, considering its overall mission and goals can help you understand how to serve other components’ procurement requirements. For example, sustainability is a growing influence on agency actions in the future as the Biden administration directed major agencies to create climate adaptation and resilience plans that integrate with their overall mission.
  • Specialized funding vehicles: Examples include the Technology Modernization Fund, which offers support for federal IT modernization to “enable agencies to reimagine the way they use technology to deliver their mission and services,” and Polaris, a governmentwide acquisition contract (GWAC) aimed at acquiring customized IT services and solutions from small businesses.

How might external factors affect 2023 federal budget allocation?

External factors have a strong influence on federal budget allocation and spending, and the past couple of years have been rife with unique world events that shape the way federal government agencies operate and spend money.

  • War in Ukraine: The war in Ukraine will likely direct procurement dollars toward military support. According to research by Bloomberg Government analysts, DOD contract spending and support of military operations tends to track with changes in personnel levels. The U.S. has been sending more DOD employees to Europe since late February, as part of the NATO response to Russia’s invasion of Ukraine. These deployments of troops and civilians will require logistics, material training, and facilities support, and according to precedent will create a marked rise in federal government IT spending, as well as spending on professional services. Obligations in those two markets combined has already more than doubled in the period following Russia’s invasion of Crimea.
DOD contract obligations of professional services grow in Europe
  • Covid-19 spending: On the flip side, after two years of bolstering federal contract spending, Covid-19-related procurement spending has dramatically declined. In 2021, that increased spending on Covid-related goods and services was significant enough to boost 2021 spending higher than 2019 spending. Thus far, 2022 Covid spending is not keeping pace with the previous two years, and that will likely impact overall spending.
Covid-19 billions has propped up 2 years of contract spending
  • Inflation: Goods and materials currently cost more, due in part to supply chain issues. Supply prices are increasing, which will continue to feed into the cycle of rising prices overall. This also turns logistics and supply chain into a key market to keep an eye on.

[2021 Federal Contract Spending in Five Charts: Discover the top trends our Bloomberg Government analysts tracked in FY21.]

What are the top markets to watch in FY22 and FY23?

Key takeaways are that many different kinds of factors impact federal procurement and markets, from laws and policies, to agency-level missions, to completely external factors.

Bloomberg Government has identified these 6 markets as sources of contracting opportunities during a time of continued contract and industrial base consolidation.

  1. Cloud computing: 114% market growth since fiscal 2017
  2. Artificial intelligence: 225% market growth since fiscal 2017
  3. Logistics and supply chain: 7.4% market growth since fiscal 2017
  4. Business management and financial services: 42% growth since fiscal 2017
  5. Facilities services: 11% growth since fiscal 2017
  6. Digital services: 68% growth since fiscal 2017

For more detailed coverage and analysis of these top federal markets to watch for contract opportunities, see our on-demand webinar.

How can you track the latest contracting news and budget allocation trends?

Bloomberg Government offers essential tools, news, and analysis to help you find the right opportunities for your mission.

Size and scope your addressable market by using our Contracts Intelligence Tool to learn which agencies need your products and services the most.

Use our Opportunity Search tool to find or exclude keywords in documents attached to solicitation notices, so you can more easily discover the most relevant opportunities.

Stay informed with our federal market and contracting news and in-depth analysis. We aggregate news from more than 35,000 sources, and provide exclusive analysis from our Bloomberg Government analysts.

To learn more about how BGOV can help optimize your business development workflows, request a demo.



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