Recently, I have been looking at various agency contract spending on information technology (IT) from fiscal year (FY) 2023 through 2025, including the Navy as well as the Air Force. This week I will focus on the Department of Homeland Security (DHS).

Total DHS IT Spending

Reported federal contract spending data under a compilation of Product Service Codes (PSC) categorized as IT shows that DHS obligated $8.4B for IT products and services in FY 2025, an increase from $8.3B in FY 2024 and $8.0B in FY 2023.

The top line FY 2025 amount represents a 4.6% increase over what DHS spent on IT in FY 2023 and a modest 0.7% increase in what they spent in FY 2024.

IT Spending by DHS Component Agencies and Directorates

The trends in DHS IT spending comes out more clearly when breaking it down by the component agencies and directorates that make up the department. The top-spending eight components account for 95% of DHS’s FY 2025 IT spending.

However, the reported contracting data show uneven growth among these components from FY 2023 through FY 2025.

Digging a little deeper into the data for these top components reveals that spending is concentrated within a few offices at each component, although TSA and USCG do not report funding office for some of their spending. Further, CISA and USCIS report all their spending at the top component level.

This is not an exhaustive list of DHS’s IT buying offices, but these thirteen top-spending entities account for $4.8B (57%) of DHS’s total FY 2025 IT spending. CISA and USCIS account for 14% and 12% of DHS’s FY 2025 IT spending, respectively.

DHS IT Spending by Business Size

Many federal agencies have struggled to increase or maintain their level of small business utilization, and DHS is no exception. While DHS increased its top line IT spending it struggled to increase its spending with small businesses at the same pace, which fluctuated and declined slightly in FY 2025.

DHS’s 4.6% growth in total IT spending from FY 2023 to FY 2025 was made possible by a 12% growth in the Other than Small category, while small businesses saw a -4.9% reduction in FY 2025 compared to FY 2023. Although small business utilization grew by 3.7% from FY 2023 to FY 2024, but that utilization rate was not sustained in FY 2025.

Top Companies by DHS IT Spending

Considering the companies which have been gaining the most in DHS IT contracts reveals a mixed list of companies dominated systems integrators, but also which includes core IT hardware, specialty software and niche capability providers.

These top 25 companies represent about 58% of DHS’s FY 2025 IT spend and at 11%, CACI is the only firm with more than 10% of the total. The remaining companies range from 4.8% to 0.8% of DHS’s FY 2025 IT spending. The frequency of SIs and niche capability providers combined with the wide distribution of the percentage of total spending indicates what a robust market opportunity that DHS presents to industry.

Looking Ahead to FY 2026 and Beyond

DHS has the unfortunate position of being the only federal department to both begin FY 2026 under a shutdown and then undergo a second shutdown after a short-term continuing resolution (CR) enacted by Congress expired. When considering how the second, ongoing DHS shutdown, its longest in history, may be affecting overall contract spending, we may look at how the shutdown at the beginning of FY 2026 impacted DHS spending.

What is most likely the case is that DHS components will be impacted unevenly and contract spending will shift to the right on the calendar. However, this latter extended shutdown brings us into uncharted territory, so the final impacts will take time to come to light.

As part of the federal FY 2027 budget request, DHS is requesting $11.7B in total IT budget for the coming fiscal year. That would be about a $1B increase, compared to $10.7B that they requested in FY 2026. Since the disposition of the department’s FY 2026 appropriations and IT funding remain in limbo, there is little way to predict exactly how much DHS will have to spend on IT in the current fiscal year, let alone the next.

Closing Thoughts

Historically, IT capabilities, and the budgets to support them, have been less contentious than other higher-profile elements of a department’s budget. Ongoing scrutiny to realize efficiencies and economies at every level have not left DHS IT contract spending unaffected. Yet, for the components and offices that support DHS’s highest priorities, the recent historical contract spending data suggests that these areas will continue to provide sustained growth opportunities.