Federal IT Subcontracting Landscape

The federal IT subcontracting market is undergoing significant transformation driven by contract consolidation, regulatory reform, and evolving procurement strategies. As fewer prime contractors control access to larger contract vehicles, subcontractors face both heightened competition and new opportunities in a marketplace where IT spending continues to grow even as vendor participation declines. This comprehensive analysis examines the forces reshaping the subcontracting landscape and provides actionable intelligence for IT companies navigating federal opportunities as subcontractors.

Covering fiscal years 2022 through 2025, this report analyzes vendor participation trends, spending patterns, policy impacts, and agency-specific dynamics affecting IT subcontractors. Drawing from federal procurement databases, agency scorecards, and regulatory sources, the analysis reveals how category management, FAR modernization, and small business policy changes are fundamentally altering the paths to federal revenue for subcontractors across all size categories.

Key Findings

• Market concentration and category management is creating fewer primes and forcing many IT contractors to shift to more subcontracting opportunities. The number of participating IT contractors has declined 42% since FY 2010, while IT spending has increased 52% over the same period. Category management initiatives have funneled spending into fewer, larger contract vehicles, creating a consolidation funnel resulting in fewer prime contractors with which subcontractors can partner, and intensifying competition for limited teaming opportunities.
• Small business contracting challenges limit the small business prime AND sub pools. While small business prime IT spending grew 53% from FY 2017-2024, the number of small business vendors declined 29%, indicating significant barriers to market entry and sustainability. Between category management and contracting officers’ newly-acquired discretion for establishing set-asides, more small IT prime contractors are likely to shift focus to subcontracting and face more competition against other companies of all sizes making the same pivot.
• Regulatory changes are reshaping the landscape. GSA's Revolutionary FAR Overhaul is streamlining procurement rules, reducing compliance burdens, and giving contracting officers more discretion—particularly around commercial item acquisitions, subcontracting plan requirements, and flow-down clauses.
• GSA OneGov will shift IT resellers to subcontractors. GSA’s strategy to contract directly with OEMs creates a significant restructuring of the OEM-VAR relationship. OEMs are under pressure to develop direct sales and subcontractor management capabilities, while VARs face reduced agency access and visibility as subcontractors.
• Operational challenges span the full subcontracting lifecycle. Subcontractors face multifaceted challenges, including limited visibility into opportunities, lack of oversight of subcontracting plan compliance, cash flow issues due to payment delays, unequal negotiating power and compliance costs (such as for CMMC certification).

Critical Insight for Vendors

Deltek’s Federal IT Subcontracting Landscape report examines critical trends affecting how subcontractors identify opportunities, navigate prime-subcontractor relationships, and succeed in an increasingly consolidated and complex federal IT contracting ecosystem.

The report provides:

• IT vendor participation trends
• Category management impact on IT procurement
• Acquisition policies impacting prime and subcontracting opportunities
• Analysis of subcontracting challenges in the federal IT market
• Assessment of agency subaward trends
• Identification of leading prime contractors’ subcontracting trends

Deltek's Federal IT Subcontracting Landscape report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.