Deltek forecasts federal spending on contractor-supplied professional services will grow from $111.2B in FY 2026 to $121.2B in FY 2029.

The federal Professional Services market is being reshaped by a convergence of appropriations dysfunction, acquisition consolidation and workforce reductions. Repeated government shutdowns and continuing resolutions are compressing the effective contracting calendar, while GSA's category management and IDIQ consolidation efforts concentrate obligations onto fewer, larger vehicles. The Department of Government Efficiency's (DOGE) FY 2025 cuts disrupted several segments, and while spending trends suggest recovery beginning in FY 2027, the pace and durability of that recovery vary by agency and segment.

Compliance and acquisition policy are converging in ways that create both new opportunities and new friction for contractors. Cost accounting standards (CAS) relief lowers the cost of holding cost-type contracts and at the same time Executive Order 14402 will drive a conversion of some cost-plus contracts to fixed-price contracts. Small businesses face particular pressure as contract consolidation favors large incumbents while the Small Business Administration moves to scale back socioeconomic program benefits and revise size standards.

Deltek anticipates targeted, uneven growth in federal professional services spending through FY 2029, with the greatest opportunities concentrated in agencies and segments aligned with administration priorities. Contractors that understand these converging policy, budget and acquisition forces will be best positioned to capture emerging demand.

Professional Services Market Segmentation

Deltek’s Professional Services market assessment is broken out across several component segments:

• Business Administration
• Financial Services
• Legal Services
• Management and Advisory Services
• Marketing and Public Relations
• R&D Administration, Studies and Analysis
• Social Services
• Technical and Engineering Services (Non-IT)

This detailed market segmentation provides perspectives that speak to the unique needs of discrete market participants.

Key Findings

• DOGE’s impact continues. Executive Order 14222's efficiency mandate is systematically cutting Advisory and Assistance Services, program-management-support, and marketing/advertising contracts across multiple agencies.
• DOD Drives Market Growth. Growth concentrates in Defense, particularly in services tied to weapons systems and space. Advisory-heavy segments, such as Management & Advisory Services and Business Administration, are slowly recovering from DOGE-driven cuts, but also face permanent reductions driven by policy decisions rather than declining underlying demand.
• Compliance Policies Create Conflicting Forces. Cost Accounting Standards (CAS) relief lowers the cost of holding cost-type contracts at the same time the Fixed-Price Executive Order forces conversion of the largest ones, and an August 2026 DOD cost/pricing transparency memo adds new disclosure burden on the fixed-price side. A single contract can gain CAS relief and face new transparency exposure simultaneously.
• Small Businesses are Being Squeezed. Category management and contract vehicle consolidation structurally favor large incumbents on fewer vehicles, while the Small Business Administration is simultaneously scaling back socioeconomic program benefits. SBA's proposed changes to size standards would create a broader competitive pool that pits very small contractors against larger small businesses.
• AI is Quelling Demand. Agencies including GSA, the Army, State and DHS explicitly cite AI/ML as an offset to headcount for document processing, translation and other back-office work. Contractors delivering Business Administration and lower-complexity Management & Advisory Services face volume and margin pressure even in agencies with stable or growing budgets.

Critical Insight for Vendors

Deltek's Federal Professional Services Market, 2026-2029 report takes a strategic 4-year look at the trends, drivers, and inhibitors shaping federal spending on professional services, including key segments that comprise this diverse market.

The report provides:

• Insight into the budget, policy and acquisition factors shaping the professional services market landscape over the next four years.
• Insight into the dynamics shaping professional services market segments and agency spending.
• Market forecasts to support vendors' strategic planning.
• Recommendations to help contractors evaluate the impact of trends on their businesses.

Deltek's Federal Professional Services Market, 2026-2029 report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.