Federal Small Business Cybersecurity Spending Indicates Steady Growth

Published: November 03, 2025

Federal Market AnalysisCybersecuritySmall Business

Sustained growth in the federal cybersecurity market indicates healthy growth for small businesses.

Small businesses captured significant market share of federal cybersecurity spending, increasing 23% from FY 2022 to FY 2024, indicating sustained growth through FY 2028. During this time, federal agencies awarded $33.97B in cybersecurity contracts. Awards to small businesses accounted for $13.7B, representing 40% of total prime obligations.

Federal Cybersecurity Snapshot

During these three fiscal years, federal agencies awarded $33.97B in cybersecurity contracts. Awards to small businesses accounted for $13.7B, representing 40% of total prime obligations. Firm-Fixed Price contracts were the most awarded type at $8.8B. Cost-Plus Fixed Fee contracts totaled $2.3B, and Time and Material contract awards were $1.7B.

 

 

 

 

 

 

 

 

 

 

Socioeconomic Distribution

Unsurprisingly, 8(a) firms consistently captured the largest market share receiving $2.37B over the three-year period, with half awarded as sole source contracts. However, Service-Disabled Veteran-Owned Small Businesses sustained the highest growth, increasing by 60% over the three-year period.

 

 

 

 

 

 

 

 

 

 

The top small business awards include:

  • SDVOSB - Health and Human Services (HHS): DCipher Ecosystem $300M
  • 8(a) – Defense Counterintelligence Security Agency Enterprise Cybersecurity Support Services: $100M
  • WOSB/EDWOSB - Department of Homeland Security (DHS) Information Assurance Services (IAMS) U.S. Coast Guard Operations Systems Center (USCG/OSC): $10M
  • HUBZone - Office of Personnel Management (OPM) Palo Alto Firewall License: $11M.

Agency Spending

Collectively, the Air Force (AF), Department of Homeland Security (DHS), the Defense Agencies and Health and Human Services (HHS) contracts represented 41% of total small business cyber spending. Defense agencies outpaced Civilian spending by 19% with Air Force leading with $10.7B.  

 

 

 

 

 

 

 

 

 

 

Key Contract Vehicles

Utilization of Government-Wide Acquisition Contracts (GWACs) and Best-in-Class (BIC) vehicles remained prevalent within the cybersecurity market, accounting for 60% of SB awards. TThe GSA Consolidated Multiple Award Schedule (GSA MAS), Solutions for Enterprisewide Procurement V (SEWP V): $2.2B and Seaport Next Generation (Seaport NXG): $675M were the top three.

 

 

 

 

 

 

 

 

 

 

Category Focus

Information Technology (IT) investments were three times greater than the combined spending among the other market segments. The top five IT contracts were:

Professional Services experienced steady growth while Research and Development remained stable. Conversely, Operations and Maintenance and Defense and Aerospace spending dropped significantly from FY 2022 - 2024.

Conclusions

Sustained growth in the cybersecurity market is expected through FY 2028. Federal agencies must both adopt emerging technologies – including artificial intelligence, data analytics, and Post-Quantum Cryptography – and address the cyber threats inherent to their implementation. Furthermore, agency IT modernization efforts to meet federal mandates and address persistent threats will drive increased investments. Ongoing government-efficiency, agency reorganizations and downsizing are also expected to moderate growth in out-years.

Firms should actively monitor and engage in the development of cyber policies, standards and programs to help shape final decisions. Strategic planning for investments to maintain compliance while aligning cyber capabilities – such as Zero Trust Architecture, threat detection and mitigation, vulnerability management, and identity management – will enable small firms to remain competitive. Maintaining an agile approach to evolving procurement initiatives such as OneGov and leveraging established acquisition vehicles will position firms for greater success.

Access Deltek’s Federal Market Analysis team’s in-depth report on the federal cybersecurity market and forecast through FY 2028 here.