New Analysis on the Federal IT Subcontracting Landscape

Making its debut, Deltek’s report on federal IT subcontracting arrives amid significant shifts in the federal acquisition landscape, with changes that are impacting all contractors, including those in subcontracting roles. Federal policies and initiatives such as GSA’s OneGov strategy, the consolidation of GSA-managed contracts, and the Revolutionary FAR Overhaul, are expected to have cascading effects on federal subcontractors.

In addition to navigating these changes, federal subcontractors face a range of challenges, from identifying viable opportunities and adapting to increasing contract consolidations, to supply chain difficulties and managing complex compliance requirements.

Despite some of these barriers, subaward data analysis reveals a modest incline in total IT prime obligations involving subawards from FY 2022 to 2024 (see the report for details on subaward contract data nuances).

(Note that FY 2025 data is incomplete and excludes full DOD information due to a 90-day reporting delay.)  

Sources: FPDS, USASpending.gov, Deltek

Amid ongoing changes across the contracting landscape, the report offers insights into the key factors shaping the federal IT subcontracting space, presents detailed subaward trends analysis, and provides guidance to help subcontractors navigate an increasingly complex environment.

Key Findings from the Report:

• 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).

Deltek’s Federal IT Subcontracting Landscape report is delivered in PowerPoint® format. In addition, the report package includes an accompanying Executive Briefing, and an Excel® data workbook.