Executive Summary - Highlights and key takeaways from Q1 2026:

• The SLED market posted a -4.2% decline in bids for Q1, extending a contraction that took hold throughout 2025 and shows no signs of reversing heading into 2026.
• Ongoing uncertainty around federal funding, compounded by a persistently unsettled economic environment, appears to be a key driver of the pullback, with SLED organizations narrowing their focus to core, essential needs.
• Procurement activity slowed across all three levels of government: state down -4.4%, education -4.6%, and local -4.1%. This marks the second consecutive quarter in which all three levels landed within a percentage point of one another - an unusual degree of alignment that suggests a shared sense of caution, regardless of the differences that typically separate their spending patterns.
• Water and energy led the way this quarter, even as every industry posted a decline. The more encouraging sign, however, is that the range between industries narrowed compared to last quarter, suggesting that the harder-hit sectors are stabilizing rather than continuing to deteriorate.

Market Snapshot

Q1 2026 played out largely as anticipated. Following a challenging 2025, there was limited expectation of a sharp rebound, and the data reflected that reality: bid counts for state and local governments declined -4.2% compared to the same quarter last year. The market continues to operate in an environment of elevated uncertainty, which has led agencies to take a more measured and selective approach to procurement activity.

It is worth keeping the bigger picture in mind, however. Q1 has been trending downward for several years, shaped by a succession of different pressures along the way, and the current climate of federal funding instability and economic unpredictability is simply the latest headwind making it harder for the market to find its footing. This is not a sudden drop so much as a continuation of a pattern, and understanding what is driving it at any given moment matters as much as the number itself.

SLED Project Counts Over Time - Total Volume and Annual Rate of Change in Bids & RFPs:

• GovWin’s database shows clear seasonality trends in the SLED market based on eight trailing quarters of activity. Because of seasonality, we measure growth for the overall market in competitive bids and RFPs by comparing same-quarter year-over-year activity.
• The -4.2% dip in Q1 reflects a continued slowdown in contracting activity, driven by ongoing challenges and shifting federal policies that have impacted SLED budgets.

Agency Snapshot – Historical Trends 

• This view highlights the quarter-by-quarter growth rates for the three major levels of government. Q1 2026 shows a broad-based, synchronized dip across all levels of SLED procurement. Year-over-year growth rates land in the mid-single digits negative after a mixed 2025 where State briefly turned positive in Q1, Education hovered near flat for parts of 2025, and Local continued a gradual recovery from its deeper trench in Q3 2024. Momentum faded through the back half of 2025 and culminated in a soft Q1 2026 across the board.

Quarterly Growth Industry Ranking – Q1 2026 : Year-Over-Year Growth Rates in Bids/RFPs (Q1 ‘26 vs. Q1 ‘25)

We looked deeper into activity by industry. This analysis divides the market into 12 distinct sectors, as defined in the glossary. Growth rates (ranging from -1.3% to -10.8%) are based on change in bid volume in Q1 ‘26 versus the same quarter one year ago.

Industry Growth Ranking by Level of Government - Annual Growth Rates In Bids/RFPs (Q1 ’26 vs Q1 ’25)

• To provide further insight into each of the three larger government types, we broke out the growth rates for the current quarter by industry and ranked the 12 industries to highlight areas of significant growth or expansion within each type of government.
• The results demonstrate obvious differences in purchasing and/or budgeting priorities between the levels of government, with generally low correlations across the levels. What is highest ranked in one type of agency is often lower ranked at other levels.
• However, this quarter we see the water & energy, education products & services, and construction industries performing well, nearly ranking in the top three across all levels of government.

Recommended follow-up article: SLED: What Slowing Procurement Activity Really Means for Vendors (Q1 2026)