The Federal IT Spending Landscape
Federal IT spending exceeds $100 billion annually and continues to grow, driven by cloud migration, cybersecurity modernization, data analytics, and digital transformation initiatives. Every major agency has an active IT modernization strategy, creating continuous demand for technology products and services.
The largest IT buyers include the Department of Defense (over $40 billion), Department of Homeland Security, Department of Health and Human Services, and the civilian technology agencies (GSA, VA, Treasury). IT NAICS codes 541511, 541512, 541513, and 541519 are among the most frequently used codes in federal procurement.
Key IT Contract Vehicles
The federal IT market is heavily structured around large IDIQ contract vehicles. Having a position on one or more of these vehicles is often a prerequisite for competing for agency IT work:
- GSA IT Schedule 70 (now MAS) — The broadest IT contract vehicle, accessible to all agencies
- SEWP VI (NASA) — IT products and product-based services
- Alliant 3 (GSA) — Complex IT solutions and services
- CIO-SP4 (NIH) — IT solutions with a health/biomedical focus
- 8(a) STARS III (GSA) — IT services for 8(a) small businesses
- Agency-specific BPAs and IDIQs for IT support services
FedRAMP and Cloud Services
If your company provides cloud services (SaaS, PaaS, IaaS), FedRAMP (Federal Risk and Authorization Management Program) authorization is essential. FedRAMP is the standardized approach to security assessment and authorization for cloud products used by federal agencies.
FedRAMP authorization is a rigorous process that can take 12-18 months and cost $250,000-$500,000 or more, depending on the complexity of your system. However, once authorized, your product can be used by any federal agency, dramatically expanding your addressable market.
Alternatives include sponsorship by a specific agency (Agency ATO) or leveraging a FedRAMP-authorized infrastructure provider. Many SaaS companies host on AWS GovCloud or Azure Government, which are already FedRAMP authorized, simplifying their own compliance path.
Agile Development in Government
The federal government has increasingly adopted agile development methodologies, moving away from traditional waterfall approaches. Agencies like the U.S. Digital Service, 18F (GSA), and the Defense Digital Service have driven this transformation, and most agency IT shops now expect agile capabilities from their contractors.
Government agile is not always the same as commercial agile. Contracts may require specific agile frameworks (SAFe, Scrum), formal sprint reviews with government stakeholders, and documentation that satisfies both agile principles and federal compliance requirements. Understanding how to operate within these constraints is a competitive advantage.
When proposing agile approaches, demonstrate your experience with iterative delivery, continuous integration/deployment, user-centered design, and DevSecOps practices. Federal buyers are looking for contractors who can deliver working software incrementally rather than in a single final delivery.
Entering the Federal IT Market
Federal IT is a massive, growing market with strong demand for modern technology solutions. For IT companies with relevant commercial capabilities, the transition to government work is natural — the technical skills transfer directly.
Start by identifying your IT NAICS codes and the agencies that buy your type of technology. Pursue a GSA IT Schedule or small business IDIQ to establish your contract vehicle presence. Invest in relevant certifications (CMMC, FedRAMP) based on your technology and target customers. The federal IT market rewards companies that combine technical excellence with compliance readiness.