Federal Contracting
Federal contracting is not federal spending. It is the part of federal spending where the government buys something: products, services, construction, research, technology, operations support, or professional work.
That sounds obvious until the numbers start circulating. Grants, loans, direct payments, salaries, benefits, interest, and transfers are not contracts. A contract is a purchase. FAR Part 2 defines it as a mutually binding legal relationship: the seller furnishes supplies or services; the government pays. The GSA FAR overview explains that the Federal Acquisition Regulation is the primary rulebook for executive agencies acquiring supplies and services with appropriated funds.
The best public entry point for the whole federal spending record is USAspending.gov, which publishes award data across contracts, grants, loans, direct payments, and other assistance. For contracting, analysts often use FPDS-derived procurement data as the core record.
What federal-wide awards mean
When USDG uses $773.68B FY2024 federal contract awards, it is using a federal-wide market summary for contract awards across agencies, not a DoD budget number. That number is most useful for showing the scale of the government procurement market. It includes defense and civilian agencies.
It should be treated differently from official obligations dashboards. GAO’s FY2024 government-wide contracting work, for example, reports obligations using federal procurement data and explains the market by agency, vendor, competition, and contract type. A secondary market summary such as GovSpend’s FY2024 awards analysis can be useful for plain-English market sizing, but official government sources should carry the most weight when precision matters.
That is why USDG does not use a federal-wide awards number to describe the defense budget. It is also why USDG does not use it to describe DoD-only obligations.
What counts as federal contracting
Federal contracting includes purchases by civilian agencies and defense agencies. It can include enterprise IT, facilities support, professional services, aerospace systems, medical supplies, disaster response logistics, cloud hosting, research, construction, and maintenance.
Small business participation is tracked separately through procurement scorecards and statutory goals. The SBA’s FY2024 reporting said the federal government awarded more than $183 billion in prime contracts to small businesses, the largest amount then reported. That figure is a subset of federal contracting, not a separate market.
Awards, obligations, and outlays
Three words cause most of the confusion.
Awards usually describe procurement actions or contract value reported in market summaries. The exact meaning depends on the dataset.
Obligations are binding commitments. USAspending’s own explainer says an obligation is the government’s promise to spend money, while an outlay is the actual payment. See USAspending on obligations and outlays.
Outlays are cash leaving the Treasury. A contract can be awarded in one fiscal year, obligated over time, and paid out over later fiscal years.
Do not confuse this with…
- Defense contracting. Defense contracting is defense-related procurement, usually DoD-centered. Federal contracting includes defense and civilian agencies. See Defense Contracting.
- DoD budget. A budget request is not a procurement market total. See DoD Budget.
- Contract obligations. Obligations are the public accounting record of binding commitments. See Contract Obligations.
- Defense industrial base. The DIB is an ecosystem of companies, facilities, workers, and supply chains. See Defense Industrial Base.
How USDG uses this term
US Defense Group uses federal contracting for the all-agency procurement market governed by the FAR and reported through federal procurement systems.
USDG uses $773.68B FY2024 federal contract awards only as a federal-wide awards figure. It should not be shortened to “the defense market” without explanation.
When discussing DoD-specific activity, USDG uses DoD contract obligations or defense contracting instead.
Sources and further reading
Questions about federal contracting
What is federal contracting?
Federal contracting is the process through which an agency acquires supplies or services with appropriated funds. It begins when an agency identifies a need and includes requirements development, solicitation, source selection, award, financing, performance, and contract administration.
Where can businesses find federal contract opportunities?
Businesses can find federal contract opportunities on SAM.gov and in agency procurement forecasts. The Small Business Administration also recommends reviewing historical award data and contacting agency small business offices before deciding which opportunities fit the company.
Source: U.S. Small Business Administration, How to win contracts
Last reviewed , by US Defense Group Editorial Team.