Updated April 2026 · FY2024 USAspending.gov data
Federal Spending by Industry
The federal government distributed $529.6B across 11 major industry categories in FY2024. The top three categories — Other Services, IT & Software, Defense & Weapons — account for roughly 71% of total contract spending. Categories follow the Product and Service Code hierarchy from the Federal Procurement Data System.
How to Read These Categories
Each row below shows a top-level industry category, the total federal obligations to contractors in that category for FY2024, the share of national contract spending it represents, and the count of unique contractors active in it. The progress bar visualizes share-of-total at a glance — a 50% bar means the category accounts for half of every federal contract dollar; a 1% bar means roughly one in a hundred. Click any category to drill into its top contractors and agencies.
Defense dominates because it is uniquely capital-intensive. A single F-35 aircraft program runs into the tens of billions; a major naval vessel into similar territory. Civilian categories — IT, healthcare administration, professional services — typically run on smaller individual awards but in larger numbers, which is why they show high contractor counts even when the dollar share is smaller than defense.
Other Services
General services including facility management, administrative support, food services, security, and miscellaneous government operations.
IT & Software
Information technology services, software development, cybersecurity, cloud computing, systems integration, and digital modernization for federal agencies.
Defense & Weapons
Military equipment, weapons systems, aircraft, ships, missiles, and defense-related manufacturing and maintenance contracts.
Professional Services
Management consulting, advisory services, program management, staffing, logistics support, and technical assistance to government agencies.
Construction
Building construction, infrastructure development, facility maintenance, military base construction, and environmental remediation projects.
Research & Development
Scientific research, technology development, laboratory operations, testing, and evaluation for federal agencies and military programs.
Healthcare & Medical
Healthcare services, medical supplies, pharmaceuticals, TRICARE administration, VA healthcare support, and public health services.
Transportation & Logistics
Shipping, freight, fleet management, supply chain services, military logistics, and transportation infrastructure.
Energy
Energy production, nuclear facility management, renewable energy projects, petroleum products, and utility services for government facilities.
Telecommunications
Communications systems, satellite services, network infrastructure, secure communications, and broadband deployment for federal agencies.
Environmental Services
Environmental cleanup, hazardous waste management, pollution remediation, environmental monitoring, and conservation services.
What Drives Each Category
Defense & Aerospace. Concentrated among five primes — Lockheed Martin, RTX, General Dynamics, Boeing, Northrop Grumman — handling aircraft, missiles, ships, satellites, and the supporting services for them. Year-to-year volatility is driven by program milestones (Lot deliveries, ship christenings) and supplemental appropriations.
Information Technology. Spread across federal IT primes (Leidos, SAIC, Booz Allen Hamilton, Accenture Federal) and a long tail of cybersecurity, cloud, and software firms. Growth is driven by legacy system modernization across civilian agencies and the ongoing federal cloud migration.
Healthcare. Dominated by Medicare Advantage and TRICARE administrators (Humana, Centene, UnitedHealth) and Department of Veterans Affairs medical-services contracts. Growth tracks federal program enrollment more than per-award changes.
Professional Services and R&D. Wide contractor base — engineering firms, research universities, federally funded R&D centers (FFRDCs), management consultancies. Awards are smaller individually but numerous, supporting agency-specific work that does not fit the major prime-contractor categories.
How These Categories Are Calculated
Every award in USAspending.gov carries a Product and Service Code (PSC) from the Federal Procurement Data System. We map each PSC to one of the top-level categories shown above (full mapping table on request) and sum obligations within each category for FY2024. Vendor identity is reconciled against SAM.gov Unique Entity ID registrations. Read the full methodology.
Frequently Asked Questions
What does the federal government spend the most on?
The largest category of federal contract spending is Other Services at $305.0B (57.59% of all obligations), followed by IT & Software at $37.4B. Together the top three categories — Other Services, IT & Software, Defense & Weapons — account for roughly 71% of federal contract spending.
How much does the government spend on IT contracts?
The federal government obligated $37,382,036,128 on IT and software contracts in FY2024, distributed across 836 contractors. IT is one of the fastest-growing contract categories as civilian agencies modernize legacy systems, harden cybersecurity, and migrate to cloud platforms.
How are industry categories assigned?
Industry categories follow the Product and Service Code (PSC) hierarchy maintained by the Federal Procurement Data System. PSCs starting with letters (A research, R professional services, S utilities) tag service awards; numeric PSCs tag products. We collapse the full PSC tree into top-level categories for visualization but preserve the underlying code on each contractor and agency profile.
Why does defense dominate this list?
Roughly half of all federal contract spending flows through the Department of Defense. Aircraft, ships, missiles, satellites, weapons systems, and the supporting services for them are the federal government's largest single procurement program. The civilian side spreads across many smaller categories — IT, healthcare administration, construction, professional services — none of which individually rivals defense.
Where does industry data come from?
All figures are sourced from USAspending.gov, the official source mandated by the DATA Act. Industry classification follows the PSC hierarchy from the Federal Procurement Data System. Vendor identity is reconciled to SAM.gov Unique Entity ID registrations.
Source: U.S. federal government, USAspending.gov, SAM.gov, and the Federal Procurement Data System. Data is public domain. Cite as: "TaxDollarData, federal spending by industry, FY2024. Data: USAspending.gov."
Last updated 2026-04-09 · covering 11 industry categories.