2025 Year in Review

Year In Review (2025)

Precision Talent Solutions (PTS) is proud to present this annual report, offering our industry a clear-eyed assessment of the forces that reshaped the government contracting industry in 2025 and what they signal for the year ahead. As a leading GovCon executive search firm, PTS benefits from a mezzanine vantage point – bridging policy, industry, and talent – through daily engagement with decision-makers, operators, and executives navigating one of the most volatile periods the sector has faced in decades.

Without exaggeration, 2025 marked the most disruptive year for government contracting since 2001. The year brought rapid policy reversals, a fundamental reshaping of the federal workforce, sweeping changes to acquisition rules, and a decisive realignment of budgets and priorities under a new U.S. Administration. Defense and homeland security emerged as clear anchors, while civilian agencies faced consolidation, downsizing, or elimination, fundamentally altering how programs are staffed, funded, and executed.

What began as an abrupt disruption gradually crystallized into a new operating reality. Early-year turbulence – including mass workforce exits, paused procurements, and agency restructuring – gave way to a clearer, though markedly different, federal landscape. The passage of the “One Big Beautiful Bill” established multi-year funding priorities, while the FY26 National Defense Authorization Act reinforced readiness, industrial capacity, and force posture as enduring imperatives. The December release of the National Defense Strategy further confirmed that U.S. commitment to the Euro-Atlantic theater remains intact, even amid broader global rebalancing debates.

Throughout this period, the GovCon industry demonstrated characteristic resilience – realigning around America First priorities emphasizing hemispheric security, domestic production, and evolving alliance structures – against a backdrop of continued war in Ukraine, heightened European defense investment, instability across Africa and the Middle East, and persistent tension in the Pacific. By year’s end, it was evident that these shifts were not cyclical but structural, reshaping missions, timelines, and expectations as contractors enter FY26.

In parallel, PTS evolved to meet this moment. We deepened our reach across defense and homeland security, expanded career transition and Precision Experts network amid unprecedented workforce churn, strengthened our transatlantic footprint in European defense, and broadened our capabilities across fast-moving sectors, including GovTech, UAS, space, intelligence, and private equity. Through these efforts – and through ongoing dialogue with senior leaders across government and industry – PTS remains focused on helping organizations and professionals align talent with a federal market transformed in scope, structure, and speed.

 

 

Major Forces Shaping the Defense and Government Market in 2025

With 2025 behind us, the value lies less in recounting disruption and more in understanding what it revealed. Beneath layoffs, delayed awards, and agency restructurings, a clearer federal operating model emerged – one that compressed acquisition timelines, narrowed market access, and redefined how contractors must compete. These forces now set the conditions for FY26 and beyond.

· Pentagon Strategic Reset — ** ** Department of War’s (DoW) executed its most consequential realignment in years as defense spending exceeded $880B, shifting emphasis toward readiness, munition replenishment, sustainment, and force posture over legacy platforms. The move away from JCIDS toward adaptive pathways and portfolio-level oversight reshaped how requirements are defined and delivered. While the Indo-Pacific remains the pacing theater, increased focus on the Arctic and Western hemisphere signals an expansion of contested operational domain.

· GovTech Becomes Core Mission Infrastructure — ** ** AI, cyber, cloud, and data integration moved from enablers to core mission-critical requirements across DoW, DHS, and civilian agencies. Workforce shortages and adversary advances accelerated zero-trust adoption and cloud modernization, while cybersecurity compliance emerged as a source-selection differentiator rather than a back-office requirement.

· Global Command and Mission Realignment—DoW reinforced the Indo-Pacific posture while expanding counternarcotics and homeland-adjacent missions in the Western Hemisphere, driving demand for contested logistics, ISR, aviation, and expeditionary support. Concurrent plans to consolidate combatant commands and rebalance authority toward homeland-focused structures signal fewer buyers with broader geographic and mission scope, requiring contractors to realign engagement and BD strategies ahead of FY26.

 

U.S. INDO-PACIFIC POSTURE

With sustained and rotational forces in the Indo-Pacific, the U.S. is deepening investment in supply chain, manufacturing, logistics, and defense infrastructure with key allies.

 

· DHS Emerges as a Lead Buyer — ** ** DHS became one of the most consequential acquisition engines of 2025, backed by ~$190.6B in funding across enforcement, border infrastructure, cyber defense, biometrics, and operational logistics. ICE, CBP, CISA, and FEMA increasingly adopted acquisition models aligned with DoW sustainment and rapid-buy frameworks, compressing timelines and raising execution expectations. For deeper insight into where DHS demand is heading next, listen to the PTS Future of GovCon podcast featuring Sue Armstrong, PTS Precision Expert.

· Europe Shifts to Sustained Rearmament — ** ** NATO accelerated collective defense and procurement, with member states signing record contracts, while NSPA managed billions in infrastructure, sustainment, and multinational acquisitions across air and missile defense, drones, mobility infrastructure, and MILCON. Uncertainty around Ukraine and evolving U.S. security commitments have reinforced Europe’s urgency to build autonomous industrial and operational capacity heading into 2026. For deeper insight into how multi-nation politics, standardization challenges, and the emerging 5% defense spending pledge are reshaping contractor opportunities with NATO, listen to Andrew Rohling on the Future of GovCon podcast.

· Workforce Disruption Reshapes Talent Supply — ** ** Federal workforce reductions converged with private-sector layoffs, widening gaps in acquisition, cyber, engineering, and program management. Agencies increasingly relied on industry to sustain operations, intensifying competition for cleared and technical talent. These pressures elevated the value of fractional leadership, surge expertise, and advisory models, capabilities delivered through PTS Precision Experts.

· New Rules of Market Access — ** ** Acquisition reform accelerated through FAR overhaul, GWAC and IDIQ consolidation, SBA size-standard adjustments, and expanded GSA authority. Market access narrowed as compliance, scale, and past performance became prerequisites rather than differentiators. Increased scrutiny of the 8(a) program further pushed small and tribal-owned firms to reassess growth strategies beyond sole-source pathways.

· Speed Becomes the Decisive Advantage — FY26 competition is increasingly shaped by commercial and non-traditional acquisition models, including OTAs, BAAs, CSOs, and SBIR/STTRs. Contractors face mounting pressures to secure positions on core vehicles, anticipate early GWAC on-ramps, and diversify award pathways as speed increasingly outweighs traditional source-selection norms.

 

· Defense Manufacturing Moves to Output — Stockpile depletion and production bottlenecks pushed the defense industrial base into strategic focus. Initiatives such as Replicator demonstrated the ability to accelerate acquisition, but the emphasis has now shifted from experimentation to scalable output. Competitive advantage in 2026 will favor firms that pair proven technology with production capacity, resilient supply chain, and delivery discipline.

 

GovTech in 2025

In 2025, GovTech crossed a structural threshold. AI, cyber, cloud, data integration, and autonomy moved from supporting functions to core mission infrastructure across defense, homeland security, and civilian agencies. These capabilities no longer differentiate bids – they define how mission delivery is evaluated, awarded, and sustained.

 

· Cyber Becomes a Gating Requirement — ** ** CMMC 2.0 moved closer to enforcement as agencies accelerated zero-trust adoption and raised baseline security expectations across the supply chain. Cyber maturity is now a condition of market access, not a compliance afterthought, increasingly serving as a discriminator in source selection. PTS supports clients in building compliant, operationally mature cyber postures – connect with Candice Smith to get ahead of evolving requirements.

· Cloud Adoption Accelerates — ** ** FedRAMP 20x compressed authorization timelines, enabling faster adoption of cloud services across enforcement, intelligence, and civilian systems. Contractors are now expected to deliver secure, cloud-native architecture as standard, not premium solutions.

 

· Pentagon R&E Reset Prioritizes Speed and Scale — The Pentagon executed one of its most consequential R&E restructurings in a decade, collapsing 14 critical technology areas into 6 modernization priorities and redirecting $140B in annual R&E spending toward capabilities deliverable within 36 months, not decade-long timelines. This shift favors contractors able to transition AI, autonomy, cyber, sensing, and digital engineering from prototype to production – where speed, integration, and execution now outweigh long-range roadmaps.

 

 

 

Looking ahead, GovTech is entering a mega-cycle. More than $200B in cumulative opportunity is emerging across major vehicles – including MAPS, IAC MAC 2.0, AAMAC, CYBERDOME, SOFGSD, VPAS, ZeroTrust AI, and CenTAM ($1B) – many of which assume ready-now digital leadership and delivery teams, not post-awards buildouts. As highlighted by Andrew MacWilliams, talent and leadership readiness have become the decisive vulnerability – one PTS is positioned to close through mission-ready GovTech leaders, fractional executives, cleared SMEs, and surge teams aligned with 2026 requirements.

 

Priority Engagement Pathways:

· DARPA STO continues to offer rolling entry points via OTA, experimental procurements, and cooperative agreements through 2027.

· Army FUZE consolidates innovation pipelines with approximately $750M annually, accelerating transition from early tech to scaled adoption via four existing initiatives – xTech, SBIR, Tech Maturation Initiative, and Manufacturing Technology program.

· AF Cyber OSCARS reinforces CSOs as the preferred pathway for rapid insertion of cyber capabilities. The current call remains open, with Step I submission due Jan 26.

· DoW CDAO TRADEWINDS ** ** remains a standing marketplace for deployable AI/ML,data, and digital solutions.

As GovTech reshapes federal mission delivery, the limiting factor is no longer access to technology but access to talent capable of delivering it at speed and scale. PTS supports this shift through dedicated GovTech recruiting teams led by Isaac Khaneles and Candice Smith, providing mission-ready professionals in AI/ML, cyber compliance, cloud architecture, DevSecOps, and digital transformation, aligned with FY26 requirements.

 

Major Programs

The summary below highlights key developments in 2025 across major programs tracked by PTS within different agencies that impact our industry, along with the contracting trends we anticipate in 2026.

 

ARMY

In 2025, the Army pivoted away from launching new major platform modernization efforts toward force restructuring, contested logistics, sustainment, and global posture alignment. The FY26 budget request of ~$185B reinforces this shift, prioritizing O&M, munitions sustainment, depot and organic industrial base capacity, and mission-aligned infrastructure across the Indo-Pacific, Europe, and homeland, while continuing divestment from legacy systems to fund readiness and resilience.

· WESTCOM – The Army stood up a new Western Hemisphere Command, consolidating Army North, Army South, and Army Forces Command under a single headquarters at Fort Bragg. Aligned with the National Security Strategy’s (NSS) renewed focus on the Western Hemisphere, WESTCOM represents a fundamental change in how the Army organizes and sources missions – reducing command touchpoints while expanding geographic scope. For contractors, this shift required realignment of BD, capture, and regional expertise heading into FY26 – an area where PTS is well positioned with dedicated talent leads, SESs, SMEs, and seasoned experts to support contractors navigating the transition.

In parallel, the Army is elevating installation readiness and sustainment, with IMCOM assuming a more central role in infrastructure, services, and force enablement, signaling continued demand for base operations, MILCOM, training, and logistics support. PTS Precision Expert Omar Jones, US Army Lieutenant General (Ret.), highlights

 

[BR4] evolving IMCOM priorities and what to expect in 2026.

 

 

Key Programs and Demand Signals:

· LOGCAP VI – The Army accelerated industry engagement for the next evolution of its $82B global sustainment vehicle, with an in-person industry day scheduled for January 26-28. Planning centers on two SATOCs aligned to East and West Strategic Support Areas, alongside CONUS-focused small-business MATOCs. A draft RFP is expected mid-FY26, with awards projected in early FY27. Planning continues around a consolidated construct that integrates LOGCAP, APS, and EAGLE into a single framework. PTS offers a deep bench of LOGCAP leadership and program talent ready to deploy to align teaming and support both prime and subcontract pathways.

· LOGCAP V – As of year-end 2025, ~ $12B (15%) of the $82B ceiling had been obligated across 38 task orders, reflecting slowed execution and a pipeline shift toward FY26 and LOGCAP VI. Insert LOGCAP V Spending charts

 

[BR5] .

 

 

· MAPS – The $50B, 10-year Marketplace for the Acquisition of Professional Services IDIQ advances early FY26, with a pre-solicitation industry walkthrough scheduled for January 28, covering PEOs, C3N, IEW&S, MS, Soldier, EIS, ATEC, and installation operations.

· Next Generation Command & Control (NGC2) – Emerging as a critical priority, NGC2 advances a portfolio-based, data-centric C2 architecture informed by lessons from Ukraine, Israel, and INDOPACOM. Industry engagement continues via CSO open through May 16, 2027.

· USACE-CENTCOM – Industry day highlighted $4.2B in active programs and $5.6B in potential future work, signaling sustained MILCON and engineering demand into FY26.

· SOF GLSS2 – Proposals were submitted for the $10.5B SOF Global Logistics Support Services II (GLSS2) contract, covering lifecycle logistics, facilities, and IT across CONUS and OCONUS. Awards are expected in Q3 FY26.

 

As the Army advances sustainment-heavy transformation initiatives – from LOGCAP VI to MAPS and NGC2 – early positioning and execution discipline will be decisive. PTS brings over 25 years of experience supporting global sustainment programs and, through Precision Experts, offers fractional technical SMEs, transitioning SES, Flag Officers, senior industry leaders, key personnel, and capture and BD talent who understand how these programs are structured and where requirements are headed. To explore how these shifts may shape Army opportunities in FY26 and beyond, connect with Jake Frazer.

 

Notable Awards:

· GDIT – $1.25B to modernize U.S. Army Europe and Africa network infrastructure.

· Conti Federal – $97.2M USACE contract for Company Operations Facilities (COF) at Schofield Barracks, Hawaii.

· Raytheon – $512.2M for ISR radar development, production, and sustainment.

· AeroVironment (AV) – Selected for Next-Gen C-UAS missile and awarded $96M for the Long-Range Kinetic Interceptor.

· Peraton –$196M for NETCOM Global Cyber Support.

 

NAVY

 

The Navy entered the year focused on forward presence, contested sustainment, and execution at scale, with acquisition activity increasingly concentrated on extending and adapting existing frameworks rather than launching major new platform programs. The FY26 budget reinforces this posture, with $292.2M in funding for shipbuilding, maintenance, and industrial capacity rather than greenfield platforms.

 

New Era of Maritime Power – The Navy implemented several positive changes that mark a new era of U.S. maritime strength. A significant shift involved canceling the Constellation-Class Frigate program, which will now align more closely with the Coast Guard’s initiatives. This change was announced alongside a pioneering new battleship program, part of the Golden Fleet initiative.

 

NAVFAC EURAFCENT FY25 Execution – NAVFAC Europe Africa Central executed $512M in FY25, strengthening fleet readiness and modernizing shore infrastructure across Europe and AFRICOM. Investments included $240M in sustainment and restoration (a 63% increase over FY24), $75M in new construction awards at NSA Sauda Bay, and $60M in expeditionary execution across 20 countries, reinforcing posture and allied infrastructure capacity in high-demand theaters.

 

· WEXMAC 2.2 (TITUS On-Ramp) – NAVSUP released the WEXMAC 2.2 RFP on December 31 to onramp additional contractors under the TITUS mission through a rolling-admissions process. The solicitation spans 6 phases of military operations, allows offerors to compete for one region, and sets a $55B base-period ceiling for Region 27 (U.S. and Outlying Territories), with proposals due January 30. This follows the Q325 award under WEXMAC 2.1 (TITUS), a $20B vehicle selecting 104 vendors to deliver rapid expeditionary support across the United States and Alaska.

· WEXMAC 2.0 (Worldwide) – ** ** NAVSUP awarded a $20B WEXMAC 2.0 IDIQ in Q125 to support non-commercial expeditionary services and supplies across 15 service and supply categories for contingency operations, humanitarian assistance, and global logistics. The vehicle includes 151 and has issued over 450 task orders, ranging from short-duration support to multi-year awards exceeding $1B, with execution concentrated in the United States, the Indo-Pacific, Europe, and the Caribbean. Notable task orders include two $1.34B detention support contracts; a $78.4M Army logistics services contract, and a $25.1M Marine Corps lodging and catering award supporting Task Force Sapper along the Southern border.

 

Navy OCONUS Base Operations Support (BOS) Program Updates

 

• Bahrain BOS – V2X was awarded a $33.64M modification to the previously awarded contract for BOS services at ISA AB, providing an additional 12 months of BOS services under the basic contract awarded on June 1, 2020, and bringing the total cumulative value to $186.9M.
• BOS Rota (Spain) – JJWWS won a $15.6M modification in November 2025 to continue providing BOS services aboard Naval Station (NAVSTA) Rota, Spain. The contract modification extends BOS services by an additional 12 months, bringing the total contract value to $62.2M.
• Diego Garcia ** ** (British Indian Ocean Territory) – RFIs were collected in July 2024 for the long-anticipated BOS recompete. The incumbent, KBR, continues to perform under bridge arrangements, RFP expected in FY26.
• Sigonella ** ** (Italy) – A pre-solicitation notice issued in Q3 2025 signaled the upcoming BOS recompete covering NAS Sigonella and supported sites. The RFP is expected in FY26; the incumbent is Valiant/Alca JV.
• Souda Bay ** ** (Greece) – IAP Worldwide Services awarded the $58.15 BOS contract in May 2025.
• Camp Lemonnier ** ** (Djibouti) – KBR won the contract in Q2 2025; $476.7M.
• Poland ** ** (Multiple Locations) – V2X is executing a $98M BOS contract to support rotational forces and expand NATO presence along the Eastern Flank.
• Singapore – Centerra Group continues to perform under a $54M contract through 2032.
• Naples ** ** (Italy) – Valiant/Alca JV won a $78M contract in Q1 2025.

 

PTS positions Navy contractors to win and execute the next generation of OCONUS BOS programs. Our network spans former Seabees, Navy Civil Engineer Corps (CEC) officers, licensed engineers, skilled trades professionals, and senior PMO leaders who understand how Navy BOS missions are evolving – toward greater scale, complexity, and operational tempo – and how to deliver under increasingly compressed acquisition and performance timelines.

 

Notable Awards:

 

· V2X wins an $84M Global Contingency Services MAC III task order to support critical water supply systems in the INDOPACOM AOR.

· Lockheed Martin ** ** received a $3.63B modification to provide global logistics, depot support, training, and sustainment services for the F-35 Joint Strike Fighter fleet across U.S. services, FMS customers, and partner nations.

· Bechtel ** ** was awarded $927.6M for production of naval nuclear propulsion components through 2035.

· MEB ** ** secured a $442.1M contract to modernize Dry Dock #3 at Norfolk Naval Shipyard.

· SAIC received a $241.7M IDIQ contract to operate and maintain the Propulsion Test Facility Complex.

· Boeing ** ** was awarded $165.0M for P-8A Poseidon CLS.

· Programs Management Analytics & Technologies ** ** received an $89.0M IDIQ award for production, repair, and engineering support of Tactical Edge Nodes (TEN) systems.

· Manson Construction ** ** was awarded $61.1M to construct lighterage and small-craft facilities at Blount Island Command, supporting Navy and Marine Corps logistics.

· Raytheon ** ** received a $53.8M modification to support production and spares for the AN/SPY-6(V) Family of Radars.

AIR FORCE

 

In 2025, the U.S. Air Force (USAF) prioritized readiness, sustainment, and operational resilience, shifting resources toward contested logistics, munitions replenishment, and base resilient basing. The FY26 budget request of roughly $188B, reinforced by a proposed funding increase for UAF alongside reductions to Space Force topline, signals a focus on near-term warfighting capacity in the Indo-Pacom and Europe. Looking into 2026, USAF opportunities will continue to favor contractors that can deliver sustainment at scale, operate across multiple theaters, and field technology-enabled mission support under compressed timelines and increasingly competitive task-order environments.

 

· AFCAP VI – RFIs were collected in October for a $15B Air Force Augmentation Program (AFCAP) VI multiple-award IDIQ covering contingency planning, deployment, logistics, construction, and sustainment services worldwide. RFP exp Q4 FY26, with awards in 2028.

· AFCAP V ** ** – 81 task orders awarded to date under AFCAP V, representing 48% awarded dollars. With a shared ceiling of $6.4B and a performance period through May 2028, the contract enables rapid acquisition of contingency, humanitarian, peacekeeping, and emergency response services. The vehicle supports a wide range of operational needs, including base operating support, logistics, infrastructure maintenance, engineering, construction, life support, and specialized mission-critical services across international locations.

· AMAC IDIQ – Draft RFI comments collected Jan 9th for this new $10B, 8-yr IDIQ to support unclassified science and technology research and development across the agency. AMAC is intended to be AF Research Laboratory (AFRL)’s standardized access point for air, space, cyberspace, and EW, and cross-cutting technology work with multiple awards under unrestricted and small business pools. Final RFP anticipated in Q2; awards expected by Q426.

 

· AI-Powered Software Development and Modernization – RFIs due Jan 2nd to support market research on current and emerging capabilities within the industry for AI-powered software development and modernization.

 

· OSCARS – AF Cyber advanced its CSO model for cyber operations support, with the Operations Support Cyberspace Awareness and Response Services call now open. Step I submission starts with a white paper due Jan 26.

 

Opportunities like AMAC are about positioning. Companies need SMEs, BD, and capture teams, and leadership aligned today for securing access now, allowing them to compete for downstream task orders. PTS has a large pool of fractional SMEs, a deep bench of BD and capture talent, and experienced leaders to navigate the complexities of upcoming USAF opportunities.

 

· RTX and Anduril completed a successful test of an advanced solid rocket motor under a contract with the USAF’s Research Laboratory Munitions Directorate.

· Akima secured a $369M contract to design, develop, and deliver the T-7A maintenance training system.

· V2X won a $425M F-16 cockpit modernization contract and secured a position on the $980M Automated Test Systems Division’s (ATS) IDIQ contract to sustain critical warfighter operations worldwide.

 

 

 

SPACE

 

Space programs entered 2026 with momentum shifting decisively toward execution. This transition is most viable in Huntsville, where the relocation of U.S. Space Command (USSC) and the rapid scaling of SDA, MDA,SHIELD, and Golden Dome-aligned programs have intensified demand for cleared engineers, system architects, program managers, and space operations leaders. PTS has mapped the Huntsville and national space talent landscape and established pipelines of mission-ready technical and program leadership to support government and industry as space programs scale in 2026. To explore alignment with Space Force and missile-defense initiatives, contact Isaac Khaneles.

Across the market, 2025 reinforced several durable trends: the continued expansion of highly distributed satellite constellations, rapid growth among small commercial and startup players, sustained investment in missile warning and tracking, and continued evolution of launch platforms and range infrastructure. While distributed LEO systems are driving scale and resilience, “Exquisite” high-end constellations remain essential for backbone missions such as advanced sensing, C2, and missile warning that less sophisticated satellites cannot yet perform.

 

· Launch Segment Continues to Enable Growth - SpaceX, ULA, and Blue Origin remain the dominant players, with SpaceX demonstrating significant gains in launch efficiency through its Rideshare program, including deploying up to 140 payloads per single Falcon 9.

· East and Western Range Modernization – Highlighted by Jacob’s $4B contract, it points to sustained investment in the ground infrastructure required to support higher launch cadence and improved coordination.

· Momentum in Lunar and Deep-Space Exploration – Civil space programs advanced steadily, with NASA completing key Artemis II launch rehearsals and initiating the CHAPEA-2 Mars analog mission, reinforcing long-term momentum in lunar and deep-space exploration.

· Missile Defense = Dominant Driver – Missile defense emerged as the dominant driver of space contracting activity, reinforced by new policy momentum behind Golden Dome and expanded industry participation through OTA and IDIQ-style vehicles. The U.S. Space Force (USSF) made clear that proliferated LEO architectures are no longer pilot projects but are now critical components of future missile warning, tracking, and space-based command and control.

 

 

Looking ahead, 2026 is shaping up as a pivotal year for space readiness and deterrence. The USSF is expected to double down on resilience, survivability, and rapid reconstitution in a contested domain, prioritizing systems that can operate through disruption rather than avoid it. Acquisition models will continue shifting toward firm-fixed-price OTAs, continuous competition, and commercially influenced production, favoring vendors that can deliver at speed and scale. Missile defense, particularly space-based sensing, tracking, and interception, will remain the primary growth vector, while autonomy, data transport, and space-domain awareness increasingly converge into integrated architectures rather than standalone programs.

 

 

· SHIELD IDIQ – MDA added 1,086 companies in Q4 to its $151B Scalable Homeland Innovative Enterprise Layered Defense (SHIELD) IDIQ, expanding the total pool to 2,100 firms competing through 2035. SHIELD powers Golden Dome, Trump’s flagship missile defense initiative, covering 19+ technical areas, including AI/ML applications, cybersecurity, data mining, advanced prototyping, and digital engineering. Commercial capabilities now compete alongside legacy primes.

· Tranche 3 Proliferated Warfighter Space Architecture (PWSA) – SDA selected Lockheed Martin, Rocket Lab USA, Northrop Grumman, and L3Harris Technologies for $3.5B OTA awards for 72 Tracking Layer satellites under Tranche 3 of the PWSA, marking a step-change toward a globally persistent missile warning and tracking constellation tightly coupled with a high-speed space data backbone. Rocket Lab’s selection to deliver more advanced missile-tracking space vehicles underscores growing confidence in non-traditional and vertically integrated space manufacturers as SDA moves fully into production mode.

· PTS-G IDIQ ($4B) – Astranis, Boeing, Intelsat, Northrop, and Viasat were awarded spots on the Protected Tactical Satcom-Global contract for design and demonstration work.

· Space-Based Interceptors (SBI) Prototypes – On December 19, USSF collected requests for a prototype proposal (RPP) for advanced technologies supporting space-based intercept concepts, reflecting renewed interest in layered missile defense architectures capable of countering hypersonic and next-generation ballistic threats. While still exploratory, this effort signals potential long-term opportunity across interceptors, tracking sensors, propulsion, autonomy, and battle management software, with early investments likely to flow through studies, prototypes, and OTAs in 2026.

Notable Awards:

 

· IERUS won a $474.9M contract for multiple radar platforms testing.

· NSSL – SpaceX and United Launch Alliance were selected to perform the first seven launches under the National Security Space Launch Program (NSSL). SpaceX will receive $714M for 5 NSSL launches, and ULA will receive $428M for 2 launches. Earlier in 2025, the Space Force awarded NSSL Phase 3 Lane 2 contracts worth $13.7B combined to SpaceX, ULA, and Blue Origin to launch missions carrying high-value payloads in support of national security objectives.

· Empower AI secured $200M contract to modernize critical infrastructure across 80+ Army installations.

· KBR wins a $99M DICE task to advance the digital engineering ecosystem.

 

 

 

 

 

 

 

 

 

 

 

DHS

 

While the Pentagon remains the federal government’s largest buyer, DHS emerged in 2025 as the largest non-DoD security spender and the fastest-scaling contracting agency, driven by the OBBB funding and an unprecedented expansion of enforcement, detention, aviation, and infrastructure programs.

 

$171B DHS Enforcement Expansion Under OBBBA
A generational funding surge is driving construction, logistics, mobility, and contingency contracting demand

 

 

 

· ICE Skip Tracing Services – Proposals were collected on 11/18 for a potential $180M contract to provide skip tracking services.

· CBP Design-Build Construction IDIQ – CBP released a solicitation for up to 10 multiple-award IDIQ contracts with a $10B ceiling over five years to design and construct CBP facilities nationwide, including checkpoints, sector headquarters, Border Patrol stations, and aviation facilities. Phase 1(A) submissions were due January 9, 2026, with Phase 1(B) due January 30, 2026.

 

Notable Awards:

 

· CBP Southwest Border Construction IDIQ (2025-2030) – In October 2025, CBP awarded 11 vendors an estimated $4.5B IDIQ for the construction of Smart Wall along the U.S. Southwest Border. The total value of 10 awarded contracts in 2025 reached $8B.

· BMMS 2.0 – AnaVation, BAH, CGI, Deloitte, IBA, and Steampunk were awarded a collective $900M to provide enterprise business management, program support, and operational services across CBP.

· CSI Aviation received a $1.5B contract from ICE for dedicated and on-demand chartered flight services supporting the ICE Air Program.

· Acquisition Logistics won $1.34B from ICE for detention, transportation, and medical services at Camp East Montana Temporary Detention Center in El Paso, TX. The contract is issued under the WEXMAC 2.0.

 

STATE

 

The Department of State (DoS) underwent one of the most consequential restructurings in its history, reflecting a fundamental shift in how U.S. diplomacy and foreign assistance are applied as instruments of strategic competition.

· USAID Is Gone! –DoS formally dismantled USAID and absorbed ~15% of the legacy global health and food security programs, bringing in 40 people. The transition, however, resulted in the termination of more than 5,300 of 6,200 programs (~$70B), the reduction of 2,000+ positions, the consolidation of nearly 50% of bureaus and offices, and the centralization of foreign assistance authority within regional bureaus.

· Foreign Assistance Retooled – Foreign assistance is being reoriented toward bilateral, security-aligned, and commercially focused instruments, including the creation of the $2.9B America First Opportunity Fund (A1OF) to enable faster, more flexible deployment of economic, security, and strategic aid aligned with U.S. interests.

· Global Health Reset – The FY26 Budget ** ** requests $28.5B for DoS, with global health declining from $10B to 3.8B, signaling a shift away from multilateral programming toward bilateral agreements, targeted re-competes, and tighter performance oversight.

 

The DOS spend under management (despite budget cuts and reorganizations) is expected to grow from $10B to ~$14B, creating new opportunities for the industry. To understand what DoS transformation means for contractors in 2026 – from closing out roughly 85% of legacy USAID work to navigating leaner budgets, smaller ceilings, heightened FAR scrutiny, and a growing acquisition talent gap – listen to the Future of GovCon podcast featuring Mike Derrios, former DoS Chief Procurement Officer and one of the most experienced acquisition leaders in government.

 

 

Featured Opportunities:

 

· GLOBALCAP (IDIQ, $5B / 10yr) – A significant opportunity for contractors in 2026. Awarded 7/1 to 16 vendors, consolidating AFRICAP and GPOI into State’s new flagship contingency vehicle for stabilization, logistics, training, equipment, and construction. No task orders released in 2025.

· GATA III (IDIQ, $765M/5yr) – Remains under protest post-award. Task order activity to start in Q126.

· GLOBAL ADVISORY (IDIQ, $250M / 5yr) – Under evaluation; proposals collected 5/6. Awards expected in Q126.

 

As DoS consolidates procurement and relies more heavily on IDIQ vehicles such as GLOBALCAP or GATA, winning in 2026 will depend on early capture positioning, key personnel, and experienced BD leadership. With more than a decade of success building winning pursuit teams, PTS supports contractors by deploying fractional BD, capture, and proposal leaders who know how to shape opportunities and drive wins in the DoS market. Contact Jason Hutchison for details.

Defense Logistics Agency

 

In 2025, DLA sharpened its focus on execution, transformation, and industrial resilience, reinforcing its role as the backbone of global sustainment amid sustained operational demand. The establishment of a new subordinate command for weapon systems support in Q4 signaled a structural shift toward tighter alignment of sustainment, engineering, and lifecycle management as platforms grow more complex. As agency leadership elevated workforce adaptation, digital modernization, and industry integration, DLA increasingly framed supply-chain security, data visibility, and execution speed as decisive enablers of warfighting readiness moving forward.

 

Subsistence Prime Vendor (SPV)

· Southwest Asia and Eastern Africa (SWAEA) – RFP dropped in December, proposals due 1/26.

· Middle East – Current SPV program for Iraq, Jordan, Kuwait, and Syria is in its final option period ending in Nov 2026. Recompete expected to start by Q226.

· Southern Europe – RFIs collected in April; RFP expected in Q126, covering land bases in Southern Europe and Navy ops in the Mediterranean.

· Northern Europe – The incumbent for the $1.1B SPV Northern Europe contract received a 400+ day extension through Dec 2026; awards expected by Q326. The expansion of Polish Provider Logistics Support (PPLS) is expected to decrease the program scope.

Maintenance, Repair & Operations (MRO)

· Pacific Region – RFIs collected in Q2, RFP now anticipated in Q226.

· Europe and Africa – Proposals collected in Q3; awards anticipated Q126.

As DLA sharpens its focus on execution, modernization, and industrial resilience, the ability to scale talent to meet global sustainment demand is critical. With decades of experience supporting SPV, MRO, energy, and expeditionary logistics programs, PTS provides contractors with supply-chain, program, and operational leaders who understand how DLA plans, procures, and executes at scale. As delayed recompetes and transition activity move into FY26, PTS is well positioned to help clients secure the right expertise to compete, transition, and perform across DLA’s worldwide mission set.

 

Notable Awards:

 

· ASRC was awarded a 5yr, sole-sourced, $1.17B contract for 3rd generation chemicals, petroleum, oils, and lubricants (ChemPOL).

· DLA Energy awarded Motor Oil (Hellas) a $29.4M contract for naval distillate fuel (F-76) to support U.S. military operations across Europe and the Mediterranean.

· Coastal Pacific won a $871M contract from DLA TS to support warfighters in the INDOPACOM AOR.

· DLA Aviation awarded Pratt & Whitney a $1.1B F100 engine sustainment contract.

 

GSA

In 2025, GSA emerged as a central driver of federal acquisition reform, combining FAR modernization with a rapidly expanding procurement footprint. The agency advanced MAS Refresh 30, accelerated OASIS+ ** ** as the next-generation services vehicle, and launched FedRAMP 20x, backed by OMB, to modernize cloud authorization through greater automation, reciprocity, and speed. At the same time, GSA assumed a larger role in consolidating federal IT acquisition under EO 14240, working alongside OMB, NASA, and NIH to absorb mission scope and projected spend across major GWACs, while rolling out OneGov to centralize IT, AI, and cloud procurement. Collectively, these moves position GSA to manage more than $400B in projected federal procurement, fundamentally reshaping how contractors will access the market heading into FY26.

· OASIS+ Reopens! –GSA announced a forthcoming amendment to all six OASIS+ contracts, releasing draft domain qualification matrices and scorecards for all 13 service domains and outlining modifications for existing awardees. Starting January 12, OASIS+ will enter Phase II, reopening solicitations continuously and introducing 5 new service domains, expanding the program from 8 to 13 total domains. PTS stands ready to help you prepare and compete with confidence by matching the requirements with Precision Experts. Reach out to Jason Hutchison for details.

· 2GIT BPA – GSA’s 2nd Generation Information Technology BPA Follow-On (2GIT), $5.5B, one-stop shop for IT hardware, software, ancillary supplies and services; 5-year ordering period, mandatory for USAF, replacing NETCENTS-2 Products IDIQ. RFI issued in August 2025, RFP expected Q2 FY26.

 

EUROPEAN DEFENSE MARKET

 

Europe enters 2026 with record defense spending but mounting execution risk. EU defense outlays reached approximately €381B in 2025 (~ 2.1% of GDP), with most NATO allies meeting the longstanding 2% benchmark and an ambitious new 5% defense investment pledge agreed at the 2025 Hague Summit. Under the new framework, members are expected to allocate 3.5% of GDP to core defense requirements (personnel, equipment, major acquisitions, and readiness), with an additional 1.5% allocated to critical infrastructure, cyber resilience, and industrial base expansion. This two-component approach broadens what qualifies as a strategic defense effort and reflects Europe’s dual need to rapidly field conventional capabilities. The strategic question remains whether Europe can convert budgets into fielded capability at speed and scale, amid industrial bottlenecks, workforce shortages, and fragmented procurement.

 

 

2026 Demand Drivers

 

· ReArm Europe / Readiness 2030 – EU framework to scale production and deployable capability across defense, ammunition, drones, cyber, space, and military mobility. Anchored by SAFE (€150B loan instrument) and expanded EDF, driving demand for manufacturing capacity, logistics infrastructure, and multinational procurement.

· Germany: Execution Test Case – Despite the €100B special defense fund, 2025 exposed procurement and industrial bottlenecks. FY26 success hinges on contracting speed, production scale, and sustainment modernization – critical to Europe’s overall deterrence credibility.

· Industrial Scaling – Europe is on a trajectory toward ~€800B ** ** in annual defense spending by 2030, potentially supporting up to 1.2M jobs, shifting FY26 demand decisively toward production throughput, second sourcing, and sustainment.

· Ukraine – European support transitioned to structured, multi-year warfighting assistance, increasing demand for munitions manufacturing, logistics, training, ISR, and sustainment, as Europe assumed a greater burden.

· Eastern Flank & Baltics – Requirements cluster around mobility corridors, ammunition storage, base hardening, air/missile defense, and maritime ISR and undersea infrastructure protection. The Baltic Sea had emerged as one of Europe’s most sensitive security theaters, defined by hybrid threats to undersea energy, power, and communications infrastructure.

· United Kingdom – Defense spending rises from £60.2B (FY25) to £62.2B (FY26), projected £73.5B by FY29, focused on munitions (£6B), autonomy (£4B+), directed-energy weapons (~£1B), and the Defence Nuclear Enterprise (£11.8B FY26), sustainment, and NATO-aligned readiness.

· Europe Remains Anchored in U.S. Defense Planning – The FY26 NDAA reaffirmed Europe as a core pillar of U.S. defense posture, locking 76,000+ U.S. troops, preserving the U.S. role as SACEUR, and authorizing $175M for the Baltic Security Initiative, reinforcing a sustained U.S. military and industrial commitment as Europe accelerates rearmament.

 

2025 Contract Signals:

 

· Saab: $1.3B GlobalEye (France); $2.3B A26 submarines (Poland).

· Rheinmetall: Vehicles, ammunition, Skyranger C-UAS, Lynx IFV (Leonardo JV).

· BAE Systems: Type 26 frigates (Norway).

· MBDA: SAMP/T adoption (Denmark); 200+ Aster missiles (France/Italy); $414M DragonFire laser (UK).

· RTX: SPY-6(V)1 (Germany); $168M Patriot FMS (Romania); expanded Patriot orders across Europe.

As Europe moves from budgets to execution, talent and delivery capacity are the critical constraints. With over half of its team based in Europe and deep ties to NATO / NSPA, and the EU, PTS supports contractors with senior leaders, engineers, program managers, and technical specialists who understand how European defense programs are planned, procured, and executed. Contact Jim Bowden, PTS European Defense Market Lead.

 

NATO/NSPA

NATO allies committed in 2025 to rebuilding deterrence and industrial capacity, targeting 5% of GDP by 2035, equivalent to €1T, with spending projected to reach ~€800B by 2030. Defense budgets are expected to rise by €300B over the next 5 years, accelerating demand for munitions, sustainment, infrastructure, energy resilience, and digital enablement across the Eastern and Southern Flanks and the High North.

 

 

NSPA continues to scale as NATO’s logistics and procurement engine:

· AWACS modernization sustainment extending service life beyond 2035.

· €1B+ ammunition framework under the Allied Ammunition Support Partnership.

· Energy-efficient base upgrades across Eastern and Southern Europe.

· Record SAC airlift missions supported by new logistics service agreements.

· AI-enabled Digital Procurement & Analytics Environment

NATO Communications and Information Agency (NCIA) is expanding rapidly as NATO’s digital integrator:

· Sovereign Cloud & AI: Google Distributed Cloud for classified NATO workloads at JATEC (Poland).

· Deployable CIS (DCIS): Multi-location contractor-supported network through 2030.

· NATO HQ IPTV & digital signage modernization (Brussels).

 

In a special bonus episode of PTS’s The Future of GovCon Podcast, Lance Landrum shares direct insight from the NATO Industry Forum on how alliance strategy is turning into real operational and industrial demand. Drawing on his experience across NATO and multinational defense roles, Landrum highlights the shift toward execution focused priorities, including munitions capacity, sustainment, logistics resilience, and energy security across the Eastern Flank and the High North. He underscores that success in the NATO ecosystem will increasingly favor companies that understand alliance decision making, align early with NSPA and NCIA demand signals, and can operate effectively across multinational frameworks. You can listen to the full episode here.

 

NSPA / NCIA Industry Days & Engagements:

· NCIA 2026 Technology & National Industry Days | Focus: C-UAS, ISR technologies | Poland / Romania | Pre-bid conference in February 2026.

· NSPA Common SHAPE and NSPA Commercial Fuel Support Industry Day | Luxembourg | 8 April 2026 | Focus: fuel business opportunities with NATO and NSPA | Register by Jan 31.

· NSPA’s 11th Night Vision Surveillance Equipment (NVSE) Conference/Industry Day | Hungary | 26-28 May | Focus: Sniper Weapon sights, and night vision and thermal devices for medium (MMG) to heavy machine guns (HMG) up to 800m | Register by Jan 22.

· Track upcoming NSPA events here.

NATO’s spending is translating into tangible opportunities for firms that can align talent, pricing, technical capability, and industrial scale with alliance priorities. To compete effectively, PTS NATO Lead and Precision Expert Colonel Philippe “Boz” Rogers, USMC (Ret.), brings recent on-the-ground engagement and operational insight to help companies position, win, and scale across the NATO ecosystem.

 

 

Mergers & Acquisitions

 

Government contracting M&A in 2025 shifted decisively from the growth-driven surge of recent years to a more disciplined, capability-focused market. While overall deal volume declined modestly compared to 2024, transaction quality improved as buyers prioritized mission relevance, contract durability, and capability depth over scale alone. Valuations compressed for labor-heavy and vehicle-dependent services firms, while assets aligned with defense modernization, space, cyber, ISR, missile defense, and international programs continued to command premiums.

 

Compared to 2024, 2025 marked a reset toward resilience, margin protection, and long-term relevance, signaling that M&A has become a core tool for portfolio survival and competitive positioning rather than opportunistic expansion. Looking ahead to 2026, deal activity is expected to re-accelerate selectively as firms prepare for major pursuits across federal agencies.

 

 

 

 

 

 

 

Noteworthy Transactions:

 

· VTG expands with acquisition of Miklos Systems — VTG acquired MSI, a Virginia-based tech services firm focused on cloud, cyber, and systems engineering, as part of its strategy to strengthen its national security market footprint.

· Peerless Technologies acquires QED Systems — Maryland-based defense and systems-engineering firm QED Systems was added to Peerless’ portfolio to expand capabilities in C4ISR, logistics, and R&D support for defense customers.

· Synergy ECP acquires NetServices — Synergy ECP expanded its software engineering, cybersecurity, and systems engineering offerings by acquiring NetServices, enhancing its mission-critical IT services capacity.

· HawkEye 360 acquires Innovative Signal Analysis — HawkEye 360, a space-based RF intelligence provider, acquired ISA to integrate signal-processing and analytics capabilities into its RF data platform.

· Presidio acquires Achieve One — Presidio strengthened its cloud and digital transformation capabilities with this acquisition, broadening its IT services reach in the Mid-Atlantic and public sector markets.

· SAIC completes acquisition of SilverEdge Government Solutions — SAIC added cybersecurity, intelligence analysis, and AI platform capabilities with this $205M transaction.

· Veritas Capital to acquire MetroStar Systems — Veritas announced an agreement to acquire AI-enabled digital transformation services provider MetroStar, enhancing its federal IT and digital services portfolio.

· TransDigm to acquire Stellant Systems ($960 M) — A major industrial acquisition adding RF/microwave tech to TransDigm’s defense portfolio.

 

 

FMS

With total Foreign Military Sales (FMS) approvals exceeding $80B in 2025, the year marked a decisive shift in how the United States employs defense exports as a tool of geopolitical alignment and deterrence. Activity across the year reflected a sustained, regionally targeted effort to move high-end capabilities into priority theaters. The concentration of advanced systems in the Indo-Pacific, alongside continued reinforcement of air and missile defense across Europe and NATO’s Eastern Flank, underscored Washington’s intent to convert security commitments into fielded capability while shaping force posture in increasingly contested environments.

The unprecedented FMS volume unfolded in parallel with a sweeping overhaul of the foreign defense sales enterprise, codified through the FY26NDAA and reinforced by executive action to centralize FMS under acquisition and sustainment authorities, accelerate approvals, and better align foreign demand with U.S. industrial capacity. Together, these reforms signal a durable shift toward treating FMS as a strategic delivery mechanism, one designed to reduce backlog, increase predictability for partner nations, and strengthen the defense industrial base as global demand for U.S. systems continues to rise.

· Indo-Pacific (~$12.6B) – Taiwan dominated Q4 approvals with $10.9B+ for HIMARS, M109A7 self-propelled howitzers, ALTIUS-600/700 UAS, Tactical Mission Network software, and missile inventories (Javelin, TOW), reinforcing layered deterrence against peer threats. Additional approvals included Japan ($100M) for Aegis destroyer support; Korea ($112M) for Small Diameter Bombs; Singapore ($353M) in construction services, logistics, and program support at the Ebbing Air National Guard Base to improve operational readiness and interoperability with U.S. and coalition forces; and India (~$93M) for Javelin missiles and Excalibur artillery projectiles.

· Europe / NATO (~$8.3B) – European approvals centered on air and missile defense, maritime surveillance, and NATO interoperability, led by Germany ($3.5B) for SM-6 and SM-2 missiles and Denmark ($3.2B combined) for P-8A maritime patrol aircraft, AMRAAM-ER, and AIM-9X missiles. Additional approvals included Poland ($200M) for training and logistics, Spain ($200M) for F404 engine components, Belgium ($79M) for Hellfire missiles, Italy ($301M) for AGM-158/B-2 missiles, the UK ($200M) for Navy multiband terminals, NATO/NSPA ($136M) for Stinger SLEP components, and Ukraine ($105M) for Patriot air defense system sustainment.

· Middle East (~$1.6B) – Approvals focused on sustainment, logistics, and force readiness, including Saudi Arabia ($1B combined) for cooperative logistics support and training, Bahrain ($445M) for F-16 sustainment, Iraq ($100M) for communications infrastructure, and Lebanon (~$91M) for medium tactical vehicles supporting internal security.

· North America (~$1.75B) – Canada to receive M142 HIMARS and related equipment for an estimated cost of $1.7B, reinforcing long-range fires interoperability and continental defense alignment with U.S. forces.

 

PTS Update

Q4 wrapped up the year with energy, strong connections, and a visible presence across the GovCon ecosystem. From major industry stages to more intimate, purpose-driven gatherings, Q4 reflected how PTS shows up best – bringing the right people together, asking the right questions, and staying close to the conversations that matter as clients look ahead to 2026.

· AUSA Annual Meeting & Exposition (Washington, DC) – In October, the PTS team joined more than 40,000 attendees at AUSA’s flagship event. Even amid uncertainty about a potential government shutdown, the halls were full, and the conversations were real. Discussions centered on readiness, acquisition speed, and what comes next as agencies and industry reset for a new fiscal year.

· PTS AUSA Luncheon – On the heels of AUSA, PTS hosted its second annual AUSA Luncheon, welcoming over 80 clients and friends. It was a chance to step away from the noise, share a meal, compare notes, and talk candidly about where the market is heading. These are the moments where trust is built and where early FY26 priorities start to take shape.

· GovCon Expert Matchmaking Event – One of the highlights of Q4 was a focused GovCon Expert Matchmaking Event, building on the growth of Precision Experts. The format was simple by design: senior industry leaders paired one-on-one with former SESs, flag officers, and technical experts for conversations aimed at real outcomes. The response reinforced what we’re seeing across the market: firms want flexible, senior-level expertise they can plug in quickly as strategies and captures evolve.

· Staying Close to the Market – Julie kept the momentum going by attending the PSC Defense Conference in late October, followed by the POC Homeland Security Conference in mid-November, keeping PTS closely aligned with defense and DHS customer priorities.

· Baird Defense & Government Conference – In November, Andy and Jake joined the Baird Defense & Government Conference, engaging with executives and investors on how capital, strategy, and talent are shaping GovCon planning for FY26.

· AFCEA TechNet Europe (Frankfurt, Germany) – To close out the year strong, Jake and Nevenka headed to AFCEA TechNet Europe in early December. Conversations there reinforced the growing importance of European defense, transatlantic coordination, and specialized talent as readiness and execution demands accelerate.

· Year-End Industry Gatherings – The quarter ended on a high note, with Andy and Julie participating in PSC and ISOA holiday events, a clear reminder that, even in a demanding market, this industry is built on relationships!

As we turn the page to 2026, one theme keeps coming up: organizations want partners who understand both the mission and the people behind it. That’s where PTS does its best work – helping clients move faster, think more clearly, and connect with the expertise they need to compete and deliver. We’re ready for what’s next.

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