Government Contracting and Procurement

The federal government is the largest single buyer in the world, spending more than $700 billion a year on contracts for everything from fighter jets and ships to software, consulting, construction, and office supplies. The Defense Department accounts for about two-thirds of contract spending. Contracting grew rapidly during World War II and the Cold War, and today contractors carry out a large share of federal work, from building weapons to running information technology systems and processing benefit claims.

Purchases are governed by the Federal Acquisition Regulation, issued in 1984, along with agency supplements and the Competition in Contracting Act of 1984, which requires full and open competition except in specified circumstances. Agencies award contracts through sealed bidding, negotiated proposals, and governmentwide vehicles such as the General Services Administration's schedules, and must set aside a share of contracts for small businesses, with a governmentwide goal of 23 percent. Losing bidders can file protests with the Government Accountability Office or the Court of Federal Claims.

Procurement has long drawn criticism for cost overruns on major weapons and technology programs, slow and complex rules, and the power of large contractors, and GAO has listed Defense Department acquisition as a high-risk area for decades. In 2025 executive orders directed a sweeping rewrite of the Federal Acquisition Regulation to remove requirements not mandated by statute, and moved to consolidate purchasing of common goods and services at the General Services Administration, while thousands of contracts were canceled as part of cost-cutting efforts. Supporters said the changes would cut red tape and waste, while critics warned that weaker rules could reduce competition and accountability.