The headlines say the government is cancelling billions in contracts. The data says federal agencies spent $681 billion on contracts in FY2025. Both are true.
The real DOGE impact on government contracting is not what the headlines suggest. It is whether right now is actually the best time for a small business to get in.
If you have been watching the news about DOGE (the Department of Government Efficiency) and wondering whether government contracting is still worth pursuing, this article gives you the real numbers, the protected programs, and a clear entry plan. No speculation. No vendor pitch. Just verified facts you can act on.
What You Will Learn
- Know exactly what DOGE has and has not done to federal contracting, with verified numbers
- Identify which agencies and contract types are growing despite the cuts
- Understand why Congress rejected most DOGE spending proposals and what that means for your business
- Evaluate whether your industry is positioned for government contracting in 2026
- Build a practical entry plan that accounts for current realities
- Find the specific programs that still guarantee small business contract dollars by law
What Is DOGE and Why Does It Matter?
DOGE stands for the Department of Government Efficiency. It launched on January 20, 2025, as a temporary organization inside the Executive Office of the President. Its job: review federal spending, cancel contracts it considers wasteful, and modernize government technology.
The key word is temporary. DOGE is scheduled to end on July 4, 2026. It is not a permanent agency. It does not write laws or change regulations. It recommends contract terminations and tracks claimed savings on its website at doge.gov.
For anyone thinking about government contracting, DOGE matters because it created real uncertainty. Contracts got cancelled. Agencies paused spending. The news made it sound like the whole market was shutting down. But the actual numbers tell a different story. You can also find broader context in our federal contracting news roundup for 2026.
The Real DOGE Impact on Government Contracting: What the Numbers Show
DOGE has terminated about 13,400 federal contracts. That sounds enormous until you consider the federal government manages hundreds of thousands of active contracts at any given time. The cuts are real, but they are not the whole picture.
The Savings Debate
DOGE claims roughly $61 billion in savings from contract terminations. Independent analysts disagree. The Brookings Institution estimated about $20 billion in verifiable cuts. An NPR review of more than 1,100 contracts found that DOGE’s calculations overstate savings by billions of dollars.
Here is the number that matters most: about 40% of cancelled contracts are expected to produce zero savings, per Federal News Network reporting. Some cancellations actually increased short-term costs because of contract wind-down expenses.
Congress Said No to Most Cuts
The Washington Times sampled 30 programs that the administration proposed slashing or eliminating. Congress kept 29 of them. Only one was eliminated entirely. Most funding was held flat or actually increased in the FY2026 budget bills.
That matters because Congress controls the budget. Executive orders can recommend cuts. Only Congress can make them permanent.
Who Got Hit Hardest
The cancellations were not random. They targeted specific contract types:
- Consulting contracts, especially in management and advisory services
- DEI (Diversity, Equity, and Inclusion) programs
- Administrative support contracts
- USAID, where 83% of contracts were cancelled
- Foreign aid programs
Small businesses absorbed 59% of termination actions, even though they held only 37% of the de-obligated dollars. That means small businesses were hit more often by count, but the largest dollar cancellations targeted big contracts at large firms.
The total spending picture stayed large. Federal agencies spent $681 billion on contracts in FY2025 per USAspending.gov. That is down from $775 billion in FY2024, but still an enormous market. And when the Department of Defense finishes reporting, analysts expect the FY2025 total to cross $730 billion.
Which Agencies and Industries Are Growing
Not every part of the government is cutting back. Defense, homeland security, and technology spending are all growing in 2026.
Where the Money Is Going
| Sector | Trend | Why |
|---|---|---|
| Department of Defense | Growing | $16 billion+ requested for cybersecurity in FY2026. AI and autonomous systems expanding. |
| Department of Homeland Security | Growing | Billions in new funding from the Big, Beautiful Bill Act (July 2025). |
| Veterans Affairs | Stable | Veterans programs remain a bipartisan priority with protected funding. |
| Federal IT (all agencies) | Growing | IT contract spending hit roughly $130 billion annually, up from $120 billion in FY2023. |
| Cybersecurity | Growing | Federal cybersecurity spending grew from $18 billion in FY2020 to over $32 billion in FY2025. |
| USAID / Foreign Aid | Sharply cut | 83% of USAID contracts cancelled. |
| DEI / Admin Support | Cut | Primary target of DOGE terminations. |
NAICS Codes Worth Watching
If you are picking your NAICS codes or thinking about which industries to target, these codes align with growing federal priorities:
- 541512: Computer Systems Design Services
- 541330: Engineering Services
- 541519: Other Computer Related Services (IT consulting, cloud, AI)
- 237310: Highway, Street, and Bridge Construction
- 561210: Facilities Support Services
The pattern is clear. Agencies aligned with defense, border security, veterans, and technology modernization are spending more. Agencies focused on foreign aid and social programs absorbed the biggest cuts. If your business serves the growing side, the DOGE impact on government contracting works in your favor.
Why Small Business Set-Asides Are Not Going Away
This is the most important section of this article. If you take away one thing, let it be this: federal law requires the government to award a minimum percentage of contracts to small businesses, and no executive order can override a statute.
The Legal Floor
Under 15 U.S.C. 644(g), every federal agency must meet these small business contracting goals:
| Category | Goal | What It Means |
|---|---|---|
| Small Business (overall) | 23% of prime contract dollars | The government must award nearly one in four contract dollars to small firms. |
| Small Disadvantaged Business (SDB/8(a)) | 5% | Includes 8(a) Business Development Program participants. |
| HUBZone | 3% | Businesses in Historically Underutilized Business Zones. |
| Service-Disabled Veteran-Owned (SDVOSB) | 3% | SDVOSB-certified businesses. Mandated spending of roughly $15 billion annually. |
| Women-Owned Small Business (WOSB) | 5% | Businesses majority-owned by women. |
These are not suggestions. They are statutory requirements. In FY2024, the government actually exceeded its own goals, awarding 28.8% of prime contract dollars to small businesses. That came to $183.5 billion, per the SBA’s annual procurement scorecard.
What About the DoD Set-Aside Review?
You may have heard that the Department of Defense (DoD) announced a review of all small business set-aside contracts over $20 million. That is real. It covers 8(a), HUBZone, SDVOSB, and WOSB contracts, per executive guidance issued in early 2026.
But context matters. This review targets large set-aside contracts at the $20 million+ level. Beginners do not compete at that level. New contractors typically start with micro-purchases under $15,000 (as of 2026) or simplified acquisition contracts under $350,000 (as of 2026). Those are not under review.
And the review cannot eliminate the statutory requirement. Even if specific large contracts are terminated, the agency still must meet its 23% small business goal. The dollars get redirected, not deleted. Per the FAR Part 19 rules, contracting officers are required to consider small business set-asides for every acquisition.
The Re-Award Pattern
Here is something the headlines miss. When large contracts get cancelled, agencies do not stop needing those services. In previous cost-cutting cycles, agencies have typically re-awarded a significant portion of cancelled contracts within 12 to 18 months, as the underlying needs remained.
When agencies break large cancelled contracts into smaller pieces, those smaller pieces are more likely to qualify for small business set-asides per SBA size standards. The disruption can actually create more entry points for new contractors.
The Real Risk: SBA Staffing
The genuine concern is not about the programs themselves. It is about the people who run them. The SBA lost 43% of its workforce under restructuring initiatives. That means fewer people processing certifications, fewer counselors available, and longer wait times for support services.
The programs still exist. The legal requirements still apply. But getting help may take longer than it used to. Plan for extra processing time if you are applying for 8(a), HUBZone, or other SBA certifications.
Ready to take the first step? Your local APEX Accelerator offers free one-on-one counseling for new government contractors. They can help you identify opportunities in your industry and walk you through registration. Find your nearest APEX Accelerator here. The service costs nothing.
What Happens After DOGE Ends on July 4, 2026
DOGE’s executive order includes a built-in expiration date: July 4, 2026. The bulk of contract termination activity has already wound down.
The post-DOGE outlook is stabilizing. Defense contractors and technology firms are seeing renewed investor confidence. The administration’s spending priorities are shifting from austerity toward what it calls “Peace Through Strength,” with expanded military and infrastructure budgets.
Some changes may stick around. The FAR overhaul, contract consolidation efforts at GSA, and the push toward IT modernization were already in motion before DOGE and will likely continue after it ends. But the wave of mass contract terminations is not expected to repeat.
For someone entering government contracting now, the timing is actually favorable. You spend the next few months getting registered and building your materials. By the time you are ready to bid, DOGE will be over and agencies will be spending their FY2026 budgets.
Is Government Contracting Still Worth It in 2026?
Yes. Here is why.
The federal government is the largest single buyer of goods and services on the planet. It will spend over $700 billion on contracts this fiscal year. DOGE trimmed some of that spending, but it did not fundamentally change the size of the market.
Entry-Level Opportunities Were Not the Target
DOGE went after large consulting contracts, not micro-purchases under $15,000 (as of 2026) or simplified acquisitions under $350,000 (as of 2026). Those entry-level contracts, the ones where new small businesses typically start, were not on DOGE’s radar.
The Barriers Have Not Changed
Registering on SAM.gov is still free. Building a capability statement costs nothing but your time. Finding opportunities on SAM.gov is free. None of the steps a beginner takes to enter government contracting were affected by DOGE.
Less Competition, More Openings
Some contractors are pulling back because of uncertainty. That means less competition for those who stay. The number of small businesses participating in the federal market has declined 49% since FY2010, per industry data tracked by Deltek. Every business that exits creates space for one that enters.
If You Already Have an Affected Contract
This article is for people thinking about entering government contracting. If you already hold a federal contract that was terminated or received a stop-work order under DOGE, you need different guidance. Our sister site has a detailed financial triage guide: DOGE Contract Cancellations: Financial Triage for Affected Contractors. It covers your recovery rights under FAR Part 49, including what costs you can recoup and how to file a termination settlement proposal.
Your Entry Plan: Five Steps That Still Work
The path into government contracting has not changed. Despite the DOGE impact on government contracting headlines, nothing about the entry process changed. These five steps work the same today as they did before January 2025.
- Register on SAM.gov. Go to sam.gov and click “Get Started.” Registration is free and takes about an hour. You will get a UEI (Unique Entity Identifier) and a CAGE code as part of the process. Our step-by-step guide walks you through it.
- Pick the right NAICS codes. Choose codes that align with growing sectors: IT, cybersecurity, engineering, construction, facilities management. Avoid codes concentrated in areas that took heavy DOGE cuts (foreign aid consulting, DEI training). Our NAICS code guide explains how to choose.
- Build your capability statement. This is a one-page document that tells agencies what your business does, who you have worked for, and what makes you qualified. It costs nothing to create. Use our free template.
- Start small. Look for micro-purchases under $15,000 (as of 2026) and simplified acquisitions under $350,000 (as of 2026). These contracts have fewer requirements, faster award timelines, and were not affected by DOGE. Our guide shows you where to find them.
- Connect with your local APEX Accelerator. These are free counseling centers funded by the Department of Defense that help small businesses win government contracts. Find yours at aptac-us.org. Wait times may be longer than usual because of SBA staffing cuts, so reach out early.
That is the same five-step process we recommend in our how to start government contracting guide. DOGE did not change any of it.
Frequently Asked Questions
What contracts has DOGE cancelled?
DOGE has terminated approximately 13,400 federal contracts, primarily targeting consulting, DEI programs, administrative support, and foreign aid. USAID was the hardest-hit agency, losing 83% of its contracts. Defense, IT, and veteran services contracts were largely protected from cuts.
How does DOGE affect small businesses trying to enter government contracting?
Small businesses considering government contracting face minimal direct impact from DOGE. The registration process, set-aside programs, and entry-level contract opportunities (micro-purchases and simplified acquisitions) remain unchanged. The main indirect effect is slower SBA support due to a 43% workforce reduction at the agency.
Is government contracting still worth it in 2026?
Government contracting remains a viable market in 2026. The federal government spends over $680 billion annually on contracts, and statutory small business goals guarantee that at least 23% goes to small firms. Defense, IT, and cybersecurity spending are all growing despite DOGE.
Are government contract set-asides going away under DOGE?
Small business set-asides are protected by federal statute (15 U.S.C. 644(g)) and cannot be eliminated by executive order. The Department of Defense is reviewing set-aside contracts over $20 million, but the underlying statutory goals for small business contracting remain fully in effect.
Which federal agencies are still awarding contracts in 2026?
The Department of Defense, Department of Homeland Security, and Veterans Affairs are all growing their contract spending in 2026. Federal IT and cybersecurity budgets continue to expand across all agencies. The biggest cuts hit USAID, foreign aid programs, and DEI-related contracts.
Does DOGE affect SAM.gov registration?
DOGE has no effect on SAM.gov registration. The process, requirements, and costs (free) are exactly the same as before. You still need a UEI number, you still register at sam.gov, and registration still takes about an hour. Nothing about this step has changed.
What happens to government contracting after DOGE ends in July 2026?
DOGE is set to expire on July 4, 2026. The contracting environment is already stabilizing, with defense and technology spending increasing. Some changes like the FAR overhaul and GSA contract consolidation may continue, but the wave of mass contract cancellations is expected to end with DOGE itself.
Next Steps
Government contracting is not dead. The market is shifting, and that creates openings. Here is what to do right now:
- Register on SAM.gov if you have not already. It is free and DOGE did not change the process.
- Find your local APEX Accelerator and schedule a free counseling session. They can help you match your business to current opportunities.
- Learn how to find government contracts on SAM.gov. Focus on micro-purchases and simplified acquisitions to get started.
- Check USAspending.gov to see which agencies are spending money in your NAICS codes right now.
- If you already have an affected contract, read the financial triage guide at AmerifusionBookkeeping.com for step-by-step recovery guidance.
