Government IT Modernization

Federal IT spending exceeds $120 billion annually and grows with cloud migration, AI/ML adoption, and cybersecurity priorities. State and local IT spending adds another $200 billion+.

Who buys

At the federal level: every agency runs major IT contracts, with concentrated buying through GSA (FedSIM, ITS, MAS), DHS (CIO-SP), HHS (NIH GWACs), DoD (multiple GWACs), and individual agency IT offices. At the state level: every state has a Chief Information Officer with portfolio responsibility for state agency IT. Local IT procurement runs through city and county IT departments.

What they buy

Cloud infrastructure (AWS GovCloud, Azure Government), managed services, custom software development, ERP systems (Oracle, SAP, Workday), CRM and case management, cybersecurity (SIEM, EDR, identity management), data analytics, AI/ML platforms, helpdesk and managed services, telecom and network services, and hardware (servers, storage, endpoint devices).

How to break in

Federal IT is the most accessible vertical for new contractors because of the breadth of opportunity. SAM.gov registration is required. FedRAMP authorization is essentially mandatory for cloud services. Key contract vehicles: GSA MAS (formerly Schedule 70), GSA Alliant 2, GSA OASIS+, NASA SEWP V, NIH CIO-SP4. Many federal IT contracts run as DoD/civilian GWACs that require teaming with established prime contractors.

Set-aside angle

Federal IT is heavily set-aside — 8(a), HUBZone, WOSB, SDVOSB, and small-business set-asides are common. GSA MAS has set-aside paths for small business. GSA OASIS+ includes set-aside domains for small business and 8(a). Cybersecurity-cleared contractors are in high demand and often receive sole-source awards.

Key NAICS codes for IT Modernization

  • 541511 — Custom Computer Programming
  • 541512 — Computer Systems Design Services
  • 541513 — Computer Facilities Management
  • 541519 — Other Computer Related Services
  • 518210 — Data Processing and Hosting
  • 517311 — Wired Telecommunications
  • 541330 — Engineering Services (IT)

Where to register

Vendors in this vertical typically register on:

Related ProcureTap resources