2025's Top 100 rankings reveal a market in major upheaval

Each annual release of the Washington Technology Top 100 is a snapshot in time, both a leading indicator of trends in the market and how contracting opportunities are evolving.

But the 2025 edition also marks a significant turning point in the market. The data used for the rankings are based on federal fiscal year 2024 data, so it represents spending during the last year of the Biden administration.

As we all know, many things have changed since inauguration day. The Trump administration has aggressively pursued efforts to shrink the government by cancelling contracts, shuttering some agencies' operations, laying off federal workers and emphasizing new priorities.

These changes have already had an impact on contracting opportunities and company revenues. Several companies have announced layoffs and adjusted revenue projections.

But here is one interesting fact about the 2025 Top 100: a portion of the market was already starting to contract.

Total prime contracts for the Top 100 shrank to $164.3 billion, compared to $167.8 billion last year. That shows a decline of 2.1%.

SEE THE 2025 WASHINGTON TECHNOLOGY TOP 100

This marks the first decline in the Top 100 since 2016, when the market bottomed out because of sequestration.

The civilian side of the market accounted for the decline as it shrunk by 7.1%, while the defense side continued to experience growth with this year's increase at 1.6%.

There are a couple of factors driving these changes.

During the first part of this decade, we saw civilian spending expand rapidly in response to the COVID-19 pandemic. Many of those programs have ended or are winding down.

Defense priorities have only increased in recent years as the war in Ukraine has continued, as have threats in the Middle East and China. Though the U.S. is only involved as a supplier to Ukraine, the lessons from the war are many and especially our capacity to rapidly restore military supplies.

Under the Trump administration, civilian spending will be under greater pressure. We will not know how extreme that pressure will be until Congress passes the next budget. But outside of the Homeland Security Department, nearly every agency will experience cuts, which will drive down contracting opportunities.

Defense spending should increase as the Trump administration pushes priorities such as the Golden Dome, a massive missile defense initiative that is estimated to cost over $150 billion. President Trump has promised it will be operational by the end of his term in 2029.

Other defense goals include modernizing the Navy and U.S. nuclear weapons.

The civilian and defense spending trends will only widen the growing gap we see between the two sides of the market.

For the 2025 Top 100, defense prime contracts accounted for 54.6% of the contract obligations versus 45.4% for civilian contracts. As this gap grows, it could prove to be a challenge for several Top 100 companies.

There are 11 Top 100 companies with no significant defense business. Several of those relied on the now-shuttered U.S. Agency for International Development as one of their larger customers.

We cannot predict if any of those companies will drop off of the Top 100, but will not be surprised to see their ranking significantly impacted.

They will not be alone facing pressure going forward. The civilian side of the market will shrink and there will be pockets of contraction at DOD and DHS, even if their overall budgets increase.

In large parts of the marketplace, there will be fewer opportunities and fewer dollars to chase. Competition will only intensify as a result.

More intense competition means pressure on pricing. But companies also have the opportunity to lean into innovative technologies such as greater use of artificial intelligence, autonomy, and even quantum computing to differentiate themselves from competitors.

Given the pressures in the market, the next year will be a year of adjustment in the federal market. How it shakes up the Top 100 rankings remains to be seen, but we can guarantee it will not be boring.