$700 Billion to Private Contractors

In FY2025, the federal government will award approximately $779 billion in contracts to private companies. That's three-quarters of a trillion dollars flowing from taxpayers to corporations — and a handful of companies capture the lion's share.

The Top 10 Federal Contractors

Notice a pattern? Six of the top ten are defense contractors. The military-industrial complex that Eisenhower warned about in 1961 is alive and well — and far larger than he imagined.

The Defense Contractor Oligopoly

Since the 1990s, the defense industry has consolidated from over 50 major contractors to essentially 5 prime contractors: Lockheed Martin, RTX (Raytheon), General Dynamics, Boeing, and Northrop Grumman. These five companies receive the majority of major defense contracts.

When there are only five companies that can build a fighter jet or a nuclear submarine, competition is limited. Cost overruns are routine. The F-35 program alone has a lifetime cost of $1.7 trillion — making it the most expensive weapons program in human history. It's been plagued by delays, cost increases, and performance issues since its inception in 2001.

No-Bid Contracts: Competition Optional

The federal government awarded $74 billion in no-bid contracts — about one-third of all large contracts. No-bid (sole-source) contracts are supposed to be exceptions for emergencies or situations where only one company can do the work. In practice, they're routine.

Studies consistently show that no-bid contracts cost 20-30% more than competitively bid contracts for similar work. That suggests taxpayers are overpaying by $15-22 billion per year just on the no-bid contracts alone.

IT Contracts: The $100 Billion Money Pit

The federal government spends over $100 billion per year on IT — and the results are abysmal. The Healthcare.gov launch debacle ($2 billion), the OPM hack (21 million personnel records stolen), and countless failed modernization projects are symptoms of a system that rewards contracts, not results.

The typical pattern: an agency awards a multi-billion-dollar IT contract to a large integrator (Leidos, Accenture, Booz Allen). The project falls behind schedule and over budget. The contractor blames changing requirements. The agency is locked in and can't switch. More money is thrown at the problem. Years later, the system is delivered late, over budget, and often doesn't work as intended.

Contractor Workforce: Shadow Government

The federal government employs about 2.2 million civilian workers. But it also employs an estimated 4.4 million private contractors — twice as many. This "shadow workforce" is largely invisible in official headcounts, allowing politicians to claim they're "shrinking government" while spending more than ever on contractors who cost 2-3x what a federal employee would.

The Bottom Line

Federal contracting is a $779 billion industry dominated by a few massive companies, particularly in defense. Competition is limited, the revolving door spins freely, and accountability is minimal. No-bid contracts waste billions. IT projects routinely fail. And the contractor workforce is twice the size of the federal workforce, at much higher cost.

The private sector is supposed to be more efficient than government. In many cases, it is. But when there are only five companies bidding (or not bidding) for trillion-dollar contracts, and the people awarding the contracts will work for those companies next year, the market isn't competitive. It's captured.