The Federal A/E Market Is Shifting
The federal architecture and engineering market in 2026 is not shrinking overall — it is rearranging. Agencies that dominated A/E procurement for the past decade are contracting while others are expanding. For firms that built their pursuit strategies around a specific mix of federal clients, this shift matters now.
Three forces are reshaping the landscape simultaneously:
- IIJA peak disbursement. The Infrastructure Investment and Jobs Act is in its "shovels in the ground" year. Authorized funds are flowing, but the act expires September 30, 2026, creating a hard deadline for new obligations.
- DOGE contract terminations. The Department of Government Efficiency has cancelled contracts worth $41.5 billion across federal programs, cutting into active work and future procurements.
- DoD budget decrease. The Department of Defense — which accounts for 43% of federal A/E spending — faces a 14% funding decrease. This is the single largest shift for firms that do military design and construction.
The net effect: firms need to know which agencies still have money to spend on A/E services and whether their SF330 packages and qualification materials are ready for different client requirements.
Agency-by-Agency Breakdown
Department of Defense (DoD) — Declining
DoD has historically been the largest single buyer of federal A/E services. Military construction (MILCON), base operations support, environmental remediation, and facility design and maintenance represent a massive share of the federal market.
What's changing:
- 14% funding decrease in FY2026
- DOGE terminations affecting active design contracts
- Slower procurement timelines as budget uncertainty persists
What this means for proposal teams:
- Fewer new SF330 opportunities for USACE and NAVFAC
- Active IDIQ holders may see reduced task-order volume
- Firms with heavy DoD concentration need to diversify — not abandon the market, but reduce dependency
Qualification requirements: SF330 submittals through SAM.gov. USACE and NAVFAC each have specific evaluation criteria and section weighting preferences. If your firm's SF330 packages are optimized for DoD evaluators, they may need adjustment for other agencies.
Department of Veterans Affairs (VA) — Surging
VA is the breakout story for A/E procurement in 2026. The VA Major Construction program has $816 million in approved funding for hospital construction and renovation.
What's changing:
- Major hospital construction and renovation projects moving forward
- Significant new A/E procurement for healthcare facility design
- Growing demand for firms with healthcare design qualifications
What this means for proposal teams:
- New SF330 opportunities for firms with healthcare facility experience
- VA evaluators prioritize healthcare design credentials and past VA project performance
- Firms without VA experience can team with experienced partners as subcontractors to build a track record
Qualification requirements: SF330 submittals through SAM.gov. VA-specific evaluation criteria emphasize healthcare design experience, patient safety in design, infection control considerations, and compliance with VA design standards (VA Technical Information Library). If your firm's project experience sheets highlight healthcare work, organize them now.
General Services Administration (GSA) — Growing
GSA is seeing a 73% increase in remediation and repair spending. Federal buildings, courthouses, and government facilities need modernization, and GSA is the procurement vehicle.
What's changing:
- Major increase in building remediation, repair, and renovation contracts
- New A/E opportunities for existing federal facility assessment and design
- LEED and sustainability requirements increasing on GSA projects
What this means for proposal teams:
- SF330 opportunities for building assessment, renovation design, and environmental remediation
- GSA evaluators value sustainable design credentials (LEED AP, WELL AP)
- Firms with existing federal building experience have an advantage
Qualification requirements: SF330 and SOQ submittals through GSA's procurement channels. GSA evaluates for past performance on similar facility types, sustainable design experience, and cost estimating accuracy. If your staff profiles include certifications like LEED AP or CxA, make sure they are current and prominently placed in your SF330 Section E resumes.
Department of Transportation (DOT) / Federal Highway Administration (FHWA) — Peak Activity With a Deadline
This is where IIJA money is moving fastest. State DOTs receiving federal pass-through dollars are procuring A/E services for highway, bridge, transit, and multimodal projects at the highest rate in a decade.
What's changing:
- Peak IIJA disbursement in 2026 — maximum active procurements right now
- State DOTs issuing RFQs and SF330 requests at high volume
- ENR 1Q 2026 data shows a split market: highway and bridge construction starts are down 25%, while non-building infrastructure (water, utilities, transit) is up 46%
- After September 30, 2026, new obligations under IIJA authority stop unless Congress reauthorizes
What this means for proposal teams:
- This is the busiest quarter for transportation A/E pursuits in recent memory
- Firms that can respond quickly to state DOT RFQs have a timing advantage
- Building a strong DOT track record now positions firms well regardless of what happens with reauthorization
Qualification requirements: Varies by state DOT. Most use SF330 or SOQ formats. State DOTs often have unique submittal formats and evaluation criteria distinct from federal agencies. If your firm primarily chases USACE work, your SF330 packages may need significant tailoring for DOT submittals — different project relevance, different key personnel emphasis, different technical approach framing.
Civilian Agencies (EPA, DOE, HHS) — Mixed
Civilian agencies present a mixed picture in 2026. Some programs are expanding while others face DOGE-related cuts.
What's changing:
- Environmental remediation work (EPA) remains active, driven by PFAS cleanup mandates
- DOE energy infrastructure modernization continues but faces budget scrutiny
- HHS facility design (not VA) is lower priority
- FEMA's Building Resilient Infrastructure and Communities (BRIC) program has a $1 billion application window open March 25 through July 23, 2026 — creating A/E opportunities for firms whose clients pursue hazard mitigation projects (safe rooms, utility hardening, flood infrastructure)
What this means for proposal teams:
- Selective opportunities in environmental and energy sectors
- The FEMA BRIC window is time-boxed — firms supporting local government clients on hazard mitigation should have qualification materials ready before July 23
- Less predictable procurement pipeline than VA or GSA overall
- Worth monitoring but not worth reorienting your entire pursuit strategy around
How to Audit Your Pipeline for Agency Mix
If your firm does federal work, do this exercise this week:
Step 1: Tag every active pursuit
Go through your current opportunity list and tag each one:
| Category | Examples | Risk Level |
|---|---|---|
| Direct DoD | USACE, NAVFAC, Army Corps, Air Force CE | High — declining budget + DOGE |
| VA | VA Major Construction, VISN-level projects | Low — surging procurement |
| GSA | Federal building modernization, courthouse renovation | Low — growing budget |
| DOT/FHWA pass-through | State DOT projects using federal IIJA funds | Medium — active now, uncertain after Sept 30 |
| Other federal | EPA, DOE, civilian agencies | Medium — varies by program |
| State/local funded | State/municipal capital projects, local bond-funded work | Low — independent of federal shifts |
| Private sector | Private development, commercial, industrial | None — no federal exposure |
Step 2: Calculate your concentration
What percentage of your pipeline is in each category? If DoD represents more than 40% of your active pursuits, you have significant exposure to the largest single budget cut in the federal A/E market.
Step 3: Identify the qualification gaps
For each growing agency (VA, GSA, state DOTs), ask:
- Do we have relevant project experience? VA wants healthcare design. GSA wants building renovation. State DOTs want transportation. If your portfolio is 80% military construction, your project experience sheets may not resonate with VA or GSA evaluators.
- Do our staff profiles reflect the right certifications? VA values healthcare design credentials. GSA values LEED AP. State DOTs value PE licenses in the relevant state. Make sure your SF330 Section E resumes highlight the certifications that matter for the target agency.
- Do we have the right teaming partners? If you lack agency-specific experience, teaming with a firm that has it is the fastest way to qualify. Position your firm as a subconsultant on one or two pursuits to build the track record.
Step 4: Adjust your go/no-go criteria
Update your pursuit evaluation to weight agency diversification. If your firm has been automatically saying yes to every DoD opportunity, start applying stricter criteria. Redirect some of that pursuit energy toward VA, GSA, or state DOT opportunities where the budget trajectory is positive.
What DOGE Means for Active Contracts
DOGE contract terminations are a separate concern from budget shifts. Even for agencies with stable or growing budgets, DOGE has the authority to terminate existing contracts for convenience.
What to watch for:
- Termination notices on active IDIQ contracts or task orders
- Delayed task-order issuance on existing vehicles
- Changes to procurement priorities at the agency level
What to do:
- Monitor SAM.gov and your contracting officers for changes to active contracts
- Do not assume an active contract will continue to generate work — track task-order velocity
- Diversify your contract vehicles so no single IDIQ represents more than 30-40% of your federal revenue
DOGE-related terminations are not predictable by agency or sector. The best defense is pipeline diversification — both across agencies and between federal and non-federal work.
The Timeline
Here is the practical calendar for federal A/E decisions in 2026:
| Date | Event | Impact |
|---|---|---|
| Now through June | Peak IIJA disbursement | Maximum state DOT RFQ volume |
| March 25 – July 23 | FEMA BRIC application window | $1B in hazard mitigation grants — drives A/E procurement for resilience projects |
| March-April | FY2027 budget formulation | Signals for next year's funding levels |
| September 30, 2026 | IIJA expiration | New obligations under IIJA authority stop |
| October 1, 2026 | FY2027 begins | New appropriations (if passed) take effect |
| Q4 2026 – Q2 2027 | Potential gap period | If reauthorization is delayed, new federal procurements slow |
The last reauthorization (the FAST Act to IIJA transition) involved over a year of short-term extensions before a new bill passed. Firms should plan for a similar gap.
Frequently Asked Questions
Which federal agency spends the most on A/E services?
The Department of Defense has historically been the largest federal buyer of A/E services, accounting for roughly 43% of federal A/E spending through agencies like USACE (Army Corps of Engineers) and NAVFAC (Naval Facilities Engineering Systems Command). However, DoD faces a 14% budget decrease in FY2026, while VA and GSA are expanding. The relative ranking may shift over the next 12-18 months.
Do I need different SF330 packages for different agencies?
Yes. While the SF330 form is standard across federal agencies, evaluation criteria, weighting, and preferences vary significantly. USACE prioritizes military design experience and specific technical capabilities. VA prioritizes healthcare design credentials and patient safety. GSA emphasizes sustainable design and building renovation experience. State DOTs using federal dollars may have their own supplemental formats alongside or instead of the SF330. Your Section E resumes and Section F project descriptions should be tailored to each agency's evaluation priorities.
How do I get VA project experience if we've never done VA work?
Three approaches: (1) Team as a subconsultant with a firm that has VA experience — this is the fastest path to building relevant past performance. (2) Highlight healthcare-adjacent experience from other clients (hospital renovations, medical office buildings, clinic design). (3) Emphasize transferable qualifications — infection control expertise, healthcare codes and standards knowledge, patient flow design experience. VA evaluators understand that firms need a first project, but you need to demonstrate competence through related work.
Will federal A/E opportunities disappear after the IIJA expires?
No. Federal agencies will continue to procure A/E services regardless of IIJA status. The IIJA provided supplemental funding above baseline appropriations — when it expires, procurement reverts to regular appropriation levels, which are lower but not zero. The risk is a gap period between IIJA expiration and whatever reauthorization follows, during which new obligations under IIJA authority cannot be made. Existing contracts and obligated funds continue. The impact varies by how much of your pipeline depends on IIJA-funded work.
Should small firms (under 50 staff) pursue federal work?
Small firms can compete for federal A/E contracts, particularly through small business set-asides and mentor-protege programs. The key consideration is whether the investment in maintaining SAM.gov registrations, SF330 packages, and federal compliance documentation is justified by your pursuit volume. If you chase fewer than five federal opportunities per year, the overhead may not be worth it. If federal work is a core growth strategy, invest in keeping your staff profiles and project data current and ready for SF330 generation at short notice.