CRS Report Calls Out Federal Contract Spending

Why It Matters

A new Congressional Research Service report released Wednesday, June 10 puts a sharp lens on one of the least-scrutinized corners of federal spending: the roughly one-third of all federal contract awards that bypass open competition entirely. In fiscal year 2025, nearly $278 billion of the approximately $793 billion in total federal contract obligations went to noncompetitive federal contracts, according to the report. That share has held between 31 and 38 percent every year for the past decade.

The central tension is straightforward: the law requires competition, agencies have broad discretion to waive it, and that discretion is now being exercised at a pace that is drawing renewed attention on Capitol Hill.

The Big Picture

The Competition in Contracting Act of 1984 is the bedrock. It requires executive agencies to pursue "full and open competition" for all property and services procurement, meaning all responsible sources can submit bids or proposals. Congress built in seven narrow exceptions for situations where competition is either infeasible or in conflict with other government priorities: only one responsible source exists; unusual and compelling urgency; industrial mobilization or expert services; international agreements; statutory authorization; national security; and public interest.

In fiscal year 2025, the "only one responsible source" exception dominated federal contract awards made outside competition, accounting for more than $199 billion, or 73.2 percent, of the nearly $271 billion obligated under all seven exceptions combined.

Agencies must document their decisions in written justifications and approvals, which are required to be posted publicly within 14 days of award, or 30 days for urgency-based sole source contracts. Approval thresholds escalate with contract value, reaching the senior procurement executive level for contracts above $20 million to $90 million, and above $20 million to $150 million for the Department of Defense, NASA, and the U.S. Coast Guard.

Layered on top of this is the Trump administration's Revolutionary Federal Acquisition Regulatory (FAR) Overhaul, initiated under Executive Order 14275, signed April 15, 2025. The order directs the FAR to be rewritten in plain language and stripped of provisions not required by statute or executive order. The FAR Council issued agency deviations for Part 6 of the FAR, which governs government contract competition requirements, on June 25, 2025. The CRS report notes those deviations did not result in substantive changes to the competition exception framework, likely because the exceptions themselves are defined in statute and cannot be altered by executive action alone.

Political Stakes

The data point that will draw the most scrutiny is the surge in spending under the "unusual and compelling urgency" exception in the current fiscal year.

Obligations under that exception peaked at $40.8 billion in fiscal year 2021, driven by COVID-19 emergency spending by the Department of Defense and the Department of Health and Human Services. By 2023, the figure had returned to the pre-pandemic baseline of roughly $3 to $5 billion annually. However, in just the first two quarters of fiscal year 2026, that figure reached $18.4 billion, and the Department of Homeland Security (DHS) drove 92 percent of it, obligating $16.9 billion under the urgency exception in that six-month window alone.

For Republicans

The FAR Overhaul offers a narrative of deregulation and procurement modernization. But the surge in urgency-based sole source contracts creates a tension: the same administration pursuing streamlined rules is also generating the sharpest spike in limited competition procurement since COVID-19.

For Democrats

The DHS numbers provide a ready-made oversight target, particularly given that the "unusual and compelling urgency" exception carries no statutory definition of what qualifies as urgent, giving agencies wide latitude that the Government Accountability Office and the U.S. Court of Federal Claims can review only after the fact.

For the Public

The CRS report notes that competition is associated with lower prices, higher quality goods and services, reduced cost growth, and greater public trust that contracts are awarded on merit rather than favoritism. When more than a third of federal contract dollars flow outside that framework, those benefits are, at minimum, not guaranteed.

The Bottom Line

The scale of noncompetitive federal contracts is not new, but the current trajectory of urgency-based awards is. The jump from $4 billion for all of fiscal year 2025 to $18.4 billion in just the first half of fiscal year 2026, concentrated almost entirely in DHS, is a data point Congress will not be able to ignore, particularly as the administration continues to invoke emergency declarations across multiple policy domains.

The Revolutionary FAR Overhaul is still in process, and while the Part 6 deviations issued so far have not changed the substantive rules around competition exceptions, the rulemaking is ongoing. The CRS report explicitly flags Congressional oversight of that process as an open question, noting that proposed changes have not yet been published for public comment.