US Federal Software Spending Improves

Research evidence excerpt

US Federal Software Spending Improves

Software June 25, 2026

John DiFucci

john.difucci@guggenheimpartners.com US Federal Software Spending Improves

212 518 9670

Blake Musumano Key Message: Herein is our latest analysis of Software spending by the U.S. Federal

blake.musumano@guggenheimpartners.com Government, which we believe accounts for 8-9% of worldwide Software spending. 212 518 9468 In summary, US Federal Government Spending on Software is improving after a

Tamjid Chowdhury long drought of about a year when efforts for improved efficiency (including DOGE)

tamjid.chowdhury@guggenheimpartners.com attempted to rid the system of waste. In this update, we also summarize the US Federal

212 823 6739 Government’s developing influence on AI, whether in efforts to encourage AI investment,

Richard Magnus growing regulatory issues, or the evolving conflict with an AI leader.

richard.magnus@guggenheimpartners.com

212 518 9308 Total US Federal Government Software spending has now increased y/y for three

consecutive months (Dec 2025 through February 2026, which is the latest month for which

we have dependable data for both the DoD and Civilian Agencies) after 10 consecutive

months of declines.

Civilian Agency spending on Software has increased y/y for 4 consecutive months

(February 2026 through most of May 2026, the latest month we have relatively dependable

Civilian Agency data) after a full year of monthly declines.

DoD spending on Software has been less consistent than Civilian Agency spending,

and it declined materially (-30% yoy) in the most recent month we have dependable

data for (February 2026), following two consecutive quarters of material increases

(+27% in January 2026 and +46% in December 2025). We’d expect DoD spending likely