DHS GovCon Intelligence · July 2025
DHS Under Trump 2.0: Budget Shifts, Contract Vehicles & What’s Next
A $2.3B drop in Q3 obligations, canceled vehicles, and new GSA pathways — here’s what it means for your pipeline.
Federal contracting at DHS is evolving, and fast. From shifting budgets and canceled vehicle programs to a full FAR rewrite and new GSA pathways, there’s a lot to track. Here are the essentials in concise sections with bullet points and official links so you can see exactly what’s changing and how it affects your opportunities.
1. Spending Trends: Q2 vs. Q3 FY 24→25
DHS spending held steady in Q2, then pulled back sharply in Q3 as programs paused and dollars shifted:
- Q2 (Jan 1–Mar 31): Obligations flat year-over-year.
- Q3 (Apr 1–Jun 30): Many contracts have been paused or canceled.
- Only ICE and the Office of the Secretary saw increased spending.
2. Agency-Level Budget Shifts
In Q3 FY 25 vs. Q3 FY 24:
- ICE & Coast Guard: +$0.8–1B each
- CBP: $19.3B enacted (–2% vs. FY 24; still above its $16.6B request)
- TSA, FEMA, USCIS: Modest trims
- Other DHS components (15% of total): +15%
3. NAICS Spending Shifts
Industry winners and losers:
- Security services (NAICS 561612/561621): +5% (border & facility protection)
- IT consulting (NAICS 541512): Flat, supported by bridge contracts
- Archives & records management (NAICS 561110): –30% (matches USCIS 8(a) recap)
4. Small-Business Set-Aside Trends
Set-asides vs. open competition, FY 24→25:
- Both pools shrank, but set-asides declined less, boosting SB share.
- Women-owned (incl. EDWOSB) saw the smallest drop.
- Industry mood: pessimistic that FAR 2.0 will weaken SB support.
5. FEMA’s Future
The administration plans to phase out FEMA after the 2025 hurricane season, shifting responsibility to states. Yet FEMA’s standalone status is backed by statute, and there’s a proposal to restore FEMA as an independent agency:
- FEMA Independence Act (H.R. 5599): Restores FEMA as a cabinet-level agency with Senate-confirmed leadership.
6. Agency-Sponsored vs. GSA Vehicles
DHS still runs niche, stand-alone procurements. Most task orders, however, now move to GSA-owned contracts when DHS directs or when a GSA vehicle is a better fit.
7. FAR 2.0 Overhaul & Small-Business Rules
A full rewrite of procurement rules is underway:
- EO 14275 “Revolutionary FAR Overhaul”: All 53 FAR parts to be rewritten. Informal input by 30 Sep 2025; proposed revisions by 12 Oct 2025.
- Part 10 (Market Research) Update (Jun 2025): Agencies must engage industry earlier and favor commercial solutions, potentially cutting some SB set-asides.
- SBA “180-Day Rule”: Firms keep single-award set-aside status if a disqualifying event occurs more than 180 days after offer submission.
8. Canceled DHS-Owned Vehicles in Detail
Two small-business-only BPAs were canceled due to overlap and protests:
- FirstSource III (IT VAR & Software)
- 30 IT VAR contracts awarded; software awards pending
- Multiple bid protests filed
- Canceled because GSA’s existing IT vehicles cover the same scope
- PACTS III (Professional Services)
- Under evaluation >1 year; no awards made
- Scope folded into GSA vehicles instead
9. “One Big Beautiful Bill” & Reconciliation Funds
The FY 26 reconciliation package (H.R. 1) aims to inject $15–20 billion more into DHS for border security and disaster relief. Funds are under Senate Finance negotiation and may arrive as late as Q4 FY 26.
10. New & Future GSA-Run Vehicles
GSA is standing up or expanding vehicles to absorb DHS work:
- Consolidated MAS (SIN 132-51, IT Services): To take on most FirstSource III tasks in Q4 FY 25; projected $30B ceiling.
- SEWP V (Services-wide 8(a) OPC): Likely home for expanded IT VAR work.
- OASIS+: Slated to onboard PACTS III professional services orders in Q1 FY 26, with 8(a), HUBZone, SDVOSB lanes.
- Exceptions: DHS may spin up quick-start vehicles or handle brand-new requirements not covered by GSA.
| Vehicle | FY21 | FY22 | FY23 | FY24 | FY25* | Industry | Program Status |
|---|---|---|---|---|---|---|---|
| GSA Schedule | $3.9B | $4.8B | $1.9B | $6.4B | $3.0B | Multi | Proposals continually received; contracts continually awarded; one of most former stand-alone schedules. Many industries represented. |
| Alliant UNR & SB / Alliant 2 | $1.4B | $1.8B | $2.0B | $2.2B | $1.0B | IT | Follow-on Alliant 3 proposals expected in April 2025. Awards could occur in Q4 FY 2025. Alliant 2 was Full & Open competition — the Alliant 2 Small Business contracts were cancelled and replaced by Polaris, which remains in source selection. |
| OASIS / OASIS+ | $830M | $1.0B | $1.1B | $1.2B | $390M | PS | OASIS+ is the follow-on to OASIS. Both an On-Ramp and Phase II are planned. Phase II will expand scope of current OASIS+. Comments on Phase II were due July 8, 2025. A timeline for release of Phase II or the On-Ramp not currently available. |
| CIO-SP3 / CIO-SP3 | $400M | $630M | $770M | $800M | $380M | IT | Follow-on CIO-SP4 (still) under protest. There were 357 GAO protests and now under litigation with US Court of Federal Claims. Current contracts extended to April 2025. CIO-SP4 currently owned by HHS but will transfer to GSA. |
| SEWP IV / V | $280M | $290M | $390M | $440M | $330M | IT | Follow-on SEWP VI under protest. Awards projected for May 2026. SEWP VI currently owned by NASA but will transfer to GSA. |
11. Upcoming Follow-On Opportunities
Key projected solicitations and ceilings:
| Program | Timeline | Ceiling / Size | Notes |
|---|---|---|---|
| TSA PACTS | Solic ~Oct 2025; Award Q2 FY 26 | $350M | GuideHouse incumbent |
| CISA Cyber Products & Services | RFI Feb 2024; Solic Feb 2026 (est.) | $18–20B IDIQ | Mandatory cyber threat-sharing included |
| DHSY Temp Facilities & Services BPA | Solic Q1 FY 26 (est.) | ~$3B (↓ from $7.5B) | New ceiling reduced |
| TACOM & TECOPS Consolidation | RFI Aug 2024 | ~$3B IDIQ | Follow-on |
| USCIS Records Ops 8(a) | Solic Jan 2026; Award Jun 2026 | ~$108M FFP; $80M obligated | 8(a) set-aside |
| ISEP 5 | Solic ~Jan 2026 (est.) | $2.2B; $1.4B obligated | 50/50 open vs. SB set-asides with 30% SDVOSB reserve |
| SWIFT 2 | Solic Nov 2025 (est.) | $1.09B; $140.5M obligated | Added AI/ML domain |
12. Discretionary vs. Mandatory & Contractor Addressability
DHS’s funding is divided into:
- Mandatory programs (statutory entitlements)
- Discretionary funds (competitive procurements)
From discretionary, remove personnel/internal ops — the remainder is the addressable pool for contractors. This pool has grown significantly in recent years.
- Management Directorate: $642M for DHS OCIO operations. Major investments include $107M for Financial Systems Modernization, $61M for Homeland Advanced Recognition Technology, $30M for DHS OneNet, $8.4M for One Net, $3.3M for DHS Data Framework (unchanged), and $3.2M for Human Resources Information Technology.
- Cybersecurity & Infrastructure Security Agency: $642M for Cyber Operations, including $417M CISA Ops; $410M for Continuous Diagnostics and Mitigation (CDM) program.
Frequently Asked Questions
Why did DHS Q3 FY2025 contract obligations drop by $2.3 billion?
DHS Q3 FY2025 contract obligations dropped $2.3 billion compared to Q3 FY2024 primarily because many contracts were paused or canceled under the Trump 2.0 administration. Only ICE and the Office of the Secretary saw increased spending during this period.
Which DHS contract vehicles were canceled and why?
DHS canceled FirstSource III (IT VAR and Software) and PACTS III (Professional Services). Both were canceled under Executive Order 14240, citing overlap with existing GSA vehicles such as the MAS Schedule and OASIS+. Their work is being redirected to GSA-owned vehicles.
What are the best contract vehicles for DHS work in 2025 and 2026?
The top vehicles for DHS work include the GSA Multiple Award Schedule, OASIS+, SEWP V, Alliant 2, and the upcoming Consolidated MAS SIN 132-51. GSA is absorbing most DHS-directed work as agency-specific vehicles are being phased out.