6.3Industry

Government & Public Services

Federal, state, and local government contractors and service providers delivering IT, facilities, defense support, and public sector services.

7
Segments
28
Verticals

Overview

Government & Public Services covers the public sector — federal, state, and local government and the services they deliver — together with the large private market of contractors and technology providers that serve them. Combined government spending exceeds $10 trillion annually, but government itself is public, not a private industry; the investable opportunity is government contracting and government technology ("govtech").

The private market spans defense and IT services primes (Leidos, Booz Allen, SAIC, GDIT, CACI), government software and public-safety technology (Tyler Technologies, Axon, Motorola Solutions), and outsourced public services. Demand is steady, non-cyclical, and budget-backed, driven by digital transformation, modernization of legacy systems, and the outsourcing of public functions, with active M&A across both government contracting (govcon) and govtech.

Market snapshot

FragmentationFragmented

Government is public-sector and not covered by the Economic Census (which measures private business); the private government-contracting and govtech market spans many professional-services and software classifications and is not separately sized here. Combined U.S. government spending exceeds $10T annually.

Business model & economics

Revenue model
Government contracts, services, and software/SaaS
Recurring revenue
High — multi-year contracts and recurring SaaS
EBITDA margin
Contract- and software-mix-dependent
Capex intensity
Low
  • Public sector itself is not a private industry.
  • Investable opportunity is govcon and govtech.
  • Steady, non-cyclical, budget-backed demand.

M&A deal context

High deal activity

Who’s acquiring

Government-services primesGovtech & public-safety software platformsPE-backed govcon/govtech consolidators

What’s driving deals

  • Digital transformation and legacy modernization.
  • Outsourcing of public functions.
  • Govcon and govtech consolidation.

Segment classifications

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