Federal Construction Contracting in Texas: 2026 Market Outlook for Founders & Investors

Serellium and Founder M&A teamed up on an in-depth analysis of the Texas federal contracting market within the construction and specialty trade industries to provide business leaders with insight into a rapidly growing, yet often overlooked, market. Our goal is simple: to lower barriers to entry for businesses new to this market, and help operators and investors strengthen strategic positioning for long-term growth and value.

Over the past three fiscal years, the U.S. government spent more than $4.89 billion on more than 4,000 federal contracts with private industry to support construction and specialty trade efforts in Texas. These industries include commercial building construction, highway, street, and bridge construction, electrical contractors, plumbing, heating, and air-conditioning contractors, and all other specialty trade contractors. A handful of primes – large construction firms, some headquartered in Texas, many out-of-state – dominate more than half of this multi-billion dollarmarket. There is significant opportunity for construction firms with annual revenue under $47 million and specialty trade contractors under $19 million, as more than a quarter of federal contracts were set-asides for small businesses and large prime contractors frequently rely on strong local partners to perform the work. The growing expenditure trends for construction and facility updates for federal infrastructure in Texas will require new business participation to meet rising demands.

This report is for investors, founders, and established businesses of all sizes exploring opportunities to win federal contracts for construction and specialty trades in Texas. It summarizes how the U.S. federal government procures construction and specialty trade services in Texas, highlighting key trends, buyers, set-asides, market concentration, and geographic hotspots to inform new and expanded participation from private industry.

Total Federal Construction Spend in Texas Over Recent Years

Over the past three fiscal years, the U.S. government awarded more than $4.89 billion in construction-related contracts to private sector firms operating in Texas. There were more than 4,000 awards to 989 unique firms. Federal demand has continued to grow year over year, with particularly strong expansion in 2025; however, that growth is not reflected in this analysis due to delays in procurement data reporting.

Why This Market Matters Now

Construction-related federal contracts in Texas represent a substantial and growing market. In 2025, the Army commenced more than $1 billion in construction projects related to Army housing across six bases. The Air Force is investing in the construction of the Basic Military Training West campus in Lackland, Texas, a project that will update 50-year old training and housing facilities. Veterans Affairs continues to invest in new and renovated facilities, including, for instance, a $617 million veterans health care center in El Paso, Texas. The Department of Homeland Security announced $3.3 billion in December 2025 for construction projects along the U.S.-Mexico border in Texas and Arizona, alongside waivers to fast-track federal construction projects in El Paso and Del Rio. Federal contracting opportunities for construction projects in Texas continue to be in high demand for major, multi-year projects.

Federal Contract Spends on Construction Services in Texas (FY22-FY24)

Top Federal Buyers in Construction

The Department of the Army is the largest buyer in this market, accounting for nearly 45% of construction-related federal contracts awarded in Texas. Other notable buyers include the Department of the Air Force, U.S. Customs and Border Protection, the Department of Veterans Affairs, the Department of the Navy, the General Services Administration’s Public Building Service, and the Federal Aviation Administration. While each represents a smaller share individually, together they make up the vast majority of overall federal construction spending in the state.

Top Federal Sub-Agency Buyers (FY22-FY24)

What’s the Government Buying?

The federal government procures construction and specialty trade services across Texas to support a wide range of project needs. The largest areas of spending include hospitals (26%), troop housing facilities (17%), administrative building construction (15%), and the repair, alteration, or maintenance of federally owned facilities.

Product/Service Codes in Construction (FY22-FY24)

Use of Set-Asides and Competition

Set-aside contracts are an important factor in federal contracting trends, as they often offer smaller competition pools for businesses seeking to enter or expand within the government market. In this analysis, small business set-asides accounted for 26 percent of total federal obligations. More than $351 million was awarded through set-asides for service-disabled veteran-owned small businesses, while $20 million was designated for women-owned small businesses.

Eligibility as a “small business” is determined using the Small Business Administration’s size standards. For NAICS 236220 (Commercial Building Construction) and 237310 (Highway, Street, and Bridge Construction), the size standard is less than $45 million in average annual receipts. For NAICS 238210 (Electrical Contractors), 238220 (Plumbing, Heating, and Air Conditioning Contractors), and 238990 (All Other Specialty Trade Contractors), the size standard is less than $19 million in average annual receipts.

Set-Aside Utilization in Construction (FY22-FY24)

Top Primes and Market Saturation

The top 10 recipients of construction-related federal contracts in Texas accounted for nearly 53 percent of the total contract value, even though a total of 989 unique firms received awards. Notably, six of these top ten awardees are headquartered outside of Texas.

Top 10 Prime Contractors in Construction (FY22-FY24)

Geographic Distribution of Awards

Federal contracts for construction-related services in Texas are concentrated in Bexar, El Paso, Bell, and Dallas counties, though opportunities exist throughout the state. The visual below shows the percentage of contract values performed across the associated counties.

Percentage of Construction-Related Federal Contract Values Performed Across Texas

Serellium Insights: Quick Tips to Enter This Market

1. Understand the Market. Learn how the federal government buys your services, and build your roadmap accordingly. Serellium delivers highly customized federal market analyses to help businesses quickly and comprehensively orient themselves to the federal contracting landscape, including actionable strategies to enter and grow in the market.

2. Identify Teaming Partners. With billions of dollars in ongoing federal construction projects across the state, primes often rely on specialized, local expertise through subcontracting or teaming partnerships for future projects. Understanding who to team with, and how, is critical to winning.

3. Leverage Your Small Business Status. If your business meets the SBA size standards, you can access small business set-asides, which represented 26 percent of total federal construction contract spending in Texas over recent years. Large companies cannot compete for these set-asides and also often rely on small businesses for subcontracts.

4. Break Into the Government Network. Attend agency or project-specific industry days, participate in matchmaking sessions with agencies and prime contractors, and leverage your existing commercial network to identify companies that already have a federal presence.

5. Revamp Communications. Communicate effectively with government partners and buyers using clear, compelling, ready-to-use materials. Start with a capability statement, create a government-facing section on your website, and maintain a short capabilities briefing deck to effectively pitch your company to primes and government customers.

Founder M&A Insights: What Buyers and Sellers Should Know

1. Be Prepared for Growth. As your organization begins to win contracts, it is pivotal to have the infrastructure and systems in place. Contract awards may require additional hiring for your business, new office space or equipment leasing/purchasing and a keen understanding of cash flow requirements. Take time to prepare.

2. Bid on Jobs You Can Handle. While you may find yourself in an aggressive mindset to start bidding on everything, it is wise to start small with the intent to grow and increase your capabilities in the long-term. 

3. Develop a Replicable Playbook. Because the opportunities are so diverse and substantial in size, you may find yourself exploring new service offerings to help secure more contract awards. Build a model for your government work that yields a proven track record, and leverage that playbook for future opportunities in adjacent industries.

4. Understand the Importance of an Exit Strategy Plan. In M&A, especially lower-middle market transactions ($5m-$150m), buyers and investors like to see diverse customer concentration. Consider your exit timeline and how to position the business to be as attractive as possible with a wide customer base, including a growth trajectory for each and performance history of successes. An exit strategy, whether in 12 months or 5 years, is critical to maximize your potential value on the open market. 

5. Market Your Differentiators and Capabilities. Small businesses in the construction and trade services industries have an enormous opportunity to work with arguably one of the best customers on the market, the federal government. Prioritize the marketing of your capabilities and past performances as well as any niche service offerings; this will be a tremendous asset going forward on your journey to building a lasting partnership with the federal government and potential partners. 

About Serellium

Serellium is dedicated to making the federal market more accessible through data-driven insights and strategic guidance. Our industry reports help businesses and investors understand federal procurement trends, identify opportunities, and develop winning strategies to bring the strongest capabilities to government industry.

Serellium offers rapid and full-service support to small, medium, and large businesses seeking to enter and expand in the federal contracting market. In a matter of weeks, we position your business for federal contracts by providing a data-driven roadmap tailored to your company and capabilities. This includes an actionable strategy grounded in extensive federal market research, refined capability offerings, and a targeted plan to pursue the highest demand and most accessible entry points.

Serellium is on a mission to help businesses brand new to government contracting enter the federal market seamlessly. By leveraging robust market analytics, a methodical process, and a deep understanding of private and government sectors, we're eliminating the barriers that have long plagued the $774 billion-per-year government contracting system. The result? A new era of public-private collaboration that benefits all Americans. 

About Founder M&A

Founder M&A is a sell-side-focused, lower-middle-market mergers and acquisitions advisory firm with a deep passion for founder-led and family-run businesses. As former entrepreneurs and operators ourselves, we understand what it truly takes to build, run, and scale a successful company—and how personal and consequential the decision to pursue an exit or recapitalization can be. Our approach is grounded in preserving legacy while helping owners realize the full value of what they’ve built through thoughtful transitions to new ownership.

Beyond traditional investment banking and transaction execution, Founder M&A provides comprehensive exit-readiness and value-maximization support through our Founder Fractional consulting services. Designed for businesses preparing to go to market within the next 6–12 months, this offering combines operational, financial, and strategic advisory to help founders strengthen performance, sharpen positioning, and enter a process from a position of leverage.

Our mission is simple and unwavering: to deliver outstanding advisory services that maximize value, mitigate risk, and ensure successful transactions for our clients. We strive to be a complete resource for business owners navigating complex decisions—offering guidance on deal structure, valuation trends, industry-specific M&A dynamics, and clear, data-driven insights through Market Assessments and Proformas (MAPs).

At our core, our business is selling businesses—and we firmly believe that the right process yields the right exit. For owners beginning to explore strategic options, our team welcomes the opportunity to engage in a discovery conversation and share how our experience, market perspective, and recent successes can help chart the optimal path forward.

Data Source and Disclaimer: The federal contracting data used in this report originates from the Federal Procurement Data System and USA Spending, the central and public repositories for U.S. government contract award information. Federal agencies are required to report contract actions through this system under the Federal Acquisition Regulation (FAR). Data accuracy depends on timely and correct entry by federal agencies, and reporting inconsistencies, omissions, or errors may occur. Additionally, data records are updated regularly, and figures may change as agencies revise or add records. This report reflects a snapshot of the data as of the date pulled in January 2026, and may not include contract actions that were delayed, classified, or inaccurately reported at the time of extraction. The data presented in this report should be interpreted with these caveats in mind and consider that it may not fully capture all aspects of federal procurement activity.