Five years of federal award data show a market concentrating around larger contracts and established providers. For smaller firms, the response starts with stronger buyer visibility.
By Ted McLaughlan, KME.digital / WestXDC
“Reason and experiment have been indulged, and error has fled before them.”
Thomas Jefferson, Notes on the State of Virginia
We’re not claiming all error has fled, here in our research. Some may remain, and like fish, it tends to reveal itself with time.
If your federal revenue has fallen, don’t assume your sales or business development team is the only reason. The market may have moved around you, and probably did here in NOVA.
Alexandria is our home market and the first place we examined company by company for this research, using our data fusion lab capabilities. It’s small enough to study in detail, but connected to the same federal market forces reshaping the rest of Northern Virginia. This is published focused on Alexandria and the Chamber ALX exclusively, to give local businesses (our neighbors) a clearer view of those forces and a starting point for conversation. The regional comparisons show why the discussion matters beyond the city line.
KME.digital analyzed five years of federal prime-award data for work that’s difficult to see as a single market: design, facilitation, language services, training, research, production, accessibility, planning and related services. We use creative innovation as an umbrella term for this work. What connects it isn’t an industry code (i.e. NAICS). It’s the use of applied expertise to frame problems, interpret context, work through competing interests and deliver something people can act on.
The Chamber’s own membership shows how broad this market is. Beyond KME.digital, there are firms in human-capital strategy and organizational transformation, firms combining human-centered design with data and digital transformation, producers of lifesaving technology. They sit in different industry categories, but each illustrates part of the capability this analysis is trying to make visible.
That work matters across Northern Virginia, but much of it is contracting faster here than it is nationally.
Comparing FY2023–24 with FY2025–26, by recipient city:
- Chantilly fell from $104.4M to $14.7M, a decline of 86 percent
- McLean fell from $59.3M to $19.1M, down 68 percent
- Fairfax fell from $86.6M to $31.4M, down 64 percent
- Arlington fell from $96.0M to $59.7M, down 38 percent
- Alexandria fell from $35.1M to $20.3M, down 42 percent
- Herndon was close to flat, from $69.5M to $62.9M, down 9 percent
Four markets held or grew over the same period:
- Reston rose slightly, from $96.1M to $99.9M, up 4 percent
- Washington, DC rose from $48.6M to $53.3M, up 10 percent
- Leesburg rose from $7.4M to $11.4M, up 54 percent
- Bethesda rose from $4.1M to $16.5M, up 302 percent from a small base
Nationally, the same body of work declined about 20 percent. Several Northern Virginia markets fell at two to four times that rate.
Note that this isn’t a census or ranking of creative firms, and it isn’t limited to small businesses. It follows capability language in federal prime awards, so the results include both specialized providers and larger integrators when this work appears inside broader contracts. Alexandria is the company-level case study. Smaller and midsize firms are the primary audience because they may have less internal market intelligence with which to see these shifts. Major integrators such as Leidos, Accenture Federal Services, GDIT and Deloitte Consulting are part of this market, but they may not appear among the named city examples because the analysis follows the recipient address and language recorded on prime awards. Their relevant capabilities may be embedded in broader contracts, registered under another location or delivered through subcontracts that this analysis doesn’t capture. This analysis also doesn’t capture much of the substantial business-to-business economy built around GovCon itself: accounting and legal firms, lenders, insurers, recruiters, capture and proposal advisers, marketing agencies (like ourselves!), technology vendors, managed-service providers and commercial real estate specialists. Their customers are usually contractors rather than federal agencies, so most of that work never appears in prime-award data.
The work didn’t disappear evenly
The federal awards pattern suggests concentration.
Using the recipient addresses recorded in the awards, Reston’s total was concentrated in a small number of technology contractors (names not provided here, only on approvals). The relevant design and research work appears within broader engineering and IT delivery rather than as stand-alone creative services. Reston’s FY25–26 total wasn’t limited to those firms, but it was highly concentrated, and it illustrates how design and research capabilities can sit inside broader engineering and technology delivery. Recipient addresses also shift over time, so a firm’s recorded location during the period analyzed may differ from where it lists its headquarters today.
Washington and Bethesda gained through a mix of federal production and technology contractors. Two patterns appear. Established media and production houses, close to their customers and holding incumbent relationships, account for much of the increase. A second pattern involves design and related capabilities embedded inside a larger IT and management-advisory business. Our filtered award analysis attributes part of the measured increase to a handful of firms, although public company profiles alone can’t reproduce that calculation. (All our data, right or wrong – if not KME 1st-party data – comes from public sources),
Alexandria shows the pressure on the middle of the market. Several established firms that held meaningful work in FY23–24 posted nothing comparable in FY25–26. One firm accounts for roughly 83 percent of the city’s remaining total in our filtered analysis. We aren’t naming the firms on either side of that shift. The pattern is the finding, and identifying individual companies by their losses serves no purpose for the businesses reading this.
Across the full five-year Alexandria analysis, we identified 191 firms associated with 917 awards. Of those firms, 155 had less than $10 million in federal revenue and 111 had less than $2 million. Many may not have a dedicated capture team or a market-intelligence budget. They may see revenue falling without being able to tell whether the cause is internal performance, changing demand, contract consolidation or some combination.
We can’t confirm from the award data alone that bundling caused the shift. We can see where the money went, though, and it increasingly went toward larger providers and broader delivery structures.
AI changes what’s worth defending
Budget pressure explains part of the contraction. AI creates a second challenge.
Federal services firms have long earned revenue from documentation, reporting, requirements development, content production and other repeatable knowledge work. AI can now handle a growing share of those tasks. That doesn’t eliminate the work, but it changes the labor required and the price a buyer may be willing to pay.
The more durable value sits closer to the problem and the people affected by it. Someone still has to determine what matters, weigh tradeoffs, make a recommendation defensible and help an organization put it into practice.
Our data shows different levels of exposure. Graphic design, photography, video production, animation and signage face both budget pressure and direct automation. Charrettes, master planning, facilitation, stakeholder engagement, service design and instructional design also face budget pressure, but they’re harder to replace when the work depends on trust, context, participation and accountable decision-making.
That distinction isn’t absolute. AI can assist both categories. The useful question is how much of the value comes from producing an artifact and how much comes from understanding the situation around it.
Lesson Learned: For firms deciding where to invest, the direction is clear: move closer to problem definition, decision support, stakeholder adoption and measurable outcomes. Don’t sell only the deliverable. Show the applied expertise – people, methods, certifications, solutions, successes – behind it.
Use the language federal buyers use
The most actionable finding came from the words in the awards.
We began with 581 terms (i.e. keywords) drawn from creative and design practice. Fifty-four returned Alexandria awards, identifying 128 firms. We then added 57 terms taken from procurement language. The result grew to 191 firms and 917 awards, a 49 percent increase in the number of businesses identified.
Those procurement terms revealed work our practitioner vocabulary had missed.
Practitioner language on the left, the language that appears in federal awards on the right:
- Human-centered design is written as customer experience, human factors, or Section 508
- Participatory design is written as charrette, facilitation, or stakeholder engagement
- Learning design is written as curriculum development, courseware, training aids, or simulation training
- Inclusive communication is written as translation, interpretation, transcription, or captioning
- Visual communication is written as data visualization, cartography, graphic design, or rendering
- Innovation methods are written as experimentation, proof of concept, or modeling and simulation
Translation, enterprise architecture, interpretation, graphic design, curriculum development, photography, modeling and simulation, cartography, charrettes and outreach were among the most frequent terms. “Human-centered design” appeared only once in award records, even though related buyer terms appeared repeatedly.
For a contractor, vocabulary affects capability statements, website content, teaming profiles, opportunity searches and customer conversations – all marketing, outreach, PR and communications. If your language reflects only how practitioners describe the work, buyers and partners may not find you.
At KME, translating between a firm’s expertise and the language federal buyers use is part of the GovCon marketing work we do every day. We connect market and award data with positioning, search visibility, content strategy and outreach. The goal is practical: help the right buyers and teaming partners understand what a firm does, why it matters and where it fits.
This analysis applies that same discipline at a regional scale. The 57 added procurement terms didn’t simply make the search larger. They made the picture more useful by revealing firms, capabilities and market relationships that practitioner language alone had missed.
It also explains why regional economic-development plans struggle to see this market. Creative innovation crosses conventional industry codes. ALX Forward, GO Virginia Region 7 and VEDP all use established sector frameworks that aren’t designed to capture a capability spread across technology, communications, education, manufacturing, professional services and nonprofit organizations. Their instruments can work as intended and still miss the pattern.
This connects directly to the Northern Virginia Chamber’s NOVA Roadmap, which asks the region to reduce its reliance on federal spending, reinvent its economy and tell its story more effectively. That work starts with knowing what Northern Virginia actually has. Firms can’t connect with adjacent customers, partners or investment if their capabilities remain buried in the wrong classifications or described in language buyers don’t use. Better visibility gives businesses, chambers and economic-development leaders something concrete to organize around.
What firms can do now
Check what’s expiring
We found 31 Alexandria contracts with performance periods ending within twelve months. We aren’t publishing the holders or dates because that could disadvantage the incumbents. Every firm can pull its own contract end dates now, map the likely acquisition path and begin customer and partner conversations before a solicitation appears.
Follow the work into larger vehicles
If smaller requirements are being absorbed into broader awards, the practical position may be a specialized subcontractor role. Identify the primes and integrators holding adjacent work, then approach them with a specific capability, customer context and past-performance fit.
Use the assistance that’s already available
The Virginia APEX Accelerator, administered by George Mason University and funded by the Defense Logistics Agency, provides no-cost counseling on federal contracting, schedules, certifications, teaming and bid matching. Some small firms may not know the full range of help that’s available. Including B2G/GovCon marketing expertise in the area.
Translate federal experience for other buyers
Creative and advisory capabilities can transfer across sectors. Section 508 work can support commercial accessibility requirements. Plain-language communication, service design, facilitation, training and stakeholder engagement apply to associations, nonprofits, health systems, higher education, local government and commercial real estate. Some firms may understate their federal experience when approaching these markets. It can prove that a team knows how to work with complex requirements and demanding stakeholders.
We know the Chamber ALX is uniquely positioned to help Alexandria businesses respond to federal-market change, as it has through its member-developed 2026 Legislative Agenda. That agenda turned business concerns into specific advocacy priorities, including reskilling displaced federal workers and streamlining permitting, zoning and licensing for small businesses. The Chamber’s Government Relations Committee is charged with serving as the advocacy voice of Alexandria business before local, state and federal officials. Because the Chamber is member-led and spans businesses of many sizes and sectors, it can hear concerns companies may not raise publicly, distinguish isolated problems from shared ones and carry a practical business case into policy conversations. That combination gives it a role no individual firm or public agency can fill.
The Chamber also makes this market easier to navigate by introducing specialized firms to larger contractors, bringing federal and commercial buyers into the same conversations and directing businesses to resources they may be missing. The data gives us feedback. Continued member conversations can test what it means in practice, uncover what the analysis missed and help the community decide where collective action would be useful.
A space question Alexandria will need to examine
Our first instrument was built to find services, so it measured product and manufacturing work poorly. A separate review still identified 109 Alexandria firms and $710 million in production and fabrication categories related to this economy. Eighty of those firms had less than $1 million in federal awards.
That raises a different local challenge. Service firms can often operate from ordinary offices. Light production businesses may need loading access, higher ceilings, ventilation, three-phase power and floor space they can afford. We’re not talking about heavy industry. The need is for light-industrial or flex-employment space suited to clean assembly, prototyping, small-scale fabrication, packaging and repair. Alexandria already recognizes a similar use as “light assembly, service and crafts.”
The near-term question is whether the city’s current zoning work will preserve and create enough appropriately equipped, affordable space for these businesses. As Alexandria converts office and industrial properties to residential use, it may also reduce the inventory available to these light production businesses. We’ve found great local examples of why production-capable space belongs in this year’s economic-development conversation.
Alexandria’s Zoning for Housing / Housing for All package, adopted November 28, 2023, carries two initiatives that bear on this directly. Initiative 7 converts obsolete office space to residential, and initiative 4 opens industrial-zoned land to the same conversion. With office vacancy at 18.9 percent, both are defensible housing responses, and together they draw down the exact inventory the 109 production and fabrication firms in our analysis depend on, the use the city’s own code calls “light assembly, service and crafts.” Nobody is tracking that drawdown. The City is accepting public input on its 2027 legislative package through August 28, 2026, and the modest ask is a reporting requirement: conversions approved under initiatives 4 and 7 should record the light-industrial floor area removed, so a running total exists before the decision is irreversible. Virginia’s Dillon Rule means the enabling authority for some of this sits with the General Assembly, which is why it belongs in a legislative package and not only in a zoning comment.
We haven’t measured the space issue well enough to recommend a specific policy response. This year’s legislative process provides an opportunity to ask whether production-capable commercial space should be evaluated as an economic-development asset before more of it is permanently converted. WestXDC plans to treat this as a separate research question, including what space exists, which businesses need it and whether current incentives recognize its value. The immediate need is to get the issue into the conversation while the City is setting its 2027 priorities.
Why we’re publishing this
KME.digital is an Alexandria-based digital marketing firm and an Alexandria Chamber member with a specialized, data-led GovCon practice. Our work sits at the intersection of market intelligence, data analysis, positioning, search visibility and outreach. This is also our regional economy, and we’re navigating many of the same changes as our customers and partners.
Our broader WestXDC CIEcon project is testing whether better visibility into Northern Virginia’s overlooked capabilities can produce practical value. This research is one part of that effort. The analysis has already changed as we’ve tested the method, corrected assumptions and added the vocabulary buyers actually use. It’ll continue to change as the instrument improves.
Alexandria went first because it’s small enough to examine company by company and diverse enough to expose the weaknesses in conventional industry categories. The same analysis will be extended across Arlington, Fairfax, Chantilly, Reston and the rest of Northern Virginia.
For local firms, the immediate value is simpler. Better market visibility (to Primes, procurement teams, and to workforce candidates) can help a business defend the right work, choose stronger partners and reach customers it hasn’t considered yet.
We’re sharing this work as a contribution to our Alexandria business community and the wider Northern Virginia region. A stronger market benefits all of us, and better information is one way we can help build it. If these findings raise a question about your firm, your market or an opportunity the analysis may have missed, contact KME.digital. We’d be glad to compare notes, hear what you’re seeing and help where we can.
Method note: This working analysis by the WestXDC Data Fusion Lab uses USAspending.gov prime-award data for FY2021–FY2026, GSA eLibrary contractor listings and Capture2Proposal solicitation-document search. We tested 638 keywords and keyphrases; 97 returned results, yielding 191 Alexandria firms and 917 awards. Regional comparisons use recipient city and apply the same method in each jurisdiction. The −42 percent Alexandria figure is the comparable regional measure; a separate, shallower recipient-name analysis produced −69 percent. City-level records may include suburban mailing addresses outside city boundaries. Obligation totals represent the full value of awards containing the relevant terms, not the value of the creative work alone, and high-volume searches may truncate. The figures should be read as a current market signal, not a census.
Sources: ALX Forward Strategic Framework · Zoning for Housing / Housing for All · City of Alexandria 2027 legislative-package input · GO Virginia Region 7 Growth and Diversification Plan · VEDP target sectors · George Mason Institute for Digital Innovation · Virginia APEX Accelerator · NOVA Roadmap · Alexandria Economic Development Partnership 2025 Market Report · National Industries for the Blind · Virginia economic outlook
