FY2026 Federal Spending: CMS Leads Sub-Agencies with $1.3T, Homeland Security Obligates $38B
Federal departments get the headlines, but sub-agencies sign the checks. In FY2026, the operational units managing healthcare, border security, and defense logistics are driving the bulk of federal obligations. Tracking these specific sub-agencies reveals exactly which offices hold the purchasing power.
Key takeaway: The Centers for Medicare and Medicaid Services (CMS) dominates FY2026 federal spending with $1.31T in obligations. Meanwhile, major infrastructure and healthcare contracts frequently cross state lines, with companies in New Mexico and Wisconsin executing multi-hundred-million-dollar projects in Texas and Virginia.
Top Federal Sub-Agencies by Obligated Dollars in FY2026
The Department of Health and Human Services (HHS) houses the single largest contracting and grant-making sub-agency in the federal government. CMS alone accounts for $1.31T across 3,901 awards in FY2026.
Other massive operational units include the Administration for Children and Families and U.S. Customs and Border Protection.
| Sub-Agency | Parent Department | Awards | Total Obligated |
|---|---|---|---|
| Centers for Medicare and Medicaid Services | Health and Human Services | 3,901 | $1.31T |
| Administration for Children and Families | Health and Human Services | 4,605 | $72.4B |
| Department of Education (Sub-Agency) | Department of Education | 14,480 | $33.4B |
| U.S. Customs and Border Protection | Homeland Security | 1,014 | $33.2B |
| Defense Contract Management Agency | Department of Defense | 602 | $13.8B |
| U.S. Immigration and Customs Enforcement | Homeland Security | 726 | $5.2B |
| Asst. Sec. for Community Planning and Development | Housing and Urban Development | 1,744 | $3.5B |
| Maritime Administration | Department of Transportation | 1,342 | $2.7B |
| Administration for Community Living | Health and Human Services | 1,819 | $2.0B |
| Veterans Health Administration | Department of Veterans Affairs | 13,306 | $1.9B |
Source: USAspending.gov FY2026 data.
Key Sub-Agencies within Health and Human Services in FY2026
HHS distributes its budget through highly specialized operational divisions. These sub-agencies handle everything from massive entitlement programs to targeted community grants.
Here is the breakdown of top HHS sub-agencies by FY2026 obligations:
- Centers for Medicare and Medicaid Services: $1.31T (3,901 awards)
- Administration for Children and Families: $72.4B (4,605 awards)
- Administration for Community Living: $2.0B (1,819 awards)
- Indian Health Service: $1.1B (3,080 awards)
CMS obligations FY2026 data dwarfs all other federal entities. The $1.31T obligated by this single sub-agency represents a massive share of total federal outlays for the fiscal year.
Department of Homeland Security's FY2026 Sub-Agency Spending
The Department of Homeland Security directs its funding primarily toward border enforcement and transportation security. U.S. Customs and Border Protection (CBP) leads the department with $33.2B across 1,014 awards.
U.S. Immigration and Customs Enforcement (ICE) follows with $5.2B obligated through 726 awards. The Transportation Security Administration (TSA) accounts for another $1.4B across 414 awards.
These top federal sub-agencies 2026 figures highlight the heavy capital requirements of physical border infrastructure and personnel management.
FY2026 Federal Contracts: Where the Work Happens vs. Recipient Location
A recipient's headquarters rarely dictates where federal contract work actually takes place. In FY2026, several of the largest federal obligations fund projects where the place of performance is entirely different from the vendor's home state.
This dynamic is especially common in large-scale construction, defense logistics, and national healthcare administration. Federal agencies frequently tap specialized firms in one region to deploy resources or build infrastructure thousands of miles away.
The result? Billions of federal dollars flow through corporate headquarters in one state to fund labor and materials in another.
Major Out-of-State Federal Obligations in FY2026
The largest out-of-state federal contracts in FY2026 highlight massive border infrastructure and veteran healthcare initiatives.
Source: USAspending.gov FY2026 data.
Border wall construction dominates the DHS contracts place of performance FY2026 data. Southwest Valley Constructors Co, based in New Mexico, holds a $1.72B obligation for border wall construction in the Big Bend sector of Texas.
Similarly, Montana-based Barnard Construction Company, Incorporated secured $601.9M for vertical barrier construction in the Del Rio, Texas sector. Alabama-based BCCG A Joint Venture is executing an $874.1M contract in Texas and a $483.4M contract in California.
The Department of Veterans Affairs relies heavily on out-of-state contractors for health administration. Wisconsin-based Optum Public Sector Solutions, Inc. and Arizona-based TriWest Healthcare Alliance Corp hold combined obligations exceeding $2.1B for work performed in Virginia.
Quick Takeaways
- CMS leads all spending: The Centers for Medicare and Medicaid Services obligated $1.31T in FY2026, making it the highest-spending sub-agency by a massive margin.
- DHS focuses on physical borders: U.S. Customs and Border Protection obligated $33.2B, heavily utilizing out-of-state contractors for Texas-based construction projects.
- Location mismatch is standard: Federal contracts out-of-state work 2026 data shows billions of dollars flowing to vendors in states like New Mexico, Montana, and Wisconsin for work physically performed in Texas and Virginia.
- Defense infrastructure spans state lines: Minnesota-based M.A. Mortenson Company secured a $610.0M DOD contract to build a screwworm facility in Texas.