Run VA’s fiscal 2025 IT obligations against fiscal 2024 and the topline tells you to move on. Total obligations fell from $9.46 billion to $9.40 billion, under one percent, consistent with a department that told Congress its IT budget was already shrinking: VA’s own FY2025 budget documents put the discretionary IT Systems request $169 million, or 2.6%, below the 2024 request. Read only that number and the story is “nothing to see here.” That’s wrong. Underneath a nearly flat total, VA rewired how it buys software — enough to change who wins the next round of task orders.
A Flat Topline Masks a Moving Target
VA’s total IT spending barely budged year over year, but that stability is an illusion built from two large numbers moving in opposite directions. According to federal spending data compiled from USAspending.gov and captured in a FedSpend agency-spend snapshot, obligations under the Product Service Code for application-platform Software-as-a-Service roughly doubled, while VA’s largest labor category contracted. Federal IT spending data is technically public, but pulling that kind of year-over-year, PSC-level composition out of raw transaction feeds is not something most buyers or trade press ever do.
| PSC Code | Category | FY2024 | FY2025 | YoY Change |
|---|---|---|---|---|
| DA10 | Application SaaS | $1.07B | $2.16B | +103% |
| DA01 | App Development Support (Labor) | $3.03B | $2.83B | −6.4% |
| R499 | Other Professional Support | $919.3M | $694.6M | −24.4% |
| — | Total VA IT Obligations | $9.46B | $9.40B | −0.7% |
If the total barely moved, where did the money go? The answer sits in a single PSC code most budget writeups never mention.
The SaaS Line That Nearly Doubled
VA’s obligations under PSC code DA10, Business Application/Application Development Software as a Service, grew from roughly $1.07 billion in FY2024 to $2.16 billion in FY2025 — a jump of more than 100% in a single fiscal year (FY2025 figures were still posting as of the snapshot date, so the full-year total could move further). That’s the largest single-year swing among VA’s top-five IT categories, in either direction.
DA10 captures something specific: subscription access to a vendor-hosted application platform, not a custom-built system, not software bought outright.
Three codes, three very different purchases
- DA01 — labor billed to build or customize an application, staffed by contractor hours.
- DA10 — a subscription to a commercial, vendor-maintained SaaS platform.
- 7A21 — perpetual-license software bought once, with no required subscription.
DA01 stayed VA’s single largest IT category in both years, so this isn’t a wholesale replacement of labor-based development — it’s additive. VA layered SaaS spending on top of a development base that actually shrank slightly, consistent with the government-wide push toward commercial, subscription-delivered platforms over large custom-build programs. Teams watching this shift inside VA’s Award Data can see the DA10 line move in real time rather than waiting on a quarterly budget document — the kind of PSC-level decomposition that raw USAspending.gov exports don’t surface without heavy manual reconciliation, the same friction that makes federal tail spend so hard to track at the transaction level.
Why a Flat Total Is the More Important Number Here
A roughly $1.1 billion jump in SaaS spending inside a budget that fell $64 million can only mean one thing: the money was reallocated, not added. DA01 and R499 together dropped about $419 million year over year, covering roughly 38% of the SaaS increase; the rest came from elsewhere in VA’s IT portfolio.
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The NAICS data corroborates the same story from a different angle, and it’s not close.
| NAICS Code | Category | FY2024 | FY2025 | Direction |
|---|---|---|---|---|
| 541512 | Computer Systems Design Services | $4.61B | $3.92B | −$686M |
| 541519 | Other Computer Related Services | $2.28B | $2.42B | +$145M |
| 511210 | Software Publishers | $649.2M | $677.0M | +$27.8M |
Computer Systems Design Services, the catch-all NAICS code for custom-build and integration labor, dropped by an amount almost identical to the DA10 increase — strong evidence this is a real procurement pattern, not a classification quirk. The commercial implication is blunt: agencies reallocating a flat budget toward subscription software means fewer large custom-development IDVs and more recurring SaaS task orders and renewals.
What This Signals for Contractors Watching VA
Vendors built around perpetual-license software or pure labor-based application development should expect their VA lanes to grow more slowly than subscription-delivered competitors. That’s the direction every category in both tables above is already pointing.
- Expect slower relative growth in perpetual-license (7A21) and pure labor-based app-dev (DA01) lanes compared to SaaS-delivered offerings.
- Treat the DA10 doubling as a strong directional signal, not a locked final number — FY2025 obligations were still posting as of this snapshot.
- Watch recompete timing on VA’s DA01 vehicles closely, since that category is still the largest by dollar volume and the likeliest source of the next wave of SaaS-replacement decisions.
That last point is where capture planning actually happens. A labor-heavy DA01 task order coming up for recompete inside a department actively shifting budget toward SaaS isn’t just a renewal — it may be the chance to bid the replacement. Recompete timing and priority scoring exist precisely because contract expirations, not awards, are where this kind of positioning decision actually gets made.
Reading Agency Spend Shifts Beyond VA
The method that surfaced VA’s SaaS pivot — comparing PSC-level composition year over year rather than reading agency totals — works on any federal IT budget, not just this one. A flat, growing, or shrinking total tells you almost nothing about what an agency actually changed. The composition is where the intelligence lives, and it’s reproducible across any of the 74 agencies a federal spending database like FedSpend tracks. This is the core argument behind treating agency spending intelligence as a distinct discipline from simple contract lookups: the award-level search answers “who won,” composition analysis answers “what changed.”
VA’s FY2025 obligations are still posting. The gap between its SaaS and labor-services spending is worth revisiting once the fiscal year closes — and it’s more likely to widen than close.
The Topline Was Never the Story
A flat budget is the easiest number in government to misread, because “flat” sounds like nothing happened. VA’s FY2025 obligations prove the opposite: a department can hold its total steady while rewiring what it buys and from whom. Vendors watching only the overall IT topline are reading the wrong line item. The $686 million drop in systems-design labor and the doubling in DA10 are the same decision, told twice — and vendors still selling labor-heavy custom development are competing for a shrinking share of a budget that isn’t shrinking. It just stopped buying what they’re selling.
