NASA Is Insourcing — What It Means for Current Contractors and the Agencies Following NASA’s Lead

Published August 11, 2026 | TIKC NewsWire

NASA is insourcing. Not metaphorically — operationally. The space agency is systematically taking over technical and operational work that has been performed by contractors for decades, bringing it in-house to federal civil servants, and reducing its contractor workforce accordingly. NASA’s insourcing push is expected to cost Amentum approximately 3% of revenue in 2027 — a significant reduction for a company of Amentum’s scale. For smaller contractors in the NASA ecosystem, the insourcing trend has immediate strategic implications.

What NASA Is Actually Doing

NASA’s insourcing effort is part of a broader administration push to reduce contractor dependency and shift technical work back to federal employees. Amentum disclosed the 3% revenue impact in investor communications, noting that NASA insourcing represents a structural reduction in its addressable market rather than a competitive loss. For contractors in this position, the work is not going to a competitor — it is going to a federal employee.

Which Agencies Are Following NASA’s Lead

Several agencies have initiated or expanded insourcing reviews this year, particularly for IT operations, program management support, and technical advisory services. The DOGE efficiency initiative has specifically flagged advisory and assistance services contracts — the A&AS category — as a target for insourcing or consolidation. Contractors holding large A&AS vehicles at NASA, DoD, DHS, or civilian agencies should monitor their agencies’ insourcing announcements carefully.

What Affected Contractors Must Do

Diversify your agency footprint now, not after the insourcing notice arrives. If 30-50% of your revenue comes from a single agency or large contract, you are exposed to insourcing risk as a concentration risk. The time to diversify is while you have cash flow from the existing contract to fund business development in new agencies.

Identify the work that cannot be insourced. Know which category your work falls into. The work most vulnerable to insourcing is long-term, cost-plus advisory and support work performed at agency facilities. The work least vulnerable is specialized, commercially unique, or mission-critical capabilities the agency cannot recruit and retain in a civil service environment.

Position for the work that remains after insourcing. When an agency insources a large chunk of a contract, it typically still needs specialized support that federal employees cannot provide. Position now to be the vendor of choice for what stays competitive.

The Bottom Line

NASA’s insourcing is a preview of where multiple agencies are heading as the administration pushes to reduce contractor dependency. Contractors with concentrated agency exposure need a diversification strategy now. Contractors with specialized capabilities the government cannot replicate in-house are well positioned for what remains. Brick by brick — the market is shifting, and the contractors who see it coming build before they have to.

Frequently Asked Questions

What is federal insourcing?

Federal insourcing occurs when a government agency takes work that has been performed by contractors and reassigns it to federal civil servants. Unlike a competitive recompete, insourcing removes the work from the private sector market entirely. The decision is made by agency leadership on cost, capability, and policy grounds — not through a procurement process.

What work is most vulnerable to insourcing?

Long-term advisory and assistance services contracts (A&AS), program management support, IT operations support, and technical advisory work performed at agency facilities are most vulnerable. Work involving specialized commercial capabilities, proprietary technology, or expertise that agencies cannot recruit and retain in a civil service environment is least vulnerable.

How does NASA’s insourcing affect small businesses?

Small businesses serving NASA as subcontractors under large prime contracts face indirect exposure — when a prime’s NASA scope is reduced through insourcing, subcontract opportunities under that prime shrink proportionally. Small businesses with direct NASA contracts for specialized services are generally less exposed, as their work tends to fall in the specialized commercial category that agencies continue to outsource.

References

Singularity Capital Advisors. (2026, August). NASA insourcing push to cost Amentum 3% of revenue in 2027. https://www.singularitycapadvisors.com/nasa-insourcing-push-to-cost-amentum-3-of-revenue-in-2027/