DOGE Federal IT Vendor Impact Series: CGI Federal

The Trump administration and its Department of Government Efficiency (DOGE) have generated massive upheaval across the board in federal operations, including in the federal IT segment. As of March 2025, thousands of contracts described by DOGE as “non-mission critical” have been canceled, including some across the federal IT and professional services landscape. TBR’s DOGE Federal IT Vendor Impact Series explores vendor-specific DOGE-related developments and impacts on earnings performance. Click here to receive upcoming series blogs in your inbox as soon as they’ve published.

 

While DOGE had no material impact on CGI Federal’s top-line growth in 1Q25, bookings growth was likely impeded by its actions

CGI corporate tendered its 1Q25 earnings on April 30 with estimated* quarterly revenue of $401 million for CGI Federal (the company’s U.S. Federal operations), representing 8.9% year-to-year growth.
 
A strong inorganic tailwind from the company’s 3Q24 strategic acquisition of Aeyon, the largest peer purchase in company history, continues to bolster CGI Federal’s top-line growth. We estimate Aeyon will add between $140 million and $150 million in inorganic revenue (on a full-year basis) for CGI Federal once the acquisition is fully integrated from a revenue standpoint. The company contributed roughly $40 million to CGI Federal’s top line in 1Q25. The integration period, which began in 3Q24, is set to end in 2Q25.
 
While top-line growth remained robust, CGI Federal’s bookings dipped below CA$300 million for the first time since 1Q21, falling to CA$231 million ($161 million USD, est.) in 1Q25 from CA$357 million ($255 million USD, est.) in 4Q24. While seasonal contraction in bookings is typical in CGI Federal’s order book from the fourth calendar quarter of one year to the first calendar quarter of the next, the decline observed in 1Q25 may be due to DOGE’s actions in the federal IT market. CGI’s executives indicated during the company’s 1Q25 earnings discussion that since the November election and January administrative transition, federal agencies have preferred smaller-scale “bridge” contracts rather than multiyear renewals to keep current work ongoing until there is greater budget clarity in federal IT procurement.
 
Corporate level days sales outstanding (DSO) was down to 34.28 in 1Q25 from 35.12 in 4Q24. DSO in 1Q25 was also the lowest receivables collection time TBR has observed since CGI posted DSO of 33.44 in 1Q21.  While company executives declined to provide a specific DSO figure for CGI Federal, they noted that neither invoice approvals nor payments from federal market clients were taking longer than usual to obtain. CGI corporate also placed greater emphasis on improving receivables collection in FY25 (which commenced in calendar 4Q24), particularly in its U.S. federal operations as a hedge against any post-election turbulence in the federal budget process.

Strategic M&A in 2024 buffered top-line growth and better aligned CGI Federal’s portfolio with DOGE’s efficiency agenda

Acquiring Aeyon enhanced CGI Federal’s digital modernization capabilities and provided the company greater access to civilian, space and homeland security agencies. Aeyon was an aggressive acquisition that enhanced CGI Federal’s portfolio and delivery scale in IT modernization at the time of the purchase and has positioned CGI Federal strongly to capitalize on DOGE’s goal to drive greater efficiencies in federal operations by leveraging AI, analytics, automation, big data and cloud technologies, all capabilities expanded by the Aeyon purchase.
 
Aeyon’s civilian clients include the Federal Aviation Administration (FAA), which awarded CGI Federal a contract in April 2025 worth up to $186.4 million to migrate the FAA’s Notice to Airmen (NOTAM) system to a cloud-based environment. Obsolete and antiquated legacy hardware and software in the NOTAM system have been blamed for numerous air traffic stoppages that have disrupted thousands of flights and cost airlines millions since 2023.
 
Additionally, Aeyon expanded CGI Federal’s footprint in the Department of Defense (DOD), which could bode particularly well for CGI Federal as the Trump administration indicated in early April plans to submit a FFY26 (federal fiscal year 2026) defense budget request that could top $1 trillion for the first time in history, up from $895 billion in FFY25 and $841 billion in FFY24. CGI Federal does not build weapons platforms or munitions, but it offers robust proprietary solutions such as Sunflower (cloud-based asset management) and Momentum (financial management) that have relevance for DOD agencies and services branches looking to enhance fiscal and supply chain management, especially to comply with DOGE-related mandates. CGI Federal also provides defense agencies cybersecurity solutions.
 
Lastly, acquiring Aeyon expanded CGI Federal’s presence with NASA and other space-related areas in the federal market, in which the Trump administration plans significant budget increases, primarily to support global defense and intelligence operations but also to increase the resilience of IT systems used by federal law enforcement agencies.

CGI Federal expects greater emphasis on outcome-based contracting during Trump 2.0

CGI Federal generates over 50% of its revenue from outcome-focused engagements, typically contracts structured as fixed-price awards. Federal IT contractors can expect a general shift from cost-plus to fixed-price arrangements as agencies adopt a more outcome-focused mindset regarding new IT outlays. When the federal IT procurement environment begins focusing more on outcome-based contracting, it will shift more risk of cost-overruns or delivery delays to the vendors — a potentially margin-erosive scenario for federal system integrators (FSIs) that fail to maintain strong program execution.
 
CGI Federal is confident it can adapt to outcome-focused contracting in federal IT but is uncertain how quickly the transition can be completed. CGI Federal has been a perennial margin leader in TBR’s Federal IT Services Benchmark due to its traction with its ever-expanding suite of homespun intellectual property (IP)-based offerings like Sunflower and Momentum, and demand for these offerings will at least endure, but likely increase, under DOGE.

CGI Federal is on DOGE’s federal consultancy ‘hit list’ but may fare better than other advisory-led FSIs

The General Service Administration (GSA) continues to review contracts held by CGI Federal and nine other companies** the Trump administration instructed DOGE to initially target in an effort to cut $65 billion in consulting fees the federal government is set to pay in FFY25 and future years. According to GX2’s DOGE-Terminated Contracts Tracker, which tracks developments in federal contracting, CGI Federal has had a total of $13.4 million in contracts terminated by DOGE as of the publishing of this blog. For comparison, Accenture Federal Services has had over $193 million in cancellations, Deloitte Federal lost over $473 million worth of contracts, and IBM has had over $40 million in awards canceled by DOGE.
 
Only five total awards in CGI Federal’s book-of-business are listed as cancelled on the GX2 website, the largest termination being a $6 million contract for application development services for the Federal Communications Commission.  Other cancellations, albeit small in scale and total value, appear to have hit CGI Federal in its asset and financial management wheelhouse. These contracts include a $4.6 million cancelled deal for digital asset management solutions with the GSA, a $2 million contract to operate a procurement platform for the Department of Justice, an award worth $785,000 for asset management services with the Department of Transportation, and a $66,000 contract for property management software with the Federal Mediation and Conciliation Service.
 
CGI Federal claims it only generates 2% of its sales from “discrete consulting services,” which TBR assumes is a reference to the type of management or strategic consulting services most vulnerable to DOGE. The $13.4 million in DOGE-related cancellations represents less than 1% of CGI Federal’s trailing 12-month revenue of $1.55 billion (as of 1Q25).
 
*CGI corporate reports its fiscal data, including business line revenue, in Canadian dollars (CAD). TBR estimates fiscal information for CGI corporate and CGI Federal in U.S. dollars by multiplying the reported quarterly data in CAD by the average exchange rate for the quarter as provided by www.x-rates.com (0.696539 in 1Q25). CGI Federal reported sales of CA$575.5 million in 1Q25, or $401 million U.S. dollars (USD).

**Accenture Federal Services, Booz Allen Hamilton, Deloitte Consulting, General Dynamics IT, Guidehouse, HII Mission Technologies, IBM, Leidos, SAIC

 

TBR’s DOGE Federal IT Impact Series will include analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, IFC International, Maximus, Booz Allen Hamilton and SAIC. Click here to download a preview of our federal IT research and receive upcoming series blogs in your inbox as soon as they’ve published.