DOGE Federal IT Vendor Impact Series: Maximus

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 May 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.

 

Maximus is unfazed by the uncertainty in the federal IT market

While vendors like ICF International have disclosed devastating impacts to their FY25 revenue as DOGE upends the stability of the federal IT market with stop work orders and contract cancellations, Maximus remains largely unaffected. Maximus’ leadership team stated on May 8 that a mere $4 million of its FY25 revenue had been negatively impacted year to date by DOGE’s actions.

 

Maximus’ U.S. Federal Services segment has continued to rapidly expand, generating $778 million in revenue during 1Q25. This represents an improvement of 10.9% on a year-to-year basis and is all organic. U.S. Federal Services’ operating margin also kept improving as it expanded 340 basis points year-to-year and 260 basis points sequentially to 15.3% in 1Q25.

 

These robust top- and bottom-line expansions were driven largely by volume growth on clinical assessments. U.S. Federal Services has benefited from the steady increase in demand for medical disability exam (MDE) services since the Honoring Our Promise to Address Comprehensive Toxics Act was passed in 2022. Maximus has been increasingly leveraging productivity-enhancing tools like AI to support these types of engagements so the company can successfully take on higher volumes of work while relying less on temporary contract workers.

 

Maximus has landed in a better position than it was in when the Trump administration first took charge in 2017 with significantly expanded capabilities, breadth and scale. While it processes these clinical assessments and supports the Centers for Medicare & Medicaid Services’ multibillion-dollar Contact Center Operations (CCO) contract, Maximus has continued to parlay its existing relationships with clients into more lucrative opportunities like systems integration and digital transformation work.

 

Maximus is also taking advantage of the bipartisan support for federal agencies to augment their citizen-facing services. The vendor unveiled the Maximus Total Experience Management solution in 2024 to gain traction with the Federal Reserve System and other agencies making these investments.

 

Maximus has booked $2.9 billion in total contract value year to date across its U.S. Federal Services, U.S. Services and its Outside the U.S. segments and has an additional $451 million in unassigned awards in its pipeline as of 1Q25.

 

Maximus estimated the value of its total addressable market at $41.2 billion as of 1Q25, down from $41.4 billion in 4Q24. Roughly $24.7 billion, or 60% of Maximus’ total addressable market, is tied to the U.S. Federal Services segment. It is also worth noting that over 60% of Maximus’ revenue during the first half of FY25 was derived from performance-based and fixed-price contracts, which is the Trump administration’s preferred contracting method.

How Maximus will navigate 2025

Maximus will likely continue to be shielded from the brunt of DOGE’s disruptions, given the bipartisan support for Maximus’ critical citizen services like the CCO and MDE contracts. These two engagements alone were last disclosed as being responsible for around 25% to 30% of Maximus’ $4.9 billion in total FY23 revenue. With the CCO recompete withdrawn and domestic Regions 1 through 4 secured, Maximus’ long-term prospects are more favorable than they were in summer 2024, but the vendor is not completely immune from the surrounding chaos.

 

While the bulk of DOGE’s contract cancellations and stop work orders have focused on various consulting and engineering services, Maximus could still face some disruptions, given the department’s activity in the federal civilian market. Maximus is heavily entrenched in this space and has flagged the Centers for Disease Control and Prevention, IRS and U.S. Securities and Exchange Commission as crucial long-term clients. Maximus’ relationship with the IRS has notably evolved over the years and is the epitome of the vendor’s go-to-market strategy.

 

Maximus gained traction with the IRS initially through its BPO-oriented work before expanding the scope of its services for the agency and becoming a valued technology integrator. Maximus is now competing against top-tier players like Accenture Federal Services as part of the IRS’ $2.6 billion Enterprise Development, Operations Services blanket purchase agreement while providing other crucial services like transitioning the IRS to a cloud-based Enterprise Data Platform. However, like many other agencies, the IRS’ budget could be slashed by billions of dollars in federal FY26. With spending from key clients under threat, Maximus needs to demonstrate that its services are mission critical and in line with the Trump administration’s long-term priorities.

 

A part of DOGE’s stated goals is to modernize agencies’ systems and streamline processes. Maximus can showcase how its technologies are reducing the amount of time needed to deliver critical citizen services without negatively impacting the customer experience (CX). Maximus can also leverage the case studies illustrating how the company’s digital transformation as well as modernization services have positioned agencies for success and put them on the path to responsibly utilize AI. Maximus leadership team recently disclosed that the vendor is currently discussing with clients and even DOGE representatives how to make processes across the government more efficient.

 

Partnerships will be integral as vendors across the federal IT market look to quickly demonstrate their value to the new administration. While Maximus has historically been quiet regarding its alliance activity, this could change as the vendor aims to avoid falling behind. For example, Maximus recently announced a partnership with Salesforce to augment its CX as a Service efforts. The Maximus Total Experience Management solution is being augmented with the Agentforce platform to provide clients with AI agents tailored to their needs that use data to adapt to citizens’ needs and simplify interactions.

 

Maximus is also one of the vendors currently considering M&A activity to bolster its operations despite the ongoing uncertainty in the federal IT market. While Maximus will not make any blockbuster moves like when it purchased Veterans Evaluation Services in 2021 to rapidly expand its clinical assessments business and relationship with the U.S. Department of Veterans Affairs, the company will explore tuck-in acquisitions that can strengthen Maximus’ capabilities with emerging technologies and its presence in core markets like the health sector.

 

Maximus’ venture capital arm will also closely monitor potential candidates that fit that criteria. Maximus disclosed during its 4Q24 earnings call that Maximus Ventures has made its first investment since being established in 3Q23. The unnamed company is optimizing technicians’ workloads when providing clinical assessment services with human-in-the-loop AI.

 

TBR anticipates that while Maximus will keep prioritizing federal opportunities relating to CX as a Service as well as technology modernization and optimization, it will balance the risk of its portfolio mix with state and local opportunities. The U.S. Services segment is particularly well positioned to support state and local governments in navigating the Trump administration’s sweeping changes and use these relationships as a chance to provide other services like unemployment insurance support.

 

TBR predicts that Maximus’ FY25 revenue will be $5.3 billion, representing a decline of 0.2% over FY24. Although U.S. Federal Services will continue to rapidly expand, its growth will not offset the normalization of the U.S. Services segment’s performance and the Outside the U.S. segment divestitures. TBR believes that these divestitures and the volume growth on key programs will cause the vendor’s operating margin to just narrowly surpass its FY24 operating margin of 9.2%.

 

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.