Between December 2024 and June 2026, federal civilian employment outside the Postal Service fell from 2,410,800 to 2,083,700, according to the BLS Current Employment Statistics series. That is 327,100 positions, a 13.6% cut in eighteen months. The contractor side of the cleared market did not shrink like that. Which sharpens the question sitting under every cleared job search: when you hit apply, whose payroll are you joining?

Two reqs can name the same agency, the same program office, and the same clearance level, and still be entirely different jobs. One makes you a federal civil servant. The other makes you an employee of a company that sells your hours to that agency. Most people find out which one they applied to around the offer letter.

Who actually employs you?

Short answer. On a federal req the government employs you and pays you from an appropriation. On a contract req a company employs you and bills the government for your hours. The agency is your customer, not your employer.

The federal side is not one thing either. OPM divides it into three services: competitive, excepted, and the Senior Executive Service. Excepted-service appointments, where many intelligence community jobs sit, skip the rated-and-ranked USAJOBS process and do not confer competitive status, which bites when you later try to move laterally inside government.

Contract work looks identical from the outside. Same badge, same SCIF, same stand-up. Your paycheck comes from a prime, a mid-tier, or a small business on a subcontract. Our guides to State Department contractor jobs and CIA contractor jobs show the pattern: you can spend a decade “at” an agency without ever being on its rolls.

Who holds the clearance, and who grants it?

Short answer. Three parties. The facility holds a facility clearance, the employer sponsors you, the government adjudicates you. No contractor grants a clearance, and none can sponsor someone it does not employ.

Under the NISPOM rule, a facility clearance is “an administrative determination that … an entity is eligible for access to classified information of a certain level.” The entity. The company. And it cannot go get one on its own initiative: 32 CFR 117.9(a)(10) says flatly that “a contractor or prospective contractor cannot apply for its own entity eligibility determination.” It must be sponsored, by a government contracting activity or an already-cleared contractor. Until that determination lands, nobody there touches classified material. The company’s FCL level also caps your access, worth reading against the levels of security clearance.

The decision about you belongs to the government. 32 CFR 117.10(a) puts eligibility with the Cognizant Security Agency, and the rule names exactly five: DoD, DOE, NRC, ODNI, and DHS. The CSA adjudicates under SEAD 4, then notifies the contractor. Access requires all three of need-to-know, a favorable government determination, and a signed nondisclosure agreement. Two out of three gets you nothing.

The same section kills this market’s most persistent myth. Contractors “will not submit requests for determination of eligibility … for individuals who are not their employees or consultants.” You cannot get cleared and then go shopping. The job comes first. Nor can employers hedge by hoarding people: 117.10(a)(5) bars using clearance requests “to establish a cache of cleared employees.” Our security clearance guide for 2026 has the mechanics.

How is the money set: GS grade and step, or a wrap rate?

Short answer. A federal salary is read off a published table: grade, step, locality. A contractor salary is whatever the company bid for your labor category, under the overhead, G&A and fee it must recover from the same billing rate.

The federal number is public before you apply. On the 2026 General Schedule, which carries a 1% across-the-board increase effective January 2026, base step-1 rates run $52,727 at GS-9, $76,463 at GS-12, $90,925 at GS-13, and $126,384 at GS-15. Nobody is paid the base rate. Locality is added on top. The 33.94% Washington-Baltimore-Arlington adjustment takes GS-13 step 1 to $121,785. In Huntsville-Decatur the 21.91% adjustment puts the same cell at $110,847. Even the “Rest of U.S.” floor adds 17.06%, for $106,437. Comparing an offer near the Pentagon with one near Redstone Arsenal? That spread is the conversation.

The contractor number is built backward from a billing rate. The FAR pools indirect costs and spreads them: “all items properly includable in an indirect cost base shall bear a pro rata share of indirect costs” (FAR 31.203). Your direct salary is the base. Overhead loads onto it, G&A onto that, fee on top. That stack is the wrap rate. The fee is not open-ended: on a cost-plus-fixed-fee contract, FAR 15.404-4 caps it at 10% of estimated cost, 15% for research work, and 6% of estimated construction cost for architect-engineer services. To bid your labor category the company had to show the government its hours, rates and cost, and how it computed those indirect costs (FAR 15.408, Table 15-2). Your salary is one line inside that structure, which is why negotiating a cleared offer works differently on each side: contractor offers have room, GS steps have none.

One correction while we are here. Recruiters routinely claim Service Contract Act wage determinations set a floor for cleared work. For most of this audience, they do not. 29 CFR 4.156 excludes persons employed in a bona fide executive, administrative, or professional capacity from the definition of “service employee.” A cleared engineer or all-source analyst generally falls outside the wage determination. Their pay is whatever the contractor bid.

What are the differences, line by line?

What really happens when your contract is recompeted?

Short answer. Not what the internet says. The incumbent right of first refusal is gone. If the winning bidder picks you up, that is bid strategy, not a rule protecting you.

This is the most out-of-date fact in cleared career advice. Executive Order 14055 (2021) provided that qualified employees on a federal service contract “be given the right of first refusal of employment with a successor contractor if they would otherwise lose their jobs as a result of expiration of the contract.” Executive Order 14148, signed January 20, 2025, revoked it. Labor then rescinded the implementing regulations at 29 CFR part 9, effective December 22, 2025 (90 FR 59734). The FAR clause that carried the requirement, FAR 52.222-17, now reads, in full: “[Reserved].”

A wrinkle makes it stranger. In the same rulemaking, DOL noted that EO 14055 applied only to solicitations issued after the FAR Council published implementing regulations, and the FAR Council never promulgated them. The protection people have cited for years may never have been enforceable against contractors at all.

Which leaves the practical reality. Incumbent capture still happens constantly: a bidder that can name the badged, cleared people already on the program writes a stronger proposal than one that cannot. You are an asset in someone’s bid, so keep the resume current and know your labor category. When the badge flips you are debriefed at the old company, since 32 CFR 117.12(l) requires it at termination of employment. Your eligibility carries forward, because a current determination based on an investigation of sufficient scope provides the basis for the new one. Our guide to protecting your security clearance is the checklist for that window.

Which side hires faster?

Short answer. Contractors move faster on the offer and slower on the start date, because the req can hang on an award that has not happened. The federal 80-day target measures only the clock to the initial offer.

Executive Order 14170 directs governmentwide time-to-hire below 80 days, and the OPM Merit Hiring Plan of May 29, 2025 is explicit that the goal “refers to time to initial offer.” Vetting sits outside that clock. OPM’s own levers include a streamlined background check, which tells you where the agency itself thinks the delay lives.

On the contractor side, “contingent upon contract award” is not a hedge. It is a regulation. 32 CFR 117.9(e)(1) lets contractors process employees for clearance during the negotiation of a contract or the preparation of a bid, so companies build a cleared bench on paper before they own the work. That is how a signed offer can land long before the work is funded.

As for the clearance itself, distrust every timeline you are quoted. GAO reported in December 2025, in GAO-26-107100, that more than 60% of the FY2024 clearance data it reviewed was inaccurate or incomplete, that 86% of the timeliness data was inaccurate, and that those errors affected the timeliness measurement of 95% of clearances completed across the government. Plan for a range, not a date, and keep the search moving, the way cleared professionals did through the last shutdown.

Frequently Asked Questions

Is a government contract job a federal job?

No. A contractor employee works for a private company that holds a contract with an agency. You may work in a government building, on government systems, alongside federal employees, and still be paid, promoted and terminated entirely by your company. Federal employment means an appointment to the civil service.

Do government contractors get paid more than federal employees?

Sometimes, and the ceiling is the reason. Federal GS pay is capped at $197,200 in 2026, the rate for level IV of the Executive Schedule, and in the DC and Huntsville tables GS-15 step 10 is truncated by that cap. Contractor salaries have no statutory ceiling. They also have no floor, no annuity and no automatic 5% TSP contribution.

Can I get a security clearance before I have a job offer?

No. Under 32 CFR 117.10(a)(7), contractors may not submit eligibility requests for individuals who are not their employees or consultants, and 117.10(a)(5) bars building a cache of cleared employees. The job comes first and sponsorship follows it. There is no self-sponsorship path.

What happens to my job when my contract is won by another company?

Legally, nothing is owed to you. EO 14148 revoked EO 14055 on January 20, 2025, DOL rescinded 29 CFR part 9 effective December 22, 2025, and FAR 52.222-17 now reads [Reserved]. Incumbent capture is still common, but it is a bid strategy, not a right you can enforce.

Which is more stable in 2026, federal or contract?

Neither is safe by default. Federal civilian employment excluding the Postal Service fell by 327,100 jobs, or 13.6%, between December 2024 and June 2026. Contractor risk concentrates at recompete, which now arrives without any nondisplacement protection. Federal risk arrives through RIF rules and appropriations.

The trade you are actually making

Look at the $197,200 cap one more time. In the 2026 DC and Huntsville tables, a GS-15 at step 10 does not receive the full locality percentage, because the statutory cap truncates it. That is the federal ladder in one number: a hard top, set by rule, no matter how good you are. The contractor ladder has no top. Since December 22, 2025, it also has no floor when a contract changes hands. Security in one, upside in the other, and your eligibility travels with your investigation even when your access does not.

So before the next application: open the req, find the employer’s legal name, and check whether it ends in Inc. or begins with United States Department of. Then read the pay line and ask which machine produced that number. In 2027 you will be living inside whichever answer you got.