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In my experience, the federal sector (DoD) is absolutely massive, incredibly easy to get into, and hard work is what matters most. Just jump companies if you're having issues with favoritism.
Hard work definitely matters if you’re a govvie - that’s all that’s needed to excel. But in many companies serving federal clients, you have to work smart rather than hard. I’ve been in the federal space for 15 years and wouldn’t call it small or exclusive, so it sounds like it might be your company.
There’s also a big difference between working as a consultant on various projects with concrete deliverables that broaden your skills and advance you professionally vs serving in a staff augmentation role, where you work in a USG office as a contractor, potentially for decades