Cloud Computing in the FY 2025 Federal IT Budget Request

Several years ago, federal civilian agencies stopped reporting what they had spent on cloud computing services during the previous year. These numbers, which used to appear in the annual IT Portfolio users could download at the IT Dashboard, tended to be wildly inconsistent with the verified cloud contract spending data that we collect here at Federal Market Analysis.

Understanding where agencies were going in the coming fiscal year also proved challenging because no budget request numbers were provided for that either. Despite these limitations, the reported data provided industry with a sense of the direction that agencies were moving insofar as their cloud use was concerned. That sense has been missing in the official reporting until now.

For fiscal 2025’s IT budget, I decided to run all of our cloud market keywords against the program descriptions listed in the IT portfolio. This exercise provided data on the civilian agency programs that are currently leveraging cloud technology, or which are planning to leverage it in the fiscal year to come. Today’s post summarizes a few of the insights generated from this exercise.

Total Budget Growth

Starting with cloud in the budget requests of civilian agencies since FY 2020 we find the following.

The data show that the budgets civilian agencies have requested for programs leveraging cloud solutions doubled from FY 2020 to FY 2025. The really big jump occurred from FY 2023 to FY 2024, with total budgets for programs leveraging cloud computing, which had been growing by around $400M per year, suddenly exploding $2.2B higher in FY 2024. Slower growth in cloud-related budgets then resumed in the FY 2025 request.

Budgets by Civilian Agency

When the FY 2023-2025 data is broken down by agency, the following pattern emerges.

A couple of surprises revealed themselves in the analysis. The first of these is the low total at the Department of Veterans Affairs (VA). The VA has been among the civilian agencies spending the most on cloud computing annually for the last several years, and yet here was the VA coming in tenth compared to smaller agencies such as the Social Security Administration. This surprising finding illustrates the limitations in the reported data. There could be dozens of VA investments leveraging cloud technology, but if the program descriptions don’t mention cloud, or the name of a solution know to be cloud-based, the searches will not return any results.

The second surprise turned out to be the Treasury appearing at the head of the pack. Treasury’s road to the cloud has been long and slow. That changed in FY 2024 with the award of the massive Treasury Cloud (TCloud) contract. Accordingly, the Treasury ramped up its budget for cloud services from $515M in FY 2023 to $2.2B in FY 2024. This jump partially explains the rise in the total market from FY 2023 to 2024. In FY 2025, the Treasury then requested an additional $2.4B, illustrating how it is making a full-on enterprise push into the cloud.

Final Thoughts

Summing up, with $8.3B in total requested budget in FY 2025, federal civilian agencies are embracing cloud computing as never before. Some of the identified cloud-related budget totals may be misleading given the documented history of cloud-related investment at agencies such as the VA. Still, the data at least refills the gap created when agencies stopped reporting their previous year’s cloud spending a few years back.