Deltek Forecasts Weak Defense Agency IT Spending Through 2021

Published: July 13, 2016

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Overall Defense Agency IT spending is expected to decline, but specific technology areas like cloud computing, cybersecurity, big data, and Defense R&D will remain active.

According to Deltek’s new Federal Information Technology Market, 2016-2021 Forecast Report, spending on information technology goods and services by non-military department agencies in the Department of Defense will decline from $11.5B in FY 2016 to $10.4B in FY 2021, resulting in a compound annual growth rate (CAGR) of -0.2%.

Deltek forecasts that Defense Agency spending on commercially-provided IT hardware will decline the fastest, followed by communications and network services and IT services. Spending on software is forecast to rise.

Defense Agency cloud efforts are an area of high activity, with much of that focused at the Defense Information Systems Agency. DISA plans to invest in a multi-phased cloud solution, incorporating DISA Enterprise Services where possible, to support the Presidential IT Community at the White House Communications Agency. DISA is also or intends to compete contracts for a Defense Enterprise Office Solution (i.e., unified capabilities) to replace Defense Enterprise Email and a new commercial solution for milCloud 2.0. In addition, the Defense Human Resource Activity will extend the cloud-based Person-Event Data Environment (PDE) across the DoD and transfer management to the Defense Manpower Data Center. Special Operations Command is getting into the game as well by procuring design and development services for a distributed cloud architecture for the SOF Information Environment.

Improving defensive cyber posture will also attract funding, with a focus on applied research at the Defense Advanced Research Projects Agency, operational systems development at the National Security Agency, and network equipment upgrades related to Joint Regional Security Stack implementation. A key element of DARPA’s efforts will be to transfer command and control of Plan X system capabilities to the military departments. Plan X provides a common operating picture for situational awareness for DoD’s Cyber Mission Force, making it an essential component for DoD offensive and defensive cyber operations. Lastly, Deltek forecasts Defense Agencies will invest in training services, advanced analytics, and software-defined networking as a defensive capability.

Zeroing in on advanced analytics for a moment, Deltek believes Defense Agencies will invest steadily in these capabilities for cybersecurity, health care, business intelligence, and ISR data processing. DoD is developing requirements to address the need for analytics solutions that integrate data from multiple sources, including programs at DARPA, DISA, and SOCOM.

Lastly, Defense Agencies are hotbeds of activity in Defense Research and Development. These efforts, falling under the rubric of the “Third Offset/Defense Innovation Initiative,” will offer opportunities to vendors providing innovations in machine-to-machine communications, artificial intelligence, autonomy, and big data. Deltek believes that vendors seeking to develop business in this area should stay in contact with DARPA and with the Strategic Capabilities Office at OSD. The SCO’s work focuses on developing prototype systems and solutions in cooperation with the military departments. As of mid-FY 2016, the SCO has averaged five or six new concepts per year. Just be aware of Other Transaction Authority (OTA), a new procurement method facilitiated a clause in the FY 2015 National Defense Authorization Act that permits Defense customers to make small contract awards for prototypes to non-traditional businesses (i.e., non-defense contractors) for game-changing technologies.