Navy IT Spending is Expected to Decline Slightly from 2016 to 2021

Deltek’s new Federal Information Technology Market, 2016-2021 forecast estimates that spending by the Navy on contracted IT goods and services will fall slightly from $13.2 billion in FY 2016 to $112.7 billion in FY 2021 reflecting a -0.7% compound annual growth rate (CAGR). Deltek’s forecast projects relatively flat spending on software communications and network services and IT hardware, modest and targeted increases in software and significant cost savings in IT services over the forecast period.

The top-line flat-to-declining spending levels will still sustain targeted investments in high-priority areas like network modernization, cybersecurity, cloud computing, big data, and mobility, paid for, in part, by various efficiency efforts that touch broad areas of infrastructure and support services.

NGEN and CANES continue to dominate the Navy’s ashore and afloat network modernization efforts as Navy works to improve performance and reduce cost as it moves toward the Joint Information Environment (JIE). CANES ship-board communications conversions are ahead of the 2022 target date and could be completed as early as 2020. Currently, the Navy plans to re-compete NGEN in 2018 and with the network rolling into JRSS 2.0 when it is ready in 2018 or 2019.

Navy is integrating cybersecurity into all levels of its IT through the hardening of its communications and computing networks to increase the security of weapons and missions systems. Navy is also injecting cyber into its broader mission-support mindset and personnel mix through their Cyber Mission Force (CMF) and CYBERCOM. The FY 2017 budget includes $370M above the future years defense program (FYDP) across the spectrum of cyber programs leading to significant improvements in the Navy’s cyber posture.

The Navy prefers to leverage commercial cloud services, although they may use DISA milCloud for some sensitive data and systems. Navy has expressed willingness to use off-premise commercial partners, working to achieve FEDRAMP Level-5 high-sensitivity security protections. The Marine Corps has stated its resistance to using commercial clouds, especially off-premise options, due to data security concerns. Navy has evolved to a cloud-first approach.

Navy’s “Big Data” demands and approaches have evolved in parallel with cloud computing, cybersecurity and sensor networks. Navy continues to leverage data for tactical mission support. A comprehensive data strategy is slow to mature and challenges of data overload are growing.

Navy Enterprise Mobility is working through BYOD and data security. Afloat wireless connectivity also faces operational challenges. Look for continued evolution of mobility management and uses from mission tactical environments to base-level and back-office functions.

These areas of priority investments will continue to provide pockets of opportunity for contractor-provided solutions and services within an overall atmosphere of cost containment and efficiency pursuit that will contain top-line growth.