Published: March 14, 2018
Last week in this space, Deltek GovWin’s Federal Market Analysis team posted an update on the total value of cloud contracts awarded by civilian agencies in fiscal 2017. This week’s analysis provides an equivalent set of data for the defense market.
As a reminder, this data is part of a report on the federal cloud market that FMA produces every October. Updates to Deltek’s cloud database take place every year in two phases. Phase one entails adding new contract numbers and their awarded ceiling values for the fiscal year that has just passed. Phase two involves identifying the number of dollars spent on the identified contracts. Phase one provides an idea of the size of the market based on the value of the contracts awarded, what we call Total Contract Value (TCV). Phase two then details what was spent against that TCV.
FMA recently completed its phase one update of the cloud market database for both the civilian and defense sectors. Phase two updates will be completed in October of this year.
Total Defense Cloud Market by TCV
The data for awarded contract value by defense organizations shows a strong rebound in fiscal 2017. After fiscal 2016’s lackluster award total, 2017 saw the DOD’s TCV rise to an awarded value of $2.3B. This is growth of almost 10X compared to the total identified in fiscal 2016 and nearly double that identified in fiscal 2015.
What drove this growth? As with the civilian sector, the data reflects in part a broadening of Deltek’s research methodology as more cloud solutions are identified. Other important factors include 2017 being a post-presidential election year and ongoing stability in the defense budget. Fiscal 2016 saw a slowdown in technology investment due to the pending administration change. The non-election year in 2017 changed that, allowing for the resumption of a more typical investment pattern that resulted in increased contracting activity. Fiscal 2017 also saw a second year in a row of a defense budget over $600B, providing necessary funding.
The third factor we can point to is the progress defense organizations made in creating mechanisms for investing in cloud. Contract awards like the Defense Information Systems Agency’s MilCloud 2.0 and Army’s Army Cloud Computing Enterprise Transformation (ACCENT) Basic Ordering Agreements offer ways for defense organizations to procure commercial cloud solutions that did not previously exist.
Top Defense Organizations by TCV
Moving now to the “by organization” perspective, the Air Force awarded cloud contracts worth $1.4B in fiscal 2017. The highest value award at the Air Force went to Dell/EMC, which nabbed a $1B contract to provide Cloud Hosted Enterprise Services. DISA’s TCV is made up almost largely of the $498M award to CSRA for MilCloud 2.0. In addition, DISA made a $40M award to Booz Allen Hamilton for Enterprise Mission Assurance Support Services. Rounding out the top 3 agencies, at Army CDW-G captured a $145M award for an Adobe Creative Cloud Enterprise Licensing Agreement. This massive contract flew under everyone’s radar, including Deltek’s, and came in addition to the $36M contract scored by AT&T for Unified Capabilities Soft Client Subscription Services.
Given the attention currently being paid to the saga surrounding the Joint Enterprise Defense Infrastructure (JEDI) we’ll need to see if the big boost in DOD’s cloud TCV in fiscal 2017 represents a turning point. Deltek has forecast since 2016 that defense cloud consumption would accelerate sharply from this year onward. Now the DOD’s budget and leadership appear to be fully behind the transition to the cloud that our forecasts predicted.