Federal Civilian Sector Cloud Contracting in Fiscal Year 2018

Published: February 06, 2019

Federal Market AnalysisCloud ComputingContracting TrendsGSAInformation TechnologyVA

Civilian agencies are buying community cloud solutions and SaaS capabilities.

Fiscal Year 2018 proved to be a banner year for cloud contracting in the federal civilian sector. Not only did most of the large agencies show growth in the total value of the cloud contracts (TCV) they awarded, in some cases this growth proved significant. Today’s post provides a high-level overview of cloud TCV in the civilian sector, including the TCV for service delivery and deployment model types. Next week will take a look at the same data for the defense side of the house.

Top 10 Civilian Agencies by Cloud TCV

In FY 2018, civilian agencies awarded contracts for cloud goods and services valued at more than $6.2B, twice the $2.7B total awarded in fiscal 2017. The top 10 civilian agencies in this mix are show in the chart below.

The General Services Administration’s TCV exploded thanks to the award to Carahsoft and Grant Thornton of a Blanket Purchase Agreement for the New Pay financial management system, a vehicle with a potential ceiling value of $2.5B. TCV growth at VA, meanwhile, reflects that agency’s accelerated drive to modernize its IT systems via migration to the cloud, particularly the Amazon Web Services and Microsoft Azure-based VA Enterprise Cloud. The Department of Agriculture, another agency moving aggressively to the cloud was the only major entity to experience a drop in its TCV from FY 2016. This reflects in part a cycle at USDA of years with very high TCV followed by years with much lower totals.

Civilian Sector TCV by Service Delivery

When analyzed by service delivery the market shows some interesting trends. First, awards for Infrastructure-as-a-Service appear to have leveled out, remaining flat in FY 2018 compared to what we saw in FY 2016, and following a dip in FY 2017. The TCV for Software-as-a-Service offerings, on the other hand, rose steadily over all three years and increasingly fast in FY 2018 compared to the two previous fiscal years. Growth in the Platform-as-a-Service TCV showed a similar pattern, albeit with far lower totals than the SaaS numbers. The rising SaaS TCV comes as less of a surprise than the flat IaaS number. Congress and the White House have badgered agencies incessantly to modernize their IT infrastructures using cloud services and while the civilian sector has responded to this pressure the fact that IaaS TCV is flat could show some challenges agencies face in these efforts. SaaS-based capabilities, by contrast, are easier to consume while growth in PaaS TCV has been forthcoming for some time as civilian agencies learn to appreciate the benefits provided by cloud-based development operations.

Civilian Sector TCV by Deployment Model

Examining the data for deployment model use shows massive growth in the TCV of community cloud solutions and strong TCV growth in private cloud solutions.

Agency awards for public cloud also grew nicely, but awards for hybrid solutions fell compared to the total awarded in FY 2016. In general, the data is consistent with the trend toward hybrid environments that leverage a combination of on-premise capabilities and off-premise commercial capabilities. Civilian agencies have been moving in this direction for years now and this drift shows no sign of abating.