Cloud Procurement at the U.S. Department of Agriculture in Fiscal Year 2019

Published: January 29, 2020

Federal Market AnalysisUSDACloud ComputingContracting TrendsInformation Technology

Trends in Cloud Procurement at the USDA.

The information technology environment at the U.S. Department of Agriculture achieved some notable progress over the last two years. The first federal agency to work with the General Service Administration’s Cloud Center of Excellence (COE), USDA incorporated more advanced data analytics dashboards into its environment, consolidated customer service and data centers from 25 to 4, and migrated 81% of the department’s applications to the cloud. By the beginning of FY 2020, the USDA had concluded its engagement with the Cloud COE, after achieving the goals IT leadership had intended. Work with the COE left the USDA a leaner, meaner department in IT terms, but did the changes engineered in cooperation with the COE have an impact on cloud acquisition?

Total Value of Cloud Contract Awards (TCV) from FY 2015-2019

In terms of the value of the identifiable cloud contracts awarded by the USDA over the last four fiscal years, this number has fluctuated wildly, punctuated by years when higher-value awards significantly raised the total, followed by years when total award values came in lower.

Leaving aside the outlier spikes in FY 2016 and FY 2018, the TCV for 2015, 2017, and 2019 shows a steady, regular climb, suggesting that USDA is indeed gradually increasing the total annual value of the awards it makes for cloud requirements. This is consistent with anecdotal reports about the department’s growing cloud use. Meanwhile, the TCV for the outlier years is reaching lower highs, which, when taken with the other three fiscal years’ totals, suggests that the contracted value of cloud goods and services at the USDA will eventually settle into a range of between $300M and $500M per year.

Number of Cloud Contracts Awarded at the USDA, FY 2015-2019

Concerning the number of contracts awarded for cloud requirements, this total rose until FY 2019 when it began to flatten out.

The curious thing about this, however, is that USDA’s TCV in FY 2018 reached $648M on 157 contract awards while the TCV in FY 2019 reached only $151M on 150 contracts. In other words, the average value of the cloud contracts the USDA awarded in FY 2019 was considerably lower than the contracts it awarded in FY 2018. A closer look at the data bears this out, with the average value of cloud contracts being $4.5M in FY 2018 and $1M in FY 2019. In terms of average contract values over the entire 4 year span from FY 2015 to 2019, the data shows a convergence similar to that identified above. In FY 2015 the average value of cloud contracts awarded at the USDA was $373K. By FY 2017, this had risen to $915K, while in the spike years of FY 2016 and FY 2018, the average contract values reached $15M and $4.5M, respectively.

Final Thought

The size of upward spikes in the average value of cloud contracts is declining at the USDA while the number of cloud contracts awarded per year is topping off. All of this suggests that the USDA’s cloud environment is settling into a more mature baseline which should lead to a leveling off of contract awards and TCV in the years to come.