Fiscal 2015 a Strong Year for Federal Cloud Computing

With the first full month of fiscal 2016 in the rearview mirror, the settling dust of fiscal 2015 provides an opportunity to look back at developments in cloud contracting over the last fiscal year. Fiscal 2015 saw a number of interesting trends in cloud procurement by federal agencies and today’s post will examine a few of these for insight into how the market is shaping up. The figures presented here are based on the total value of contracts awarded for cloud goods and services, providing an indication of the size of the market. Please keep in mind that the awarded value of these contracts will not necessarily translate into an equivalent level of spending. This said, knowing the total value can provide insight into where the market is heading and what the potential size of the “opportunity” is in a given segment or sector of the market. Lastly, although the data presented here represents 220 cloud awards made in fiscal 2015, the value of some contracts could not be found. The total value of contracts awarded in 2015, therefore, could be higher than is represented.

Trend #1: Defense Cloud Awards Approach Civilian Awards

Let’s start with a big one. In fiscal 2015, the Department of Defense, the same bureaucratic behemoth that is often criticized for not adopting cloud-based solutions quickly enough, came very close to awarding the same total value of contracts for cloud services as all the civilian agencies combined. DoD’s total awarded contract value came to $1.14 billion versus $1.15 billion for civilian agencies. More than half of the total for DoD includes very large awards made by the Air Force – the $296 million Collaboration Pathfinder contract (#HC104715F4002) awarded to Dell Federal and the $427 million Enterprise Storage Services II award (#HC102815D0002) made by the Defense Information Systems Agency to World Wide Technology.

The Air Force award to Dell is a bigger deal than might be apparent because the Collaboration Pathfinder approach is being scrutinized as a model for the further use of commercial cloud services by the DoD. Considering Collaboration Pathfinder is about implementing Microsoft’s cloud-based Office 365 business capabilities, including email, it is even possible that the next iteration of Defense Enterprise Email (2.0), which the DoD wants to be a commercial system, will end up being the Collaboration Pathfinder solution expanded across the entire department.

As for the largest civilian awards, one of these literally flew under the radar. This would be a $238 million award made to Harris Corporation (#DTFAWA15D00003) for Common Support Services Weather Software Development. Software development isn’t specifically a cloud activity, but in this case the CSS-Wx program is using government provided infrastructure-as-a-Service for processing capacity and storage to deploy the solution, so cloud is critical to the work. Another big award was a $225 million task order (#EDFSA15O0090) made to HP Enterprise Services by the Department of Education for a Next Generation Virtual Data Center.

Trend #2: Fiscal 2015 - The Year of Hybrid Cloud

The strength of hybrid cloud use surprised in fiscal 2015 with total awarded contract value of $1.35 billion across both the civilian and defense sectors of the market. The total of DoD’s awards actually exceeded those of civilian agencies by some $200 million thanks to the ESS II and Collaboration Pathfinder contracts, which leverage hybrid models. Civilian agency totals comprised the Department of Education’s NG-VDC award mentioned above and the Federal Aviation Administration’s $109 million FAA Cloud Services award, which leverages a variety of cloud infrastructures.

Trend #3: IaaS Continues to Dominate the Market

Finally, both civilian agencies and the DoD continue to rely more on cloud-based infrastructure than on capabilities delivered via Software-as-a-Service.

This said, the awarded total for SaaS at the DoD ($306 million) surpassed the entire civilian sector combined ($214 million). Platform-as-a-Service use continued to lag behind IaaS and SaaS, as it has over the last several years. Lastly, civilian agencies awarded $347 million in contracts that call for a combination of “as-a-Service” options, while the DoD awarded only $74 million.