In case you missed it, the Department of Defense (DOD) finally posted its “Information Technology and Cyberspace Activities Budget Overview” for FY 2026. I write “finally” because this document typically comes out in May, not three-and-a-half months later in the middle of September. Now that we have the numbers, what does the DOD estimate it will budget for cloud computing in FY 2026?

Total Spending/Budgets and Spending/Budgets by Organization

For FY 2026, the DOD estimates its cloud budget will total $2.7B. This represents an 8.8% decrease from the $3.0B DOD figured it budgeted this fiscal year, but an 11.2% increase from the $2.5B it budgeted in FY 2024.

Take these figures with a grain of salt because the verified cloud contract spending data we track here at Federal Market Analysis (FMA) shows that in FY 2024, the DOD spent $6.1B. There is quite a big difference between $2.5B and $6.1B.

The spending/budget data by defense organization comes in as follows.

Unfortunately, DOD provides no commentary explaining why we see volatility in the estimates, such as those submitted by the Air Force. At least the totals provided are relatively stable for the rest of DOD.

Cloud Migration Budgets

These figures are always a laugh. The DOD is in the middle of an enterprise-level shift toward cloud-delivered capabilities, both CONUS and OCONUS, yet the reported numbers of migration efforts are ridiculously low across the board, except at the Air Force. At least the Fourth Estate got on board with relatively reasonable estimates this year. Army and Navy’s estimates should probably look more like the Air Force’s, but who knows?

Use of In-House Cloud Capabilities

The annual estimates always include numbers concerning the DOD’s use of so-called “In-House” capabilities, what basically amounts to private cloud deployments at the organization and/or provided by other DOD entities.

These numbers should also be taken under advisement. We know, for example, that the Defense Agencies use DISA’s Stratus Cloud extensively. That capability could be considered “In-House,” but may not be. We simply don’t know. As usual, the Army never provides estimates in this category.

Use of Commercial Cloud Capabilities

Lastly, here are the numbers provided for the use of commercial cloud capabilities.

These estimates provide industry with at least some sense of directionality. Navy and the Defense Agencies have definitely been using commercial cloud services more year-over-year. Air Force is, too, but again shows an inexplicable volatility in its totals. Army’s estimates, meanwhile, are dropping. Taken in tandem with the claim that it does not use In-House capabilities, this data suggests the Army’s planned investment in cloud is dropping! This is contradicted by FMA’s contract data. It shows the Army’s spending on cloud in FY 2024 hit $1.2B, the highest level yet, and has been rising every year.

Summing up, I’m not sure why the DOD bothers releasing this data. It has so many problems that limit its usefulness. Industry would be best to use the words “at least” when using this numbers for planning purposes. We know for a fact that the DOD spends a lot more on cloud computing than it reports.