Budget Analysis: Defense Agency Programs Leveraging Cloud in FY 2023

Published: June 22, 2022

Federal Market AnalysisBudgetCloud ComputingDEFENSEForecasts and SpendingInformation Technology

Based on an analysis of the DOD’s fiscal 2023 budget request, Defense Agencies intend to spend $2.7B on programs leveraging cloud technology.

Every Spring, Deltek’s Federal Market Analysis (FMA) team takes a thorough look at the Department of Defense’s Procurement and Research, Development, Testing, and Evaluation (RDT&E), and Operational Test and Evaluation (OTE) budget requests for the fiscal year to come.

FMA identifies programs using keywords that invest in certain technologies of importance to the contractor community. These technologies include cloud computing, big data analytics, cybersecurity/weaponry, and others.

FMA’s analysis of the Fourth Estate’s fiscal 2023 Procurement, RDT&E, and OTE budget requests is now complete, revealing that Defense Agencies an intent to spend $2.7B on programs that use or prepare for the use of cloud technology in one way or another. This is down $535M from the more than $3.2B received in FY 2021.

Procurement, RDT&E, and Operational Test and Evaluation Categories

Turning to requested cloud-related funding by budget activity, Procurement totals $1.3B in FY 2023, down approximately $516M vs. FY 2021. Requested RDT&E funding totals $1.4B, which is up $92M vs. FY 2021. Cloud-related OTE funding, meanwhile, is $100M, which is up $26M vs. FY 2021

Identifying the specific cloud spend in each program is impossible due to the vague way that the DOD report’s budget request data. Readers should keep in mind, therefore, that the numbers presented here are the requested budgets for programs that plan to use cloud technology for a specific purpose (e.g., storage, testing, or delivering a capability, etc.). The numbers presented here should not be considered the Fourth Estate’s entire cloud budget for FY 2023. They are best thought of as a signpost indicating how and where Defense Agencies intend to use cloud and the potential amounts they could spend on it.

FY 2023 Spending by Defense Agency

The table below lists the total requested budgets for cloud-related work by budget activity and Defense Agency for the next fiscal year. The funding requested by the Director, Operational Test and Evaluation is included in a separate category.

The first thing that becomes obvious from looking at the data in this arrangement is the fluctuations in Procurement funding. Fiscal 2022 saw a strong decline in the number of Procurement programs leveraging cloud computing. Fiscal 2023 shows a strong recovery in this funding category, but at levels that are still significantly lower than the funding received in FY 2021.

The trend in requested RDT&E funding for cloud-related programs is a similarly mixed bag, with FY 2021 showing a recent high point in terms of the amount of funding requested vs. either FY 2021 or FY 2023. Eight out of the 15 Defense Agencies listed are asking for higher level of FY 2023 RDT&E funding vs. what they received in FY 2021. The other 7 Defense Agencies are all requested less funding than received in FY 2021.