Cloud Contracting Trends, FY 2021-2023

Each year, the Federal Market Analysis (FMA) team here at Deltek/GovWin expands its database of identified cloud contract awards. This year’s version will be complete by the end of March, as we are still putting in the spending data for those contracts. Some preliminary observations, however, can be made about the market based on the data we have so far. Today’s post summarizes a few of those broader observations.

Market Growth

The federal cloud market continued to expand strongly in federal fiscal year (FY) 2023. According to the number of new cloud contracts awarded, it hit the highest total ever with 9,140 awards identified. There are undoubtedly more awards out there that have either not been labeled as such or were made against larger contract vehicles for general IT support or data center management.

Although FMA cannot easily identify 100% of the contracts for cloud services awarded, our data does suggest how the market is trending, and that direction is up.

Awards by Business Size

When counting contract awards by business size, we can conclude that small business awards comprised 41% of the awards made in FY 2023. This percentage is far higher than the overall percentage of awards made to small businesses across the federal government as a whole.

Growth in small business awards can be attributed to a couple of things. First, the inclusion of a larger number of commercial solutions in the methodology FMA uses to identify cloud awards. Second, the shift in the market toward Software-as-a-Service (SaaS) procurements first noted by FMA in our annual cloud computing report several years ago. Federal agencies are using an expanding number of SaaS capabilities and small businesses are providing these in increasing numbers.

Top Solution Types

When it comes to the type of solution agencies are investing in most, advanced analytics come out on top. This category includes geospatial, financial/business, cybersecurity, and other types analytics. The surge in the procurement of analytics procurements suggests that agencies are becoming more efficient in adapting big data technology to their various needs. It also indicates that agencies are increasingly comfortable with analytics delivered via the cloud.

In addition, agencies are leveraging modeling and simulation more extensively. Computer-Aided Design (CAD) capabilities are included under this category. Some analysts include modeling under big data technology, but FMA has chosen not to due to certain considerations that are beyond the scope of this post.

The appearance of hyperconverged infrastructure reflects the dominance of VMware in this part of the market. Classified as a hybrid capability, agencies are using VMware for server and data center virtualization. Lastly, it is worth mentioning the presence of firewalls in the top ten types of solutions. Last week, I posted an article providing more data on the procurement of cloud-based cybersecurity.

In general, contract award data shows that the federal cloud market is robust and growing. Spending data is still to come, but I expect it will echo this conclusion.