Cloud Spending On Other Transaction Authority Contracts, FY 2018-2020

Key Takeaways

• The DOD spent $286M on cloud computing OTAs in FY 2020.
• Air Force and the Army spent the most on their joint Enterprise Information Technology-as-a-Service initiative.
• Spending on cloud-related OTAs likely fell due to a decline in engineering services caused by the government’s COVID-19 response.

Last week’s post observed how a preliminary analysis of federal cloud spending in fiscal year 2020 showed a rather substantial slow down in agency investment. I suggested in the post that the shift to full telework in response to COVID-19 appeared to have delayed new projects, particularly in the area of cloud engineering, which makes up a significant percentage of federal spending on cloud annually.

This week’s post examines spending on cloud computing contracts awarded using Other Transaction Authority. Given that these contracts are intended for the development of prototype systems and solutions they are by nature engineering-centric. Analyzing OTAs can therefore offer a good way to test the hypothesis that the government’s COVID-19 response prompted a decline in cloud spending. One point to keep in kind is that the data on OTA spending applies only to the Department of Defense, as only the DOD, with a few exceptions, uses OTA awards for information technology requirements.

Total OTA Cloud Spending, FY 2018-2020

Federal Market Analysis found that the DOD spent $286M on cloud computing OTA agreements in fiscal 2020.

This number represented approximately double the amount spent in FY 2018, but a decline of $99M from the $385M that defense organizations spent on similar prototype requirements in FY 2019. OTA spending on cloud reached a new high in that latter year before COVID-19 forced the DOD to apply the brakes in FY 2020. Work still progressed, of course, but at a slower pace than the previous year.

Cloud OTA Spending by Defense Organization

Breaking down FY 2018-2020 spending by organization reveals that the Air Force spent the most on cloud-related requirements. This makes sense as roughly $68M of Air Force’s spending in FY 2020 involved work on its Enterprise IT-as-a-Service (EITaaS) initiative, including $36M on the Compute and Store component and $32M on the Network-as-a-Service part which provides the infrastructure for delivering cloud capabilities.

At $345M the U.S. Army’s cloud-related OTA spending came in second. Like the Air Force, the Army’s work on EITaaS comprised most of its FY 2020 spending at $77M. The Army also spent $49M on developing the Persistent Cyber Training Environment and $29M on the Army Accessions Information Environment.  

Defense Agency spending centered largely at the Defense Information Systems Agency (DISA), which spent $8M in FY 2020 on full scale production of the Cloud-Based Internet Isolation solution. Lastly, the Navy spent $9M in FY 2020 on its prototype Infrastructure-as-a-Service for Disconnected/Intermittent Connectivity Shipboard Installation.

This analysis of OTA data related to cloud computing prototypes appears to validate the conclusion reached last week about the federal cloud market in general. Spending on these engineering-focused efforts also showed a decline of about $100M vs. spending in FY 2019. The unprecedented impact of COVID-19 does appear to have slowed federal cloud spending, both on traditional contracts and OTA-based awards.