DOD’s FY 2020 Cloud Computing Budget

When the Department of Defense released its budget request for fiscal year 2020 in April it also published a new Congressional Cloud Report as part of its information technology budget materials. This report, the first of its kind that I’ve seen from any federal agency, provides a detailed look into the DOD’s recent cloud spending and its plans for the upcoming fiscal year. The newly-released data offers one particularly interesting set of facts that help unlock a mystery we here at Deltek have been trying to solve for years – determining what percentage of the department’s cloud spending/budget goes to in-house sources vs. commercial providers. Industry will be interested in particularly the latter data set as it gives substance to what is typically referred to as the “contractor-addressable” portion of the budget; although to be fair, even the “in-house” cloud resources offered by the Defense Information Systems Agency are based on technology purchased from commercial sources so to a certain extent all of it is addressable in one way or another.

In-House vs. Commercial Cloud

The data below shows DOD’s FY 2020 cloud budget request by military department (or Defense Agency) distributed by planned spending on in-house clouds (i.e., government-owned) vs. commercial clouds. DOD’s anticipated total cloud budget in FY 2020 is $656.4M.

There is a clear difference between the organizations that leverage commercial solutions the most, especially the Navy, and to a certain extent the Defense Agencies, vs. those that favor government-owned solutions, particularly the Army and Air Force. On the surface, this data would suggest that commercial providers looking to develop business should focus their efforts on selling to Navy and the Defense Agencies more than to Army and Air Force. Given what we know about DOD’s cloud computing plans, however, that conclusion would be only partially correct. The DOD CIO, for example, has ordered Defense Agencies to migrate all of their workloads to DISA’s milCloud 2.0 solution, meaning that in FY 2020 and beyond the portion of Defense Agency cloud spending represented by the light blue column should shrink vs. the portion represented by the dark blue column. Similarly, once the JEDI and DEOS contracts are awarded imagine how these spending proportions could change.

Comparing the Data

Being an analyst, I am always concerned about the reliability and completeness of the data I’m examining. To that end, here is a chart comparing the total cloud spending reported by DOD for FY 2018 vs. the same numbers collected by Deltek.

Every year we here at Federal Market Analysis collect contract numbers that we verify specifically as cloud efforts, either through the delivery mechanism of the capability (e.g., practically all Adobe products are cloud delivered now) or by looking through the statement of work to weed out contracts that are not cloud-related. The result is as pure a database of cloud-specific contracts as we’re able to come up with.

Deltek’s data suggests that the DOD is significantly underreporting its cloud totals, especially for spending that is contractor-addressable. This should provide some comfort to industry partners looking at the DOD’s data for FY 2020 and concluding that the department will not spend much on commercial solutions.

Summing up, the DOD’s FY 2020 cloud budget request provides some insight into what the department will spend with commercial partners vs. on in-house solutions, but it should be considered alongside other sources that provide additional details for comparison.