Department of Defense Cloud Budget Estimates, FY 2022-2024

Last Thursday, May 11, the Department of Defense (DOD) released its annual Information Technology and Cyberspace Activities Budget Overview. The document came out roughly one month after the other parts of the DOD’s budget and it provides a glance at the estimated departmental technology budget for the coming fiscal year.

One of the subjects covered is cloud computing, with estimates provided for spending on commercial cloud, in-house cloud, and the migration of systems to the cloud. The DOD’s total estimated budget for FY 2024, including all three of these categories, is $2.3B.

Commercial Cloud Budgets

According to the overview, “97% of the total cloud budget” ($2.0B) will be spent with commercial cloud providers in FY 2024. This is the highest total reported in three years compared to $1.5B in FY 2022 and $1.8B in FY 2023.

Strangely, however, although the DOD just awarded the Joint Warfighter Cloud Capability contracts, and senior defense personnel comment frequently about the department going “all-in” on cloud, spending on commercial cloud services at the Air Force and Army is expected to drop. Only at the Navy and among the Defense Agencies (no details given about which Defense Agency) is cloud spending expected to rise.

In-House Cloud Budgets

Another category the DOD reports is anticipated spending on in-house cloud, such as Stratus at the Defense Information Systems Agency (DISA). This figure totals $61M in FY 2024, up from $53M in FY 2023.

The Army reported no budget for in-house cloud and there is little movement in either the roughly $11M the Navy budgets annually, or the $1.0M budgeted by the Air Force. The real action here is in the Fourth Estate, which anticipates seeing the highest budget yet for in-house cloud services. This trend is probably related to the growing use of DISA’s cloud services by the other Fourth Estate agencies.

Cloud Migration Budgets

The last budget category reported by the DOD is anticipated spending on cloud migration. Take these figures with a shaker of salt; not a grain, an entire shaker. Here is why. The Army is about to award its $1.0B Enterprise Application Migration and Modernization contract vehicle and it reports anticipated spending of $0 on cloud migration in FY 2024. You read that correctly—$0.

The Army alone should be spending tens of millions on cloud migration in FY 2024, meaning that the numbers for each of the military departments and the Defense Agencies probably look more like those for Air Force, which appears to be the only service branch that took this exercise seriously.

Parting Thought

Our best guess here at GovWin is that the data reported by the DOD accounts for only one-third of what the department will actually spend on cloud computing in FY 2024. Our forecast estimate of $6.9B (published in August 2022) includes hundreds of millions for cloud migration and other engineering services based on previously established spending patterns and identified cloud contracts. Industry should probably take into account this and other data points, in addition to the ones provided by the DOD, when doing their strategic planning for FY 2024.