Federal Cybersecurity Market Forecast Points to Sustained Growth

Securing the federal technology landscape continues to be among the highest of government priorities and presents some of the most formidable challenges for agencies large and small. Government-wide directives from the White House and Congress, combined with evolving technology standards and acquisition rules, continue to drive agency cybersecurity efforts and related procurements of supporting commercial solutions.

Deltek's report, Federal Cybersecurity Market, 2024-2028 examines the trends and drivers shaping the federal cybersecurity marketplace and provides a forecast for the next five years.

Growth Drivers

Assessing the federal cybersecurity market from a broad perspective, we see five categories of major drivers that continue to spur demand for government-wide and agency budget investments:

• Threat Environment – The complex and diverse threats to networks, devices, data and infrastructure.
• Technology Policy – Security compliance, standards, and management policies addressing government-wide priorities.
• Acquisition Policy – Cybersecurity is a growing requirement within acquisition policy.
• Technology Solutions – Technical remedies to improve security and emerging technologies that require security for greater adoption.
• Workforce Strategies - Efforts to establish the leadership, organizations, programs, and skilled workforce to meet the cybersecurity challenge.

Driven by the multiple plans and initiatives focused on enhancing agency cybersecurity postures across the federal government, Deltek forecasts the demand for vendor-supplied cybersecurity products and services by the U.S. federal government will increase from $17.4 billion in FY 2024 to $21.5 billion in FY 2028. (See chart below.)

Key Findings

• Growing Cyber Budgets. Agencies continued to grow their cybersecurity budgets to support progress of both agency-specific operational objectives and government-wide cyber policy mandates. However, workforce deficiencies can both hamper progress and sustain demand for contracted support.
• Cyber Executive Order Influence Continues. Elements in the 2021 White House Cybersecurity Executive Order continue to have sweeping impacts. Zero trust architectures and supporting efforts permeate nearly every aspect of federal IT and security. Supply chain risk management, including software, impacts acquisition rules and contract requirements. Agencies continue to invest in identity management, event management and security orchestration capabilities to fill cyber capability gaps.
• CMMC is On Its Way. DOD’s CMMC program is on the cusp of a phased launch beginning in early-mid-2025, as the program rule has been finalized and the acquisition rule is nearing completion. DOD contractors now have a clearer sense of what to expect and how to prepare for CMMC compliance.
• Security-by-Design. Agencies are heavily encouraging software developers to adjust product design and development processes to align with “security-by-design” principles to address agency concerns about cybersecurity risk.
• AI for Cyber. Many federal agencies continue to explore the use of AI and data analytics to augment and automate cybersecurity capabilities, including continuous monitoring across networks.

Complex Environment Presents Opportunities

Unknown vulnerabilities and persistent threats within a context of complex information environments and rapidly emerging technologies combine to make safeguarding federal information and networks a labyrinth of potential progress and pitfalls. Agency cybersecurity effectiveness is tested by complex, hybrid IT environments consisting of legacy systems, modern cloud deployments and emerging technologies operating across a mix of government-owned and commercially-provided infrastructure.

Growing demand for greater digital government services, cloud-based applications, mobile capabilities and advanced computational technologies – such as artificial intelligence and data analytics – presents agencies with multi-layered security challenges as well as potential game-changing opportunities.

These factors drive ongoing federal cybersecurity modernization efforts that present promising contractor opportunities over the next five years.

Get more of our perspective in the full report, Federal Cybersecurity Market, 2024-2028.