Federal Information Technology Market, 2021-2023

Published: July 16, 2021

FeaturedFederal Market AnalysisForecasts and SpendingPolicy and Legislation

Deltek?s Federal Information Technology Market, 2021-2023 report analyzes the market trends, policies and principal initiatives that will shape federal information technology spending over the next three years.

Deltek forecasts federal spending on contractor-supplied Information Technology (IT) products and services will grow from $118.1 billion in FY 2021 to $119.9 billion in FY 2023 at a compound annual growth rate (CAGR) of 0.8%.

More than ever, the federal IT landscape is a complex amalgam of rapid technological change and critical challenges alongside entrenched legacy infrastructure. Agencies are facing the challenges of diverse cybersecurity threats while working to emerge from the disruptive impacts of the COVID-19 pandemic. These and other challenges are impacting IT operations and resetting priorities of in-flight IT transformation and modernization efforts.

As the Biden Administration's presidential management agenda begins to take shape, the administration is strongly emphasizing IT modernization, cybersecurity and investments in key technologies as critical mission enablers, presenting opportunities in systems modernization, cloud computing, artificial intelligence, data analytics, automation and cybersecurity. Although the fiscal year (FY) 2022 budget proposes large increases to the discretionary budgets of nearly all civilian agencies and modest increases to the Department of Defense, IT budgets are much more varied and increases are more targeted. Consequently, agencies will remain under pressure in the coming years to increase efficiency, eliminate waste and demonstrate clear value for their IT investments.

Deltek forecasts the federal IT market will continue to show very modest and uneven growth over the next few years as agencies emerge from the COVID-19 pandemic and its impact on their operations and work to move forward on their IT priorities.

Key Findings

  • Major Budget Cuts Unlikely. Given the efforts of Congress (Democrats) and the Biden Administration to make significant investments to address long-standing deficiencies (such as infrastructure and climate change), major budget cuts are unlikely within the forecast period.
  • IT Priorities Advance. Agencies continue to make progress in critical technology areas, including cloud, cyber, big data, AI, health IT, mobility/5G and network modernization. Vulnerabilities exposed during the COVID response add focus and urgency.
  • Cloud as Enabler. Migrating legacy systems to the cloud and/or purchasing cloud-based capabilities is now the de facto way agencies are modernizing their IT environments. However, many agencies must still address application rationalization, security and governance.
  • Cybersecurity Dominates. Vulnerabilities exposed by the SolarWinds hacks are driving increased cyber budgets and pushing agencies to take a harder look at zero trust, but implementing the architecture will require increased investment across all technology segments. CMMC will help drive contractor trust, but concerns about program costs and impact remain.
  • IT Modernization Funding. Agency focus on IT modernization remains high due to funding and process changes in the TMF. However, the pace of modernization leveraging those funds will depend on the TMF Board?s ability to review, approve and oversee modernization projects.

Critical Insight for Vendors

Deltek's Federal Information Technology Market, 2021-2023 report takes a strategic 3-year look at the trends, drivers, and inhibitors shaping federal information technology procurement. The scope of Deltek?s analysis includes traditional IT and embedded IT spending within non-IT programs.

The report provides:

  • Insight into the factors, policies, and technologies shaping the market landscape over the next three years.
  • Insight into the dynamics shaping IT market segments and agency spending.
  • Insight from industry and government thought leaders.
  • Market forecasts to support vendors? strategic planning.
  • Recommendations to help contractors evaluate the impact of trends on their businesses.

Deltek's Federal IT Market, 2021-2023 report is delivered in PowerPoint? format, including a PowerPoint? Executive Briefing, and an Excel? data workbook.

FEDERAL IT MARKET, 2021-2023

TABLE OF CONTENTS

Introduction

 

  • Report Purpose
  • Scope and Methodology
  • Market Segment Definitions
  • Key Findings

 

Federal IT Trends and Drivers

  • Budget Environment
  • Technology Priorities and Policy Drivers
  • Acquisition Policy Drivers

     

    Federal IT Market Forecasts

  • Total Addressable Market
  • Addressable Market by Buyer Segments (Defense, Civilian, Intelligence)
  • Addressable Market by Technology Segments
    - IT Hardware
    - Software
    - IT Professional Services
    - IT Outsourcing
    - Communications and Network Services

     

    Agency Analysis

  • Army
  • Navy
  • Defense
  • Air Force
  • Health and Human Services
  • Homeland Security
  • Veterans Affairs
  • Transportation
  • Commerce
  • Treasury
  • Justice
  • Intelligence Community
  • NASA
  • State
  • Agriculture
  • Energy
  • GSA
  • Social Security Administration
  • Interior
  • Education
  • Labor
  • Environmental Protection Agency
  • Housing and Urban Development
  • Small Business Administration
  • National Science Foundation

 

Conclusions and Recommendations

 

Terms and Definitions