Federal Information Technology Market, 2024-2028

Deltek forecasts federal spending on contractor-supplied Information Technology (IT) products and services will grow from $131.0 billion in FY 2024 to $156.1 billion in FY 2028.

The federal IT environment continues to operate and adapt amidst a complex economic and geopolitical landscape. Agencies are working to make progress in core areas, such as IT modernization, cybersecurity and cloud computing, while concurrently developing new capabilities in artificial intelligence, analytics and automation. Within this context of fast-changing geopolitical and economic forces, the federal IT landscape is an increasingly complex combination of future potentials and current needs, as agencies seek to embrace emerging technologies while also sustaining or modernizing their legacy infrastructure.

In its policies and budget priorities, the Biden Administration continues to emphasize IT modernization, cybersecurity and investments in key technologies as vital to achieving crucial agency missions, essential citizen services and significant government-wide objectives. This technology agenda presents sustained and sundry opportunities in systems modernization and support, cybersecurity, cloud computing, data analytics, artificial intelligence, process automation and others. As a mission enabler, IT remains a substantial part of a broad scope of programs across professional services, R&D, defense & aerospace and operations & maintenance activities, as IT capabilities are embedded into varied and widespread programs, often beyond traditional IT areas.

Deltek forecasts the federal IT market will experience steady but uneven growth over the next five years as agencies seek to invest in IT capabilities that add new operational capacities and effectiveness, and address multiple administration technology priorities and mandates.

Key Findings

• IT Modernization Tops Priorities. Agencies continue to prioritize investments in critical technology areas, including cloud, cyber, big data, AI, health IT, mobility/5G and network modernization. Computing as a service, AI and machine learning, and zero trust environments are becoming of increasing importance as agencies modernize.
• CMMC on the Horizon. DOD’s ongoing development of their Cybersecurity Maturity Model Certification (CMMC) program continues, as specifics of the related program and acquisition rules remain in review at DOD and OMB. The program appears to be on track to launch in late 2024, or more likely in early 2025, but many specifics are TBD.
• Agencies Laying the AI Groundwork. Federal AI adoption continues to expand, particularly as agencies begin to adopt generative AI solutions. Policy and regulation are key driving factors to further AI federal expansion. As agencies continue to install Chief AI Officers and develop strategies, the number of federal AI use cases will rise to assist in agency modernization and operations.
• Domination of SaaS. Investment in Software-as-a-Service continues to outpace spending on every other type of cloud service. The GSA has acknowledged this trend and introduced changes to acquisition rules, such as giving contracting officers the ability to buy SaaS on a consumption model.
• Focus on Software Development. Agencies continue focus on DevOps, DevSecOps, human-centered design and the use of APIs and microservices in software development practices and modernization efforts.
• Embedded IT Grows. Spending for key technologies such as AI/ML, analytics, cybersecurity and sensor technology is increasingly embedded within non-IT programs, representing contractor opportunities beyond those funded by agencies' primary IT budget requests.

Critical Insight for Vendors

Deltek's Federal Information Technology Market, 2024-2028 report takes a strategic 5-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 five 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, 2024-2028 report is delivered in PowerPoint® format, including a PowerPoint® Executive Briefing, and an Excel® data workbook.