Federal Information Technology Market, 2020-2022

Deltek forecasts federal spending on contractor-supplied Information Technology (IT) products and services will grow from $116.6 billion in FY 2020 to $118.3 billion in FY 2022 at a compound annual growth rate (CAGR) of 0.7%.

The Federal IT landscape is facing unprecedented challenges. While in the midst of broad transformation and modernization efforts agencies are facing the disruptive impacts of the COVID-19 pandemic. As a consequence, agencies are working to adapt to pressing needs while keeping longer-term initiatives on track. The Trump Administration?s presidential management agenda calls on agencies to modernize their IT environments. To that end, cloud computing and the outsourcing of agency networks ? along with the use of advanced analytics, artificial intelligence and modernized cybersecurity practices ? are key areas of growth in the federal IT space. Although the Bipartisan Budget Act of 2019 provided higher near-term funding, agencies will remain under pressure in the coming years to increase efficiency, eliminate waste and adopt emerging technologies that promise to improve service-delivery. Deltek forecasts the federal IT market will show very modest and uneven growth over the next few years as agencies deal with the repercussions of the COVID-19 pandemic on their operations while working to move their IT priorities forward.

Changes to Deltek?s Forecast Due to COVID-19

Due to the unique circumstances of the COVID-19 pandemic, Deltek has made changes to this year?s forecast. Given the uncertainty of its impact on future federal budgets and operations, FMA is:

• Narrowing the forecast focus to ?near term,? covering only FY 2020?2022.
• Discussing additional federal IT spending scenarios for insight into factors that could have material effects on near-term federal budgets.
• Streamlining discussion of market drivers impacting multiple technology segments.

Key Findings

• Budget Ambiguity. Although uncertainty remains, Congress is unlikely to enact major budgets cuts while the economy is unstable. The topline budget for FY 2021 has already been negotiated, though Congress could enact some changes to help agencies address budget shortfalls and/or address ongoing COVID-19 response issues within regular appropriations.
• Insulated IT Budgets. Historically, federal IT budgets and spending are somewhat buffered from Congressional efforts to reduce the federal deficit or lower federal spending. The pandemic response has underscored the role of IT as a mission enabler.
• COVID-19 Impacts. COVID-19 operational disruptions drove rapid IT modernization efforts, such as scaling of remote access and telework capabilities, and emphasized the importance of cloud computing, which should drive investment in cloud capabilities and modernized network infrastructure.
• IT Priority Progress. Agencies continue to make progress in critical technology areas, including cloud, cyber, big data, AI, health IT, mobility/5G and network modernization.
• Category Management. Category management and contract consolidation efforts are driving price points down for commodity IT.

Critical Insight for Vendors

Deltek's Federal Information Technology Market, 2020-2022 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, 2020-2022 report is delivered in PowerPoint? format, including a PowerPoint? Executive Briefing, and an Excel? data workbook.