Procurement Centralization and the Federal Cloud Market

Back in the third week in March, President Trump signed an Executive Order (EO) “consolidating federal procurement for common goods and services in the General Services Administration (GSA).” The EO zeroed in on information technology (IT), stating, “agencies have independently purchased office productivity software, leading to numerous challenges and inefficiencies, including pricing inconsistencies. For example, the cost of a comprehensive suite of Microsoft Office 365 services could vary between agencies by more than $200 per license. Consolidating the acquisition of this software in GSA could result in more than $100M in savings per year.”

This announcement quickly prompted Google Public Sector to approach GSA “with the idea of providing a discounted price for Google Workspace based on the entire government’s userbase. The company said it conservatively estimated a potential savings for federal agencies of $2 billion over three years under the 71% discount.” The discount will be in place until the end of fiscal 2025 and the Department of Government Efficiency (DOGE) says it is but the first of many such deals to come.

The centralization of IT procurement in the GSA will also lead to the consolidation of contract vehicles used to procure cloud services. Industry does not yet know if all Government-Wide Acquisition Contracts (GWACs) will be folded into the GSA’s Multiple-Award Schedule (MAS). We do know according to the GSA, however, that “This effort will streamline governmentwide procurement and regulations, reducing duplication and enabling agencies to focus on their core missions.” The GSA also recently made a few changes to the MAS, including adding a cloud services sub-category and revising Special Item Number (SIN) 518210C Cloud Computing and Cloud Related IT Professional Services to include AI/ML. 

Now that it seems the GSA is turning the MAS into the one cloud contract to rule them all, it is worth asking what spending on GWACs for cloud goods and services has been over the last few years.

The chart below shows cloud-related spending on the most-used GWACs from FY 2022 to FY 2024.

Over the last few fiscal years, federal agencies have used SEWP V more for cloud goods and services than all other GWACs combined. Spending was also rising on Alliant 2 and OASIS, but the totals are tiny compared to SEWP V.

These numbers shake out as follows for the Department of Defense.

Defense customers also used SEWP V the most, but that spending has been declining for the last three fiscal years. This can probably be attributed to the DOD standing up alternatives, such as contracts for the Air Force’s Cloud One and the Joint Warfighting Cloud Contracts. Spending had been rising on OASIS and CIO-SP3, too, but falling on CIO-CS. As for Alliant, cloud-related spending on that dropped off when Alliant 2 came online.

Concerning the civilian sector, here is what the data shows.

Civilian agencies use SEWP V much more than any other GWAC. Meanwhile, spending on most other large GWACs has been decreasing over the last three fiscal years, with the exception of STARS III, which held steady.  

Summing up, it appears that with federal procurement consolidated into GSA’s MAS cloud good and service vendors who have relied on SEWP V will feel the pinch of shifting their sales efforts the most. Those are vendors who also happen to sell the most to civilian agencies. Meanwhile, vendors selling to the DOD will not feel the shift to the MAS quite as much in the short term. In the long term, however, even the DOD is likely to increase its use of the MAS as well.