The Defense IT Marketplace is Under Transformation

The Department of Defense’s (DOD) information technology (IT) environment and surrounding landscape is undergoing a profound transformation. This is one observation within Deltek’ s recent analysis report, Defense IT Priorities and Strategies, 2020-2022, which examines the factors shaping the DOD’s information technology environment, priorities and key investment areas.

Technology Innovation and Acquisition Policy Driving Changes

The DOD’s shift to a new cloud-based infrastructure is increasing nimbleness, allowing greater remote capabilities and laying the foundation for the enterprise deployment of artificial intelligence. Leveraging new acquisition authority and reorganizing its processes to maximize efficiency, the DOD continues to introduce commercial technologies at an unprecedented rate, beginning with prototypes that DOD can transition into permanent solutions. Outsourced network operations and 5G pilots promise to deliver capabilities faster than ever, while cyber-operations – both offensive and defensive – are becoming a part of nearly every defense mission area.

Underscoring the pace of change, a new multi-domain operations concept is replacing the Joint Information Environment (JIE) construct that was promulgated just a few years ago. The resulting new multi-domain construct combines kinetic warfare with cyber capabilities and information dominance initiatives. The military departments are working to provide capabilities to the warfighting edge using cloud-based platforms that also employ enterprise-wide big data analytics delivered via mobile devices.

At the same time, demands for speed, agility, effectiveness and efficiency are reshaping enterprise IT policy while driving the use of alternative acquisition approaches, such as Other Transaction Authority (OTA). This report examines the DOD’s current and planned efforts to modernize its policies, acquisition processes and IT environment over the coming years.

Key findings in our analysis include:

• Flat Defense Discretionary Budget: The defense discretionary budget will be flat in FY 2021 compared to previous years, however IT budgets will experience slight growth.
• Securing the Defense Supply Chain: Enhancing supply chain security is a major thrust of current defense acquisition reform initiatives. Expect pending DFARS changes to clarify the potential impact these will have on industry.
• Cloud Adoption Accelerating: DOD’s commitment to commercial cloud is firming up. An estimated $299M of the planned FY 2021 cloud budget will be spent with commercial providers.
• Record High Defense Cyber Budgets: Recent funding for defense cyber budgets is at historic highs in response to growing threats from bad actors and state-level adversaries.
• Industry Can Help Shape CMMC: DOD’s developing Cybersecurity Maturity Model Certification (CMMC) program will continue to evolve over the next 6-12 months and beyond, with ongoing opportunities for industry to provide input and help shape program design.
• Interest Grows in Emerging Technologies: A growing appetite for emerging technologies is providing business opportunity for both traditional contractors and non-traditional industry partners alike, a trend reflected in increasing spending on awards for Other Transaction Agreements.

These factors and others continue to influence DOD’s efforts to develop and deploy the technical capabilities required to support its mission and modernization strategy going forward.

To learn more about the major drivers in the defense IT market and get our recommendations for how solutions providers can maximize their market positioning to best take advantage of defense business opportunities, read the full report: Defense IT Priorities and Strategies, 2020-2022.