The Federal Cybersecurity Market Shows No Sign of Curtailed Growth

The federal technology environment continues to present a challenging cybersecurity landscape, propelling multiple policies and strategies to meet the challenge. White House directives, congressional mandates, and evolving technology standards converge to propel agency cybersecurity efforts and related procurements of supporting commercial solutions.

Deltek's report, Federal Cybersecurity Market, 2022-2024 examines the trends and drivers shaping the federal cybersecurity marketplace and provides a forecast for the next three years.

Looking at the federal cybersecurity market from a wide perspective, we see five major categories of drivers that continue to create demand for government-wide and agency budget investments:

• Threat Environment – The complex and diverse threats to networks, devices, data and infrastructure.
• Technology Policy – Security compliance, standards, and management policies addressing government-wide priorities.
• Acquisition Policy – Cybersecurity is a growing requirement within acquisition policy.
• Technology Solutions – Technical remedies to improve security and emerging technologies that require security for greater adoption.
• Organizational and Workforce Strategies - Efforts to establish the leadership, organizations, programs, and skilled workforce to meet the cybersecurity challenge.

Driven by the plans and efforts to enhance agency cybersecurity postures across the federal government, Deltek forecasts the demand for vendor-supplied cybersecurity products and services by the U.S. federal government will increase from $14.8 billion in FY 2022 to $16.2 billion in FY 2024. (See chart below.)

Key Findings

• Flourishing Budgets. Agency cybersecurity budgets continue on a growth path, driven by both individual operational objectives and government-wide cyber policy directives. The DOD topline cyberspace activities budget for FY 2023 shows a modest 5% increase from the FY 2022 level and a 14% jump from FY 2021.
• Encompassing Directives. Elements in the 2021 White House Cybersecurity Executive Order continue to have sweeping impacts, driving advances in endpoint detection and response; vulnerability identification and remediation; and supply chain risk management, including software security. Supply chain provisions impact acquisition rules and contract requirements.
• Zero Trust Objective. Zero trust architectures and supporting efforts permeate nearly every aspect of federal IT and security. High-profile cybersecurity incidents, dispersed mobile workforces and identity and authentication concerns have coalesced to focus and accelerate pursuit of zero trust capabilities. Some agencies are using Technology Modernization Fund (TMF) projects to fund high-priority cybersecurity enhancements.
• Visibility and Collaboration. Cyber incident reporting and information sharing requirements impact both agencies and supporting contractors. Directives from OMB and CISA drive increased incident reporting and data sharing requirements for agencies and contractors.
• Capability Enablers. Many federal agencies are exploring the use of artificial intelligence (AI) and data analytics for continuous monitoring across networks, to automate cybersecurity functions and aid decision-making capacity.
• Evolving Programs for Defined Standards. DOD’s evolving CMMC program continues to focus on NIST standards while final federal regulations are anticipated in 2023. Civilian agencies will hold to NIST standards, even if they do not fully adopt CMMC.

Growth Drivers

Diverse threats, persistent vulnerabilities, coordinated attacks, pervasive and rapidly changing technologies, and dependence on interconnected technologies and critical data make safeguarding federal information and infrastructure one of the highest national security priorities. Security integrity is tested by complex federal IT environments, where legacy IT continues to operate alongside modern systems and emerging technologies.

The increased demand for mobile capabilities, cloud-based applications and advanced computational technologies, such as artificial intelligence, presses agencies to meet current security challenges while anticipating future needs. These factors drive ongoing federal cybersecurity modernization efforts that present both challenges and promising opportunities over the next three years, and likely beyond.

Get more of our perspective in the full report, Federal Cybersecurity Market, 2022-2024.