While the overall Department of Defense budget in the Biden administration is expected to remain mostly flat, spending on information technology products and services should remain robust, according to a new report.

GovWin from Deltek’s recent Defense IT Priorities and Strategies, 2020-2022 report projects that the Department of Defense contractor-addressable IT market will show modest growth over a two-year period. Spend is expected to increase from $54.7 billion in FY 2020 to $55.7 billion in FY 2022 at a compound annual growth rate of 0.9 percent. This is expected to lead to more demand for advanced technologies such as 5G, cloud computing, cybersecurity, data analytics, artificial intelligence and autonomous systems.

“DOD’s move to a multi-domain operational construct will drive unprecedented integration across the joint force, paving the way for greater use of emerging technologies such as 5G and artificial intelligence,” said Alex Rossino, principal research analyst for Deltek.

The Department of Defense’s IT environment and surrounding landscape is undergoing a profound transformation. The department’s shift to a new cloud-based infrastructure is increasing nimbleness, allowing greater remote capabilities and laying the foundation for the enterprise deployment of AI. And 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.

Below are four of the key findings from the report, highlighting areas within DoD information technology spending that are expected to continue to evolve in the coming years.

  • Cyber budgets grow. Recent funding for defense cyber budgets is at historic highs in response to growing threats from bad actors and state-level adversaries.
  • Cloud adoption accelerates. DoD’s commitment to commercial cloud is firming up. An estimated $299 million of the planned FY 2021 cloud budget will be spent with commercial providers.
  • CMMC begins in earnest. DoD’s Cybersecurity Maturity Model Certification program is now at the piloting stage and will continue to evolve over the next six to12 months and beyond, with ongoing opportunities for industry to provide input.
  • Interest grows in emerging technologies. A growing appetite for emerging technologies such as Internet of Things and blockchain is providing business opportunity for both traditional contractors and non-traditional industry partners alike.

These themes are expected to overlap in the short-term with ongoing efforts to tighten and reform supply chain security, increased oversight of supply chain health and an increased desire to “buy American.”

“Supply chain security and cybersecurity are top priorities for DoD leadership and Congress,” said John Slye, advisory research analyst for Deltek. “Contractors must be proactive in ensuring their cybersecurity practices meet rising DoD standards in order to remain competitive in the market.”

The full report by GovWin from Deltek further explores the factors shaping the Department of Defense’s information technology environment, priorities and key investment areas, and includes recommendations to help federal government contractors evaluate the impact that these Defense IT spending trends and key investment areas may have on their business.

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