Big Money Predicted for Navy IT Contracting
The Navy’s shipbuilding and aircraft programs come with the biggest price tags and garner the most media attention, but there are major opportunities for contractors vying for the service’s information technology projects, analysts noted.
“It doesn’t look like much compared to the rest of the contract spend for the Navy, but it’s big money,” Cameron Leuthy, a senior budget analyst with Bloomberg Government, said of the service’s IT investments.
The Navy buys more info-tech systems than any civilian agency and more than any defense organization other than the Army, he noted during a recent briefing for members of industry.
The service’s IT budget is projected to increase from $10.5 billion and $11.3 billion in fiscal years 2018 and 2019, respectively, to $12 billion in 2020, including classified programs. That number would then grow to $12.3 billion by 2024. Within that spending category, cybersecurity investment would grow to a projected $1.6 billion in 2020, an increase of $137 million from 2019. Spending would then level off at $1.7 billion annually in fiscal years 2021 through 2023 before increasing to $1.8 billion in 2024, according to Leuthy’s presentation slides.
The service’s largest IT program budgets for 2019 include: Navy enterprise resource planning, $182 million; base communications office, $161 million; Navy maritime maintenance enterprise solution, $125 million; Navy standard integrated personnel system, $112 million; and network on the move, $100 million.
A variety of vendors currently dominate the market, Leuthy noted.
“You’ve got an interesting mix of hardcore, traditional big defense contractors and specialized IT companies in this space,” he said. “Some of these top vendors weren’t big in Navy contracting overall, but they’re big in the IT space.”
Robert Levinson, a senior defense analyst with Bloomberg Government, sees cloud computing as a major growth area in the coming years.
“Cloud is hot,” he said, noting the Pentagon has plans for a massive $10 billion cloud program known as joint enterprise defense infrastructure, or JEDI, for which commercial tech giants have been competing. As of press time, Amazon Web Services and Microsoft were the two remaining competitors.
Part of the JEDI effort is “really to force all the [military] services to come to the cloud,” he said. “That’s been controversial and there’s a lot of back and forth and protests and all that kind of thing. But once that … is finally done and awarded, you’re going to see even more push,” he added. “Cloud is going to be a continued push for all of the services, not unique to the Navy.”