Where are the defense bucks in 2015?

Defense agencies across the Defense Department have made their budget requests for fiscal 2015, and with those requests come a slew of defense opportunities for the contracting community.

Speaking at immixGroup’s Government IT Sales Summit on Thursday, industry analysts broke down each defense agency’s budget request and discussed where the money is going to be for companies looking to do business.

Defense Information Systems Agency (DISA)

  • FY15 IT Budget: $4.5B
  • FY15: Discretional Budget: $9.4B

DISA’s fiscal 2015 budget request is about even with last year, said Lloyd McCoy Jr., consultant, market intelligence at immixGroup. “Fortunately for those selling to DISA, [the agency is] somewhat unscathed by spending cuts and is actually expected to grow over the next couple of years,” he said.

Defense budgets

One of the reasons behind DISA’s safety is where its funding comes from: the Defense Working Capital Fund, through which other agencies such as the Army pay DISA for services like cloud hosting, McCoy said. Since the Army and Air Force in particular have been moving more of their applications and systems to DISA, he added, the agency has more money that it can spend on initiatives related to mobility, cloud and cybersecurity.  

On the topic of DISA, there will be some drivers that companies should know. For one, contractors have been hearing about the Better Buying Power initiative for years, said Stephanie Meloni, senior analyst, market intelligence at immixGroup, but one of the more tangible things to come out of it is the emergence of joint enterprise licensing agreements. In terms of cloud computing, industry will soon have the chance to help DISA store highly classified data as the agency looks to expand use of its internal cloud, called milCloud, Meloni said.


  • FY15 IT Budget: $6.2B
  • FY15 Discretionary Budget: $147.7B

The Navy has requested the largest amount of money of all the defense agencies, McCoy said, but compared to fiscal 2014, there is a dip in the amount of IT spending that the Navy requested for fiscal 2015. This is partly because the Navy has found a way to achieve cost savings through the use of enterprise licensing agreements, infrastructure consolidation and cloud computing, McCoy said, all areas emphasized by Navy CIO Terry Halvorsen.

In terms of drivers, the Defense Department is insisting that the shift to the Pacific is happening even despite budget stagnation, giving the Navy and Marine Corps a greater focus. But a shift to the Pacific is a tall order, Meloni said, and the Navy is therefore trying to do more with less.

One way is by rationalizing their cyber practices and trying to figure out a way to improve the service’s defensive cyber posture and cyber resiliency. Another driver is the Navy’s focus on rapid acquisition. The agency has stood up what it calls an Innovation Cell, which Meloni said will serve as a platform allowing the Navy to rapidly acquire and introduce new technologies.

“The innovation cell is set up to get your products to market faster,” she said. The first industry day for this will take place within the first two months of the 2015 calendar year.

Air Force:

  • FY15 IT Budget: $5.9B
  • FY15 Discretionary Budget: $137.8B

“The Air Force is the only service that has seen an increase in their IT budget for fiscal 2015 in their request,” McCoy said, “So, of course, that’s good news for contractors.”

With this budget, the Air Force is looking to embrace innovation and explore technologies that help them do two things: achieve cost savings in their operations, allowing them to divert money to modernization programs, and achieve innovation and development of new capabilities, McCoy said.

The agency will also be relying on technology to help mitigate the pressure they have felt due to downsizing headquarters staff, Meloni said. With reduced staff, the Air Force is looking to move their personnel away from IT systems management and toward the service’s warfighting mission, McCoy added. In a way, the agency is looking to get out of the IT business and rely on DISA to provide enterprise email, enterprise capabilities and IT capabilities as a service; this will help save money.

"The end goal for the Air Force’s IT outsourcing and streamlining will allow them to divert funds to the types of innovative solutions they want to focus on,” McCoy said. They are also looking to move to common standards in order to streamline processes and save dollars that they can use for organizational programs, he added.

Finally, McCoy said, the Air Force is hoping to achieve more IT interoperability with its reserve components since it will be relying on those components more often due to the agency’s reduction in force.


  • FY15 IT Budget: $7.5B
  • FY15 Discretionary Budget: $120.5B

The Army has the largest IT budget of all the military services, and will be using that money to improve existing systems incrementally since it will not be able to buy new systems and equipment, McCoy said. “The Army will need help managing applications and IT portfolios as such.”

“On the bright side, the Army’s technology portfolio will be filled with data analytics,” Meloni said, and the service actually is expected to be the biggest purchaser of big data solutions and software. They will be most reliant on purchasing solutions to improve situational awareness and decision making based on data, Meloni said, and will be additionally looking for autonomy in these tools in order to make it easier for the user to get what they need out of the data.

Defense Health Agency:

  • FY15 IT Budget: $2B
  • FY15 Discretionary Budget: $47.4B

The Defense Health Agency is looking to bring procurement and management together under one roof through shared services, Meloni said, and is additionally looking to augment their cybersecurity since mobility is expanding into the health care space.

“[The agency] is embarking on an effort to standardize the defense health IT infrastructure for the desktop level,” she said. That means that they will be looking at contractors for virtualization, network security and voice and video data solutions. Other drivers for the Defense Health Agency include electronic health record modernization, information assurance, telehealth and IT portfolio rationalization.

About the Author

Mark Hoover is a senior staff writer with Washington Technology. You can contact him at mhoover@washingtontechnology.com, or connect with him on Twitter at @mhooverWT.

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