Treasury’s funding request for IRS cloud tech far outpaces other civilian agencies, report says

The Treasury Department is requesting roughly $2.4 billion in fiscal year 2025 for programs using cloud technology, with the bulk of that funding being directed toward the Internal Revenue Service, according to an analysis conducted by Deltek. 

The review of the government’s cloud-related program budgets, published on July 24, found that federal civilian agencies are calling for almost $9 billion in their FY25 IT budget requests, with Treasury outpacing the next highest agency’s cloud technology total — the Department of Health and Human Services — by more than $1 billion. 

Alex Rossino, an advisory research analyst on Deltek's federal market analysis team, told Nextgov/FCW that “programs that are using cloud in one way or another at the IRS account for $2 billion of the Treasury's total budget in FY25.”

“The bulk of what's going on at Treasury, when it comes to cloud work, is at the IRS,” Rossino said, adding that the department's next highest request for cloud-related funding is for general administrative offices, which accounts for approximately $139 million of the total. 

“My understanding,” he added, “is that the modernization of IRS systems is really based on leveraging the cloud to the greatest extent possible — so either for just adopting cloud native capabilities right from the get-go, or migrating certain capabilities that they currently have to the cloud.”

Treasury’s FY25 budget request — as well as its FY24 request — far outpaced other agencies’ cloud-related program budgets, which shows “how the Treasury is pushing harder than any other civilian agency to adopt cloud technology,” in recent years, according to the analysis. 

Rossino said, however, that this effort is indicative of Treasury’s slow adoption of cloud technologies in comparison to other civilian agencies, noting that “it took a few years for them to get off the ground with an acquisition strategy and then put together the solicitation documents.”

The report said the Departments of Agriculture, Homeland Security and the Social Security Administration, “have been extensively leveraging cloud technology for several years already,” and that “their cloud-related program budgets are also growing, but at a more measured rate consistent with maturity in the use of the technology.”

Overall, civilian agencies’ total FY25 budget request for cloud-related programs far outpaced the Department of Defense’s estimated cloud budget of $2.4 billion. Rossino said this had to do more with the acquisition process rather than department-based needs. 

“It's a lot easier to work with [civilian agencies] if you're a cloud provider,” he said, adding that “small businesses that are trying to get a foot in the door, or trying to sell a capability or whatever, they're better off probably looking at the whole spectrum of civilian agencies first before they try and do anything with the DOD.”

But the Pentagon is also notable for the sheer size of some of its contract offerings. The agency awarded a $9 billion enterprise cloud contract in 2022, known as the Joint Warfighting Cloud Capability, to help the department acquire commercial cloud services. The contract offers cloud solutions through Microsoft, Amazon Web Services, Google and Oracle.