News & Events

Riding on the Cloud: Strategic Opportunities for Cloud-Focused Contractors

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On July 9th, the General Services Administration (“GSA”) announced it is seeking an additional cloud category for its IT Schedule 70 contract vehicle, with the intent to streamline the acquisition of cloud solutions and shared services across Federal agencies.  The GSA’s announcement highlights continued demand for cloud computing solutions throughout the Federal sector.  Over the past two years, Federal agencies have spent approximately $800 million on cloud solutions through GSA IT Schedule 70, with several agencies stating a desire to invest more resources to procure cloud solutions and adopt shared service models.  Additionally, while civilian agencies certainly represent a growth area for cloud providers over the near-term, the Intelligence Community (“IC”) is expected to generate increased demand for these technologies.  The IC’s cloud focus, a key piece of the Intelligence Community Information Technology Enterprise (“IC-ITE”) initiative, will be demonstrated during the latter part of this summer, with the anticipated roll-out of Amazon’s $600 million cloud for the Central Intelligence Agency (“CIA”).  Amazon’s solution would serve all 17 organizations that comprise the IC, and may signal a new era of technology adoption and information sharing across the entire Federal government, not just within the IC.  What impact does this have on government technology contractors?

Cloud computing remains a priority for the majority of Federal agencies, including those within the Department of Defense (“DoD”) and IC, and enterprise-wide adoption of cloud technologies and shared service solutions continues to be a focus from both a budgetary and procurement perspective.  As funding dollars continue to be channeled toward these solutions, government technology contractors with high-end cloud capabilities and/or access to customers wishing to procure these capabilities should be well-positioned to capitalize on positive M&A trends within this space.  As buyers continue to refine and shape their portfolios, cloud-focused contractors represent attractive targets.  Recent examples include L-3 Communications’ acquisition of Data Tactics Corporation, a provider of data analytics and cloud computing solutions primarily to the DoD, and Preferred Systems Solutions’ acquisition of Envision Technical Services, which provides advanced IT and cloud solutions to the IC.  Similar to Data Tactics and Envision Technical Services, government technology contractors with the ability to deliver high-end cloud solutions should be strongly positioned for significant near-term growth, particularly as it relates to M&A within this space.