December

2015 Issue #14

The Soter Group

Fiscal Year 2015 Federal Civilian Information Technology (IT) Services Market $19.1
Billion
Our November 2015 issue focused on one segment of the $106+ billion fiscal year (FY) 2015 federal
civilian government services market: the large and growing federal civilian professional, administrative,
and management support services (PAMS) market accounted for nearly $31 billion of this greater
services market and included well over 20,000 various contractors. The competitiveness in the PAMS
market is largely a product of the ubiquity of relevant service-centric capabilities across the government
contracting community.
A similarly competitive and ubiquitous market is the information technology (IT) services market. This
market is a sub-segment of both the federal civilian government services market ($106+ billion) and the
oft-referenced federal IT budget, which totaled $48.1 billion in FY15 across the civilian agencies. The
remainder of this brief analysis highlights how the IT services market fits under these larger umbrellas
and identifies some key statistics and trends that should be useful as we continue in the new fiscal year.
Total Federal Civilian IT Services Market Grew 8.2% to $19.1 Billion in FY15
Amidst ongoing mischaracterizations of the federal budget and contracting environments as being
tough and constrained, the federal civilian IT services market grew 8.2% year-over-year to
approximately $19.1 billion in FY15. This follows a year-over-year increase of 14.0% between FY13 and
FY14. With additional growth expected in the overall civilian IT budget in FY16, continued increases in IT
services spending appear to be promising.

Billions

Total Federal Civilian IT Services Prime Contract ObligaFons

$20

All Others

$18

DOT

$16

USDA

$14
$12

DOC

$10

NASA

$8

DOJ

$6

State

$4

Treasury

$2

VA

$-
2013

2014
Government Fiscal Year

2015

DHS
HHS

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December 2015 Issue #14

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Top 3 Federal Civilian Customers Account for 47.3% of FY15 IT Services Spending
The Departments of Health of Human Services (HHS), Homeland Security (DHS), and Veterans Affairs
(VA) accounted for nearly one-half of all federal civilian prime contract obligations on IT services in FY15.
This proportion is an increase from both FY13 and FY14 levels. The bulk of this increase can be
attributed to the expansion of the VAs share of IT services spending from 12.4% in FY13 to 14.3% in
FY15. Among the major civilian customers, the Department of Commerce (DOC) is the other agency that
has experienced a marked increase in market share over this period of time, increasing from 4.2% in
FY13 to 5.5% in FY15.

Federal Civilian IT Services Prime Contract ObligaFons, % Share

100%

All Others

90%

DOT

80%
70%

4.2%

5.0%

5.5%

USDA

60%

DOC

50%

NASA

40%

12.4%

13.0%

14.3%

30%

DOJ
State

20%

Treasury

10%

VA

0%
2013

2014
Government Fiscal Year

2015

DHS
HHS

Ten Largest Service Categories Accounted for 57.0% of FY15 Total
The ten largest IT service categories totaled $9.8 billion in FY15, accounting for approximately 57.0% of
the annual federal civilian total. Systems Development was the single largest defined service category.
Federal civilian agencies obligated over $1.8 billion on systems development-centric service contracts in
FY15, making up 10.5% of the federal civilian total.
While the federal civilian IT services topline grew 8.2%, or over $1.4 billion, year-over-year between
FY14 and FY15, some service categories experienced significant decreases in prime contract obligations
in the past fiscal year. Ultimately, fluctuations in contract spending for certain capabilities can
potentially signify fundamental shifts in the market, and thus are important to discern and track in
conjunction with shifts in the total market size, customer spending, and competitive environment.

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2015 The Soter Group. All Rights Reserved.

December 2015 Issue #14

The Soter Group

Billions

Federal Civilian IT Services Prime Contract ObligaFons, by Service

Category
$20
$18

All Other IT Services

$16

Annual Hardware Maintenance Service Plans

$14

Telecommunicalons and Transmission

$12

Telecommunicalons Network Management

$10

Annual Somware Maintenance Service Plans

$8

Systems Analysis

$6

IT Strategy and Architecture

$4

Integrated Hardware/Somware/Services Solulons

$2

Programming

$-
2013

2014

2015

Government Fiscal Year

Facility Operalon and Maintenance

Systems Development

(in $ millions)

Approximately 5,000 Federal Civilian IT Services Contractors

While still very competitive, the federal civilian IT services competitive environment is noticeably
different from that of the federal civilian PAMS market. While the PAMS market was fragmented and
included over 20,000 contractors, the IT market is comprised of approximately 5,000 private sector
participants. More importantly, the leading IT providers hold much more dominant and controlling
positions; the top fifteen vendors identified in the table below garnered 43.0% of FY15 prime contract
obligations. Adding just eight more vendors, for a total of 23, would increase the share to just over half
of the total market. Continued consolidation in the market (e.g., CSC Government Services and SRA
International) could result in increasingly dominant market positions and should have an affect on
market opportunities and the associated growth strategies.
#
1
2
3
4
5
6
7
8
9

Vendor
Lockheed Martin
HP
CSC
SAIC*
Harris Corporation
IBM
Booz Allen Hamilton
Northrop Grumman
Accenture

FY15 IT Services Prime

Contract Obligations
$945.0
903.2
875.4
692.2
565.4
564.3
534.7
515.9
497.9

% of FY15 Federal Civilian

IT Services Market
5.0%
4.7%
4.6%
3.6%
3.0%
3.0%
2.8%
2.7%
2.6%

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December 2015 Issue #14

The Soter Group

10
11
12
13
14
15

SRA International
General Dynamics
Deloitte
AT&T
Verizon
CACI International
All Others

492.4
418.4
342.2
335.8
257.2
255.8
10,874.5

2.6%
2.2%
1.8%
1.8%
1.3%
1.3%
57.0%

(in $ millions)
Note: While Leidos and Science Application International Corporation (SAIC) completed their split in September
2013, government data may not completely and accurately reflect this new delineation. The data aggregated in
the table above is based on the best publically available information.

Conclusion
Both PAMS and IT services are major components of the greater federal civilian government services
market. However, there are characteristics that are strikingly different, which further support the
notion that there is no one-size-fits-all strategy, whether between organizations or across markets.
Nonetheless, the federal civilian IT services market presents a very attractive opportunity, given its size
and anticipated future growth. Given this growth environment, are you properly positioned to exploit
opportunities or at the very least, get your fair share? Are you focused on new and existing market
opportunities, or are you overly consumed by the potentially misguided constraints and barriers within
the market?
About The Soter Group
The Soter Group provides services to both the Federal government and the commercial entities that
support it. Our Commercial Services Division provides market research and assessments, competitive
assessments, business development and sales pipeline support, and strategic advisory services to
commercial clients seeking to enter or grow in the Federal government security market. Justin Taft,
President & CEO, and Peter Wong, Director of Market Research, authored these perspectives. The Soter
Group welcomes the opportunity for our research to be cited in third-party reports. To learn more and
to hire The Soter Group, please visit www.TheSoterGroup.com and/or email info@TheSoterGroup.com.
Report December 2015: Perspectives Fiscal Year 2015 Federal Civilian Information Technology (IT)
Services Market $19.1 Billion
To access and read all of our free market reports please visit: https://www.scribd.com/thesotergroupllc

1100 North Glebe Road, Suite 1010, Arlington, VA 22201 | Tel: 703.224.4407 | Fax: 703.224.8001 | info@thesotergroup.com
2015 The Soter Group. All Rights Reserved.