Cyber defense opportunities in $1.8B market

Friday - 5/25/2012, 4:39pm EDT

Jason Wilson, Reporter, Bloomberg Government

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The Defense Department spent about $10 billion on cybersecurity over the past five years. But compared to other IT areas, cyber budgets are staying flat and might actually be a lot less than what you'd expect.

Jason Wilson, a reporter for Bloomberg Government, examined federal defense spending on cybersecurity for a new Bloomberg study. He joined In Depth with Francis Rose to discuss the overall trends he's noticed.

Report Executive Summary: (Written by BGov)

This study, part one of two, estimates the size of defense cybersecurity demand, identifies an important driver of procurement in this market and outlines specific opportunities for companies pursuing contracts. Watch video.

The study finds:

  • The Pentagon spent $1.82 billion on cybersecurity in fiscal 2011, or 56 percent of the amount spent on unclassified cybersecurity by the entire federal government. In the past five years, the Department of Defense spent 58 percent, or $8.8 billion, of total federal cybersecurity spending.

  • Bloomberg Government's estimate of defense cybersecurity spending is significantly less than commonly accepted estimates, which range between $3.26 billion and $4.4 billion a year.

  • Bloomberg Government's estimate of cybersecurity demand is lower than others' figures in part because our more precise definition of cybersecurity excludes other computer spending.

  • While the study shows that the defense cybersecurity market is relatively flat, spending on computer network operations has grown significantly in the past five fiscal years.

  • Cybersecurity spending tends to rise for one to three months after new directives and standards are released, and then falls.

  • Leading companies in the market include Booz Allen Hamilton Holding Corp. and Northrop Grumman Corp.

Part 2 of this study will examine the nondefense cybersecurity market. Companies in the market may be able to use these findings to focus their strategy, products, services and business development.

(Read the full Bloomberg Government study, "Trends in the $1.8 Billion Market for Defense Cybersecurity." BGov.com is a paid site and requires a subscription for access.)