Changes in Federal IT Spending Require Nimble Contracting


Federal agencies will continue to spend heavily on information technology over the next five years, but the pace and direction of spending will be complicated by shifting priorities, congressional constraints and a presidential election.

The bottom line is that the overall rate of IT spending will be above US$98 billion each year for next six federal fiscal years, according to a forecast Deltek released last month during the company's Federal MarketView Forecast conference.

The funding level applies to what Deltek calls the "addressable" IT contract market, comprised of 58 federal agencies including intelligence units, the U.S. Postal Service and the judiciary.

The federal IT budget as calculated by the Office of Management and Budget covers just 26 agencies, mainly cabinet departments. The OMB figure for IT investments has hovered around $80 billion for several years.

Federal IT spending will reach $99.8 billion in fiscal 2016, then drop and level off to $98.0 billion in 2017, $98.1 billion in 2018, $98.0 billion in 2019, $98.2 billion in 2020 and $98.4 billion in 2021, the Deltek forecast shows.

However, the relatively flat level "hides the major disruptions taking place in agency technology priorities," said Kevin Plexico, vice president for research at Deltek.

"Cost saving initiatives are the primary driver for most major investments," going forward, he noted.

Some agencies may experience a significant bump in IT investments in the budget request for 2017 versus spending in 2016. The reason, according to Deltek, is that the U.S. Congress provided for a 2017 reprieve of the federal budget sequestration process that has kept a lid on spending for the past few years. That reprieve could continue at least through 2018.

As a result, the U.S. Army could see IT investments jump from $8.56 billion in 2016 to $9.14 billion in 2017, a 4 percent increase. Other 2016 to 2017 gains include the Department of Homeland Security, from $5.95 billion to $6.19 billion (up 4 percent); the U.S. Treasury Department, $3.77 billion to $4.50 billion (up 19 percent); the Department of Commerce, $2.16 billion to $2.33 billion (up 8 percent); the Social Security Administration, $1.58 billion to $1.69 billion (up 7 percent) and the U.S. State Department, $1.41 billion to $1.63 billion (up 15 percent).

The IT investment profile shows modest declines in various segments during the forecast period, with IT hardware spending declining from $16.6 billion in 2016 to $15.9 billion in 2021; IT services dipping from $53.7 billion to $52.6 billion; and communications and networks slipping from $18.2 billion to $17.5 billion. Software spending will gain, from $11.4 billion in 2016 to $12.5 billion by 2021.

In terms of government function, annual defense IT investing will drop from $47.4 billion in 2016 to $44.4 billion in 2021, while civilian agency spending will grow from $42.4 billion to $44.5 billion during the period, and intelligence agency funding will dip just a bit, from $9.7 billion to $9.5 billion.

There are some short-term and long-term acquisition factors affecting vendors serving the federal IT market, the Deltek forecast notes. The most obvious is the upcoming change in administration following the presidential election. A change within the same party is likely to affect government operations, while a change to a different party could compound uncertainty in contracting.

Still, any changes in IT procurement likely would be on the branding of management initiatives, with the substance of current reforms likely to remain in place, a panel of federal acquisition officials told attendees at the Deltek forecast conference.

With a relatively flat funding environment, the current and near-term emphasis on cybersecurity will have an impact on IT spending, and cyberprotection will evolve into a growing segment of investment.

"Because of the nature of the IT challenges that we are having in cybersecurity, agencies are having to spend money that they weren't really planning to spend for that purpose," Plexico said.

"As a percent of the IT budget, the cybersegment is growing as threats have grown -- and that is crowding out the ability of agencies to use [funds] for other investments," he told the E-Commerce Times.

That could constrain acquisitions of innovative IT capabilities.

Vendors will need to turn over the rocks to become familiar with the specific mission requirements at each agency in order to provide the best IT support for government customers.

One such effort the federal government is using to improve efficiency and flexibility in IT contracting is the "18-F" program at the General Services Administration (GSA). The 18F unit essentially acts as an inside-the-government consultancy to help agencies develop digital competencies, especially in software, and also find appropriate contract mechanisms and vendors.

The unit employs a small core of digitaI product acquisition experts, often with private sector experience, to assist procurement staffs that might not be fully up to speed on market offerings or on how to frame a request for proposals.

"We are aiming to be more inviting in terms of how private sector companies can work with us," David Zvenyach, director of acquisition management at the 18F program, told the E-Commerce Times at the Deltek conference, "and we hope to gain empathy from them on what we are doing."

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

0 Comment

Leave a Reply

Captcha image


  • 5300c769af79e

    Robotics Gone Wild: 8 Animal-Inspired Machines

    They are empowered If you want a glimpse of the future of robotics, start by looking at our biological past and present.Among programmers, there's a principle called DRY, which stands for "Don't repeat yourself.
  • 5300c769af79e

    10 Programming Languages And Tools Data Scientists Use Now

    Register and attend this webinar to understand where the world of cyber security is going, the rol Looking to get started with data science but not sure how to get started?Take a look at our list of 10 programming languages and tools that are hot among data scientists and data analysts right now.
  • 5300c769af79e

    iPhone 6, iPhone 6 Plus Face Ban In Beijing

    This session will give you advice on how to best ensure that your initial steps into analytics wil Intellectual property regulators in Beijing have ordered Apple to stop selling its iPhone 6 and iPhone 6 Plus in China's major city, claiming they violate patents held by a Chinese smartphone maker.The Beijing Intellectual Property Office ruled that Apple's current slate of iPhone smartphones violates the patents held by China smartphone maker Shenzhen Baili for its 100C phone, according to a Bloomberg report.
  • 5300c769af79e

    Netflix Now Offers Cellular Data Controls for Quality

    Through simultaneous blog posts and app updates released this morning, Netflix customers across the globe can control cellular data usage on a number of levels.Out of the box, Netflix is set to an “Automatic” setting, which sets the quality of Netflix streams to usage of about 1GB of data per 3 hours streamed (600kb/s).