Analysts: Debt Deal Will Not Largely Affect Federal IT

Photo: Reza Baktar

Analysts have determined the discretionary spending caps, resulting from the debt ceiling deal passed this week by Congress, will not likely have a major effect on information technology spending.

In a recently published research report, analysts at INPUT, a Deltek company, determined that while overall agency budgets are under pressure, the administration’s IT priorities will result in continued investments in IT.

“While the administration is still focused on key cost-saving measures such as cloud computing and data center consolidation, agencies will be under pressure to execute those plans under strict budgets,” INPUT reported.

The low-cost and high-efficiency of IT makes it an attractive option to the government and is only about eight percent of discretionary spending. Also, some of the administration’s near-term priorities revolving around IT includes leveraging shared services, automating processes to improve delivery of citizen services, cybersecurity and investing in technology infrastructure to reduce operational costs.

“If Vivek Kundra has done anything in his tenure as Federal CIO, it’s been selling the idea that IT is an enabler of efficiency and cost-savings, which Congress likes,” Deniece Peterson wrote on INPUT’s blog.

Additionally, it is not a large enough target to warrant unbalanced scrutiny. Other larger areas like defense and aerospace, she explained, could be significantly more costly.

INPUT projects that federal IT spending will grow from $93.6 billion to $99 billion by fiscal 2016. The spending figures include estimates of IT spending not reported to the Office of Management and Budget.

Peterson offered several recommendations for IT providers to adapt to the tightening of the government’s finances. She explained that contractors should “revisit the programmatic biases that emerged during the fiscal 2011 appropriations debate,” in order to determine which areas the government thinks are bloated and therefore possible targets for additional cuts.

She also recommended companies align their marketing strategies to the government’s priorities and reduce prices without reducing value.

“The government will still be spending over $1T per year, and with a flat workforce and plans to make it flatter, a significant amount of that $1T will go to contractors,” Peterson explained. “But make no mistake – it is the survival of the fittest.”

“Those contractors that have a compelling message, powerful solutions, excellent customer service and impeccable execution will be those that not only survive but thrive in the coming years,” she added.

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