Federal Government Spending Outlook: Anybody’s Guess

Federal Government Spending Outlook: Anybody’s Guess

7.17.2017 | Blog | IT Sales | by RainKing

Will the federal budget achieve consensus before the deadline on September 30? Nobody knows. Even though one party holds all three branches of government, which ostensibly means less bickering on Capitol Hill about budget allocations, that’s not the case this year.

The majority party shows signs of internal friction. Certain contingencies have been slow to show support for the administration’s budget proposal. It’s not summertime in Washington, DC without budget-related political grandstanding; the hot months of 2017 have borne witness to plenty of congressional spending drama already.

Contested spending priorities

On one side, is the congressional majority pushing for budget cuts across the board. Meanwhile, the president has plans to increase military spending by $54 billion (a 10% increase for the defense budget). That explains much of the contention thus far.

Both branches agree that some form of reduction in healthcare spending should occur. Officials face pressure to make good on campaign promises to repeal and replace the Affordable Care Act. Intra-party friction over the debt ceiling adds further challenges for reaching consensus.

Executive proposal for federal technology spending is a mixed bag

The president’s budget request increases the federal technology spending by $1.6 billion in 2018 for a total of $95 billion. Most agencies (at least 14) will remain flat or see decreased budget, however. The increase largely funds IT Infrastructure updates for moving agency data away from legacy systems.

Sensible legislators on both sides of the aisle see the need for new hardware. Upkeep of legacy systems is expensive, and the Federal Government is riddled with systems dating back a decade or more. In some cases, mainframes date back to the Reagan administration—circa 1981, while other critical IT systems in government are over 50 years old. The Federal Government spends 75% of allocated budget dollars supporting old hardware.

Here’s a look at how tech spending shakes out for federal agencies under the current administration's proposed budget. (Source: Federal News Radio)

Which agencies are likely recipients of technology budget?

  • Department of Defense (DOD) stands to receive $4 billion more than last year
  • Education Department (ED) would see a $28 million increase over 2017 numbers
  • Health & Human Services (HHS) wins the largest increase of any civilian agency with $1.7 billion added to its budget

Which agencies are the biggest losers under this executive budget proposal?

  • The Environmental Protection Agency (EPA) stands to lose a third of its budget ($143 million less than last year)
  • Department of Agriculture(USDA) is facing a $220 million cut


Federal market analysis 2017

Forrester analysts predict that federal technology budgets will tighten further in the latter part of the current administration’s term. On the state and local levels, IT spending looks more bullish—fueled by municipal and state lawmakers purchasing cloud-based software.

The president’s announcement in January of a federal hiring freeze triggered speculation by federal worker union leaders that agencies will look to contractors to fill IT needs previously staffed in-house. Projections by some analysts indicate a “radical redesign” of Federal Government IT is on the horizon, with agencies adopting the practices and patterns of IT modernization in the private sector.


Application development opportunities

Technology contractors with services connected with planning for a hardware refresh, systems migration, writing programs that integrate old and new equipment should find demand for their services in federal RFIs according to recent market research. Government’s big iron will likely be replaced by offside cloud servers managed by Google, Amazon, and Microsoft Azure.

A move towards cloud-based federal data is good news for companies that develop microservices and APIs designed for remote access for offsite data stores. Software companies are in good position to sell into the Federal Government by developing HTTP/REST apps with JSON (JavaScript Object Notation) or Protobuf (Protocol Buffers).


Advanced technology adoption underway at the federal level

Company owners with core competency around data migration/access software should be ready to reach out for government contracts. Internal federal IT teams will be asked streamline existing operations for efficiencies. Federal agencies have begun to harness machine learning, and will be looking to purchase cognitive analytics and robotics automation solutions in the near term.

Public sector IT workers are perfectly positioned to drive change. And when agencies invest in their employees, federal workers can become innovators, driven by a positive mission to improve citizen services and leave a lasting impact on their country.    


Finding federal decision makers is tricky

One challenging aspect for many contractors wishing to extend their services into the Federal Government is discovering key decision-makers, and finding ways to attract and engage them. Learn how RainKing can reduce the guesswork and tedium for working within governmental constructs in Winning Bids & Business: Strategies for Selling into the Federal Government.

In some cases, due to the hiring freeze, certain agencies find themselves shorthanded in managing their technical projects. This may actually reduce some of the red tape for contractors since a winning bid requires fewer bureaucrats to come to an agreement when awarding work.

For example, the GSA Technology Transformation Service Commissioner, Rob Cook, has a hand in awarding contracts related to technology refreshes. However, several of the positions within the American Technology Council are staffed by temporary stakeholders—Tim Horne at GSA and Matt Cutts (formerly of Google), acting as U.S. Digital Service Administrator. Some critical decision making positions have sat vacant for months: the Federal Chief Technology Officer, Federal Chief Information Officer, and Director of the White House Office of Science and Technology.


It’s a year-round campaign for contractors

Veteran contractors grow to expect snafu’s when politics intertwine with running government on an operational level. The smart play involves finding and engaging stakeholders year-round, partnering with other contractors that complement your core offering, and approaching this federal sales funnel with the same strategies and vigor that produce success in the private sector.       

Winning Bids & Business