Feds to Keep IT Revenue Stream Flowing

As the U.S. economy shows modest signs of recovering, and with forecasts for the overall information technology market also showing modest growth, vendors can at least count on one big customer to provide a steady stream of revenue for the next year or two: the U.S. government.

Federal Chief Information Officer Steven VanRoekel has been promoting the idea that when it comes to IT, the federal government must “do more with less.” But the Obama administration’s budget for 2013 basically proposes that federal agencies do more with the same.

The projected IT budget for fiscal 2013, which actually begins October 1, is US$78.8 billion, essentially flat when compared with the $79.4-billion enacted for fiscal 2012. That cut of nearly $600 million can’t be dismissed as chump change, but in the overall budget scheme, federal IT spending will be on a plateau well into 2013.

Civilian Agencies Gain

Spending on IT within civilian agencies is expected to reach a total of $41.7 billion in 2013, an increase of $460 million from the 2012 budget. However, the Defense Department will spend $37.1 billion in 2013, reflecting a cut of about $1 billion. DoD projects savings of $300 million in IT expenses in 2013 as a result of data consolidation. A major administration initiative for 2012 is an additional $202 million for continuous monitoring technology related to cybersecurity.

The top five civilian agencies in terms of proposed IT spending in 2013 are Health and Human Services at $7.13 billion; Homeland Security at $5.75 billion; Treasury at $3.57 billion; Veterans Affairs at $3.32 billion, and Transportation at $3.10 billion.

While the federal IT funding level will remain about the same for 2013, vendors will be encouraged by VanRoekel’s policy to promote significant investments in IT innovations. For the past three years, the administration has been pushing agencies to reduce IT spending while pursuing more productive operations, such as the goal of cutting nearly 2,000 data centers by half.

Innovation Investments

“We’ve been spending a lot of time talking about ‘the less’ and it’s time to start talking about ‘the more.’ Now the question is how can we turn our savings back into investments,” VanRoekel said at an IT budget forum hosted in Washington last month by the Armed Forces Communications and Electronics Association. VanRoekel’s first priority would be generating return on investment so that savings could be reinvested.

“It’s not enough for agencies to just cut waste and duplication — they have to invest in new technologies that will fundamentally improve the way the federal government delivers services to the American people,” VanRoekel said.

Among several 2012 goals related to the budget and IT resource management which VanRoekel outlined at the AFCEA forum:

  • Shared services: A new “shared services” strategy will be released in April. Each agency will be required to develop a shared services plan that includes, at a minimum, two commodity IT areas for migration to a shared environment by Dec. 31, 2012. The “shared service” goal relates to an IT function that is provided by one organization for consumption by multiple organizations within or between federal agencies.
  • Interagency market: To encourage consolidation of IT operations, a task force will develop a “data center marketplace” so that agencies can leverage unused capacity across the federal government.
  • Incremental approach: Instead of developing major ‘one-shot’ information technology projects — which often take years to implement. including both contract and deployment phases — VanRoekel said one of his goals was to provide guidance to federal agencies to support modular approaches in acquisition and development.

    In his private sector experience, very few projects were started from scratch, he noted, but instead were built from components of existing capabilities.

    “We have been working with our federal procurement partners to look at modular contracting that allows us to build these componentized systems,” VanRoekel said.

Another goal for the next few years will deal with the IT management culture within the federal government. In order to bring in fresh thinking, VanRoekel will embark on a program to sponsor “entrepreneurs in residence” to promote “innovative best practices and technologies” at the federal level.

Under the program, private sector IT specialists will rotate through government agencies on a short-term basis. In addition, the initial group of Presidential Technology Fellows will begin their terms in government this year.

Procurement Plans Evolve

Procurement and contracting mechanisms will continue to evolve into a more integrated approach within departments and agencies, as well as across government. One key development that follows the goal of promoting collaboration among agencies on a wide range of IT operations is the use of contracts by multiple agencies.

The usual custom is that an agency will issue a contract designed to provide a solution just for that agency, or even just for a government unit within a department or agency. As a result of the single contract restrictions, a successful IT deployment contract cannot be applied to another situation within government. Instead, another duplicative contracting mechanism must be employed.

To remedy this situation, officials are seeking to modify contract models. Often, government units are “stuck” when trying to broaden the use of a narrowly scoped, single contract, Richard Spires, CIO for the Department of Homeland Security, conceded at the AFCEA forum. The issue has been raised within the federal Chief Information Officers Council and the staff at the Office of Management and Budget.

“We are turning to them to come up with contract language that could be used — that could really change the landscape,” Spires told CRM Buyer.

Vendors who are sensitive to the changing federal environment can benefit by responding positively to the changes.

“We need private sector strategic partners who can provide agile and lean capabilities for government IT,” VanRoekel told CRM Buyer.

Such IT management methods include management styles that are flexible, collaborative and less structured, coupled with the techniques focusing on efficiency, value and continuous quality assessment.

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.

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