Federal CIOs pessimistic about the impact of IT as budgets flatten

Oct 17

By Jason Miller

Agencies will spend less on information technology over the next decade. And that downward slope will slow down the government’s ability to meet the ever-growing needs of citizens and businesses.

The TechAmerica Foundation’s latest survey and analysis of federal IT spending shows many agency chief information officers expect a grim decade.

“We are looking at about $70 billion for the current fiscal year with only moderate growth over the next couple of years. Really, it’s tied almost to inflation because of the pressure on the discretionary budget,” said Robert Haas, a spokesperson for the TechAmerica Foundation, during a press briefing earlier this week ahead of the 49th Vision Conference happening Wednesday and Thursday in Springfield, Va. “In this scenario we are in right now, the IT budget growth is really tied to the growth of the discretionary budget. With IT duking it out, if you will, with IT salaries, other personnel salaries, field operations and other items such as, maybe, real estate, agencies are having a hard time just even maintaining their current levels of spending. And the impact over time, when you take inflation into account, there’s very little growth over the forecast term baring any significant, major economic changes.”

TechAmerica Foundation estimated that because of inflation even slight increases actually are decreases in real dollars.

Haas said on the civilian side, the IT budget will remain steady at about $38.3 billion, and is expected to inch up to $42.1 billion by 2019, less than a $4 billion increase over the next five years.

Defense procurement, R&D slows

On the Defense Department side, TechAmerica Foundation predicted DoD will see a $31.7 billion IT budget in 2014 and it will grow by just under $5 billion to $36.3 billion by 2019.

The flat or no growth means fewer opportunities for contractors as well.

Trey Hodgkins, another spokesperson for the TechAmerica Foundation, said DoD’s procurement, and research and development spending will see the biggest downturns.

“We end up with a significant difference between the procurement dollars and research and development dollars, and that’s going to come in that 2013-2017 window, primarily a significant reduction in those areas,” he said. “It will climb back up again based primary just on inflation. The 2012 to 2014 is actually almost a 10 percent reduction in investment with very modest inflationary like growth out to 2024.”

Hodgkins added agencies and contractors are facing a series of negative forces, including cuts from sequestration, the decline of total spending within DoD because of the ending of the wars in Afghanistan and Iraq, and the fact DoD is spending less on operation and maintenance needs, that are causing the across-the- board funding decreases.

The group estimated DoD’s procurement spending will drop to $81 billion in 2014 from $90 billion last year, and slowly rise to $101 billion by 2024. Meanwhile, research and development spending will drop to $60 billion this year from $63 billion in 2013, and rise to $69 billion by 2024.

Hodgkins said the decrease in IT, procurement, and research and development spending follows a historical pattern where the government spends less after withdrawing troops from a specific theater.