Proposed 2016 Federal Budget Plumps IT Spending by $2B

"We are looking at this budget with cautious optimism, which is what I would recommend vendors do," said Deltek analyst Deniece Peterson. "It is only a request, so I would use it as a guideline for where agency priorities lie. IT budgets have been relatively stable over the past several years ... so it's highly likely that some of the growth built into this budget will pass."

The U.S. government will increase spending on information technology for the third year in a row, if the Obama administration’s proposed 2016 fiscal year budget is passed. The fiscal year begins on Oct. 1.

The 2016 budget request includes civilian agency IT spending at US$49.1 billion and defense IT expenditures at $37.3 billion. The 2016 total of $86.4 billion is about $2 billion more than for 2015, and it is more than double the amount spent in 2001, according to the Office of Management and Budget. A significant aspect of the 2016 proposal is that IT spending will continue the upward trend of the past three years after hitting a small trough in 2011.

OMB made a point of declaring that the modest levels of year-to-year growth reflect more-efficient IT management in recent years.

“Through a combination of policy guidance and oversight, this administration has optimized IT spending to save taxpayers money by driving value and cost savings in federal IT investments, and by delivering better services to American citizens,” according to Analytical Perspectives, Budget of the United States Government, Fiscal Year 2016.

The 7.1 percent annual rate of growth in IT spending from 2001 through 2009 “has been slowed to 1.5 percent annually for 2009-2016, due in part to the Administration’s achievements in improving the efficiency of how funds are spent,” the budget document notes.

Changes Are Likely but Direction Is Up

Given the budget machinations of recent years, changes to the Obama proposal are likely. Congressional committees may make adjustments to individual agency IT budgets, but overall IT spending for 2016 is likely to continue a modest upward trend.

“The bottom line on the proposed 2016 budget is that we are no longer seeing five to six percent annual growth as we did in past years,” noted Shawn McCarthy, research director at IDC Government Insights, in a first-cut analysis of the Administration’s proposal. “The government also is spending more on shared services and cloud services for its IT needs, so the total amount spent on in-house IT solutions could actually reflect less than one percent growth.”

Budget analysis is a somewhat inexact process, given different methodologies and even differences of source data. The OMB figure is based on spending by cabinet departments and major agencies. In a preliminary analysis from Deltek, federal spending on IT was forecasted to gain by 2.7 percent between 2015 and 2016. When estimated Defense Department classified IT expenses are deducted from the OMB figure, the IDC, Deltek and OMB projections for 2016 differ slightly, but hover around $79 billion.

However, Deltek customarily adds estimates of spending covering classified intelligence functions, as well as spending by the judicial and legislative branches, which can add upwards of $30 billion per year to the annual IT budget.

“Because of the amount of digging and extrapolation we have to do to get to our intel number for IT, we do not yet have an estimate for that,” said Deniece Peterson, Deltek’s director of federal industry analysis.

The discretionary budget request did, however, reveal an increase in at least one component of intelligence spending, she told the E-Commerce Times. The budget for the Intelligence Community Management Account shows a gain to $211 million in 2016 from $197 million in 2015.

The funding supports the Director of National Intelligence and the intelligence community in such areas as leading intelligence integration, coordinating cross-program activities, and improving budget oversight.

“When it comes to IT, the tone of this budget seems to be recovery, in terms of giving agencies more money to kind of take things off the shelf that they’ve had to put off over the past couple of years,” said Peterson.

Several Departments Show Big Gains

On a government-wide basis, cybersecurity spending at $14 billion will account for almost 18 percent of the total for IT. Investments will include $480 million for network security, including the EINSTEIN3 accelerated program to detect and prevent malicious traffic, and $102.6 million for the Continuous Diagnostics and Mitigation program for hardware, software and services.

Among the agencies with major increases in spending are the following:

  • U.S. Labor Department: The department plans to allocate $820.9 million to IT in 2016, a 22.7-percent gain from 2015. Funding will support upgrades to the department’s “Digital Government Integrated Platform” with improvements or enhancements to VOIP, VTC, wireless access capabilities, mobile computing and records management.
  • U.S. Treasury Department: Spending for IT will hit $4.5 billion in 2016, a 19 percent gain over 2015. Specific items include $241 million for the department’s customer account data engine and $219 million for the Internal Revenue Service mainframe services and support.
  • U.S. Department of Homeland Security: DHS spending for IT will grow from $5.95 billion in 2015 to $6.20 billion in 2016. Significant investments for 2016 include a boost of $88 million for the National Protection and Programs Directorate, which deals with reducing threats to critical infrastructure. The Customs and Border Patrol will be spending $85 million more for its Non-Intrusive Detection System used to monitor various types of freight shipments.

While the federal IT spending pie is growing, vendors will still have to think strategically to get a slice of the business.

“Two thirds of government IT spending goes to large systems integrators who work with a variety of subcontractors to build the systems required by federal agencies. It’s very important for vendors to work with the SIs as part of their sales channel,” IDC’s McCarthy told the E-Commerce Times.

“We are looking at this budget with cautious optimism, which is what I would recommend vendors do. It is only a request, so I would use it as a guideline for where agency priorities lie,” Deltek’s Peterson said. “IT budgets have been relatively stable over the past several years, even as discretionary budgets declined, so it’s highly likely that some of the growth built into this budget will pass.”

The Federal Buzz: Clinton Emails; NIST Seeks Cyberhelp

Sunlight on Clinton: The revelation that former Secretary of State Hillary Clinton used private email instead of a government account immediately drew fire from open government groups.

“Even as federal electronic record keeping is widely considered abysmal, there is shock at what Secretary Clinton did because the most likely explanation of her intent seems clear: She created a system designed to avoid accountability,” wrote John Wonderlich, policy director at the Sunlight Foundation.

The legal implications are a bit trickier.

“Under the federal records act, agency heads are required to provide for the maintenance and preservation of records. [Clinton] clearly did not live up to that requirement,” Wonderlich told the E-Commerce Times, noting that records preservation should involve “official government channels.”

However, Sunlight suggested only that Clinton’s action was “potentially in violation of the law.”

Just after reports surfaced about Clinton’s emails, Judicial Watch reported that its court suit against the U.S. State Department would require the government to “answer questions about, and conduct thorough searches of, Hillary Clinton’s newly discovered hidden email accounts.”

The State Department failed to properly respond to a Freedom of Information Act request for documents — including Clinton’s emails — involving relations between the U.S. and Egypt, Judicial Watch claimed in the February 2015 suit.

On Capitol Hill, Rep. Jason Chaffetz, R-Utah, chairman of the House Oversight and Government Reform Committee, balked at asserting any illegality at this point.

“Violations of the Federal Records Act within federal agencies are something we take very seriously,” he said.

The oversight committee will work with another House panel “to further explore Hillary Clinton’s use of personal emails while at the State Department,” Chaffetz said.

Cyberassistance Sought: The National Institute of Science and Technology is offering private sector companies and other organizations Cooperative Research and Development Agreements dealing with energy sector cybersecurity.

Areas of interest include software, data collection and analysis, networking, and remote communications. Applications will be accepted on a rolling basis. The program contact is Jim McCarthy at NIST’s National Cybersecurity Center of Excellence; phone 240-314-6616.

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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