Study quantifies coming cuts in federal IT spending

Federal IT spending is expected to decrease by $8 billion from now through fiscal 2017, but a new study finds the government will still be spending in certain areas.

According to the GovWin IQ study by Deltek, with the recent and projected budget cuts, agencies won’t spend as much on IT products and services as they once did. The cutbacks could decrease spending from $121 billion in 2012 to $113 billion by 2017.

Deltek predicts agencies won't spend as much on IT equipment and professional services will experience contraction. The reductions will come because of reduced federal employment, more strategic sourcing efforts, and a transition to lower cost mobile and thin-client devices. IT equipment investment could decline by a 7 percent compound annual growth rate. Services could decline by 1 percent.

Yet, the government is expanding further into some areas, such as cybersecurity and health care. Agencies will be investing in the foundations of the programs and the systems that support the overall initiatives, according to the study.

“While the overall market is declining, we see some pockets of opportunity that companies can tap into to soften the impact on their business,” said Deniece Peterson, director of Deltek’s GovWin IQ Federal Industry Analysis program.

Peterson said 2011's spending figures would be relatively on par with the 2012 numbers, or even slightly higher, since the spending the trajectory has been in the negative for the past two to three years. Deltek moved to a new model for accounting, leaving the 2011 numbers and the 2012 numbers not exactly comparable.

For the five-year forecasts, Deltek looked at IT hardware, software, IT professional services, IT outsourcing and communications, and network services.