Federal IT forecast: Brace for impact

Federal leadership and personnel are dealing with budget cuts already under way, and face a tsunami of more spending reductions with sequestration on the horizon. With IT considered as discretionary funding and the hunt for savings on, government workers can expect a radically changing landscape in the next few years, according to officials and industry experts.

It’s a grim situation that no agency or department will be able to escape, particularly if and when the sequestration process trims 10 percent of federal discretionary funding across the board.

“What everybody is thinking is, how do I make it very clear there’s no way possible my budget can take a 10 percent cut? There’s no good bureaucrat out there right now who thinks their budget can actually withstand that,” Roger Baker, CIO of Veterans Affairs, said June 14 at the Deltek MarketView 2012 briefing in McLean, Va. “But we have to make certain that we recognize that’s a possibility. It’s not even that we have to do a little bit better – we have to make dramatic cuts.”

If the government doesn’t act to avoid sequestration and it goes into effect on Jan. 3, 2013, the impact will be swift, according to Kevin Plexico, vice president of federal information solutions at Deltek. He noted that cuts would go beyond layoffs; contract terminations, furloughs and possibly even a government shutdown would have to also be considered in a worst-case scenario.

“This is the first time…there hasn’t been growth in IT spending. 2013 and 2014 will be a low point for IT spending and for discretionary spending,” Plexico said. He added that after 2014, a return to upward trends can be expected.

Although sequestration would automatically reduce spending by 10 percent, the federal budget does include slight increases over the next few years. Some agencies are seeing more growth in IT spending, such as the Treasury Department and VA, Plexico said.

The discretionary budget is expected to be $1.04 trillion in 2013 and $1.06 trillion in 2014. By 2021, it is estimated to reach $1.23 trillion, according to Deltek.

Sequestration isn’t the only factor shaping federal IT though. In 2013 federal employees can expect a handful of trends to play a key role in transforming government IT, according to Plexico.

Some of them include mandates, including the 25-point federal IT reform plan launched by former federal CIO Vivek Kundra, as well as directives to consolidate data centers. Other trends involve newer government-wide approaches to IT, such as the cloud-first and shared-first policies, strategic sourcing and mobile and digital strategies. Additionally, initiatives for research and development in big data may also have an impact, Plexico said.

While the looming budget cuts and challenges associated with change do present formidable hurdles, Plexico and other speakers at the MarketView event remained optimistic.

"I don’t think it’s all doom and gloom. I think there are some real opportunities here,” said Rep. Gerry Connolly (D-Va.). “Heretofore, technology has been a tool in government to make us a little more effective and a little more efficient. Where we’re headed is…for technology to be transformative, not a marginal or incremental improvement.”

See more on Deltek’s federal IT market forecast over at Washington Technology: http://washingtontechnology.com/articles/2012/06/14/deltek-marketview-report.aspx