Federal IT Spending Could Spike in 2016

Federal civilian agencies are in line to ramp up their IT spending in the remainder of the current fiscal year and 2016, a new forecast suggests. 

Civilian agency spending could jump to a total of $48.1 billion by the end of the summer -- an increase of 10.3 percent compared to agencies' initial IT budgets for fiscal 2015, according to a report from the International Data Corporation. The forecast examined agency spending, budget plans and investment priorities, among other sources. 

The govermentwide IT budget for fiscal 2016 proposed by the Office of Management and Budget is about $49 billion -- 1.9 percent more than the updated fiscal 2015 budget, and 12.4 percent more than the initial plan for 2015, the report said.

The Department of Health and Human Services' IT spend is on track to grow from an initial estimate of $8.6 billion to a projected $12.6 billion by the summer -- a 45 percent increase, according to the report.

HHS' spending growth, disproportionately high when compared to other civilian agencies, could drive the spike in federal IT budgets, said IDC analyst Shawn McCarthy, who authored the report. 

Across agencies' planned IT spending in 2016, top programs were health care related -- the Centers for Medicare and Medicaid Services' Medicaid Management Information System could spend about $5.7 billion, and the Department of Veterans Affairs' Medical IT Support about $1.3 billion.

Some agencies might spend less than they proposed. The Treasury Department, for instance, will likely spend $3.8 billion instead of $4 billion, the report said.

Across civilian agencies, 63.8 percent of the fiscal 2016 IT budget was directed to IT services, and 18.1 percent was directed to software and hardware respectively (excluding budget proposals for personnel, office equipment and other related costs.)

"More and more, new development is going to cloud providers, IT service providers, shared services," McCarthy said. "Agencies are buying less hardware, and they are leasing software.. . . the model is changing."

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