Federal IT faces painful budget pressure

Federal agencies will face near-sequestration-level pressure to cut information technology spending in the next five years even if Congress manages to wriggle out of the across-the-board cuts required by a 2011 deal to avoid a government shutdown, a technology vendor and consultancy has predicted.

Cuts will be driven by budget austerity and facilitated by a move to more efficient technologies, especially vendor-managed cloud computing storage, analysts at Deltek said in a five-year forecast.

That will be a painful transition for many agencies that have been hesitant to outsource their computer programs to private sector clouds because of security concerns, the analysts said.

“The fiscal reality is running up against the cultural reality,” Principal Research Analyst Alex Rossino told Nextgov. “The cultural reality is agencies don’t want their data in vendors’ hands, and as a citizen and a taxpayer I don’t blame them. But with the way the fiscal picture looks, that’s what’s coming and they have no choice but to outsource more and leverage vendors’ infrastructure.”

Agencies also may make up for the cuts by shifting some technology costs out of the IT budget, said Rossino and John Slye, another Deltek analyst, such as by charging nontechnical divisions for IT services or by instituting bring –your-own-device policies, so federal employees are paying for their own smartphones and tablets rather than using agency-issued devices.

Guidance for fiscal 2014 budgets urges agencies to cut IT spending by 10 percent, but leaves open the possibility of reinvesting that money in new technology that can show a return on investment within 18 months. Slye and Rossino said they expect the trend of forced cuts with possible reinvestments to continue in coming years.

Deltek’s overall prediction for the direction of federal technology -- less spending, more efficiencies through cloud and other tools -- will be the same regardless of whether President Obama or the Republican presidential nominee Mitt Romney wins election in November, the analysts said.

“The Obama administration has really brought IT into the forefront of their government message,” Slye said. “It’s become central to government and government services. But at some point IT just becomes the status quo whatever the administration is.”

The greatest difference between the two candidates, Slye said, likely will be in administration priorities and how they use technology to meet them.

Much of agencies’ discretionary IT spending during the Obama administration has focused on using technology to improve citizen services -- a typical Democratic priority. The president issued an executive order in April 2011, for instance, requiring agencies to improve customer service based on lessons from the private sector.

Romney, on the other hand, may be more interested in using technology to drive down the cost and complexity of government -- a typical Republican priority, Slye said.

Social media also may be less emphasized under a Romney administration, he said, based largely on the personality of the chief executive trickling down to affect agency priorities.

“Obama had a persona coming into office of being hip and of a younger generation,” Slye said. “His BlackBerry was something near and dear to him. Romney doesn’t wear that kind of stuff on his hip. That’s not his style.”

The emphasis on social media in government is unlikely to disappear entirely, he said, especially if agencies can show evidence it’s helping to drive down the cost of communicating with citizens.

Rossino disagreed that there might be a difference in how the administrations manage social media.

“I take a more cynical view of this whole issue,” he said. “Social media costs practically nothing and over the last decade the president has become the campaigner in chief. Social media is a way people communicate so it will be used and exploited regardless of whether it’s an Obama or Romney administration.”