U.S. gov't IT spending to be tight over short term
TechAmerica panelists seem some long-term growth in cybersecurity, mobile expansion and other areas
IDG News Service - Federal agencies will have tight IT budgets over the next 12 to 18 months, but there are opportunities for small IT vendors as many agencies divide up contracts into small chunks, IT and financial services representatives said Wednesday.
The next year to year and a half look "pretty tough" for federal IT spending as lawmakers try to reign in the federal budget, said Bill Loomis, a managing director focused on government IT markets at investment banking firm Stifel Nicolaus. IT firms serving the U.S. government are seeing their "bid pipelines continue to pile up" as many projects are delayed, he said at a TechAmerica event focused on government contracting.
"There's going to continue to be a lot of budget uncertainty, and that creates delays out there," Loomis said.
The federal government faces so-called budget sequestration -- large cuts in defense and other spending -- if Congress and President Obama's administration do not agree on spending cuts by the end of the year. Loomis predicted that the two sides will agree to an interim budget that puts off tougher choices until November's elections, but government contractors should plan for the large cuts, he said.
In February, Obama released a 2013 federal IT budget of $78.9 billion, a decrease of 0.7% from the government's 2012 budget. The priorities in the 2013 federal IT budget will be improving cybersecurity and pumping up e-government efforts aimed at citizen and business interaction with agencies, administration officials said then.
In the longer term, Loomis and other speakers at Wednesday's event see growth in the federal IT budget. Over the next two to five years, federal agencies will look to consolidate databases, expand their IT analytics capabilities and growth their use of mobile devices, Loomis said. In addition, federal cybersecurity efforts will be an ongoing priority, as will using IT to become more efficient, he said.
The U.S. government will continue to be a major buyer of IT and related services despite near-term "doom and gloom," added Tim Young, senior manager in the federal services practice at Deloitte Consulting. Federal IT contractors should expect more short-term contracts, instead of five- or 10-year deals, as agencies hesitate to commit to large projects, he said.
Loomis asked the panelists if they see government agencies looking to launch IT projects that will help them save money in the long run. Agencies have considered many small money-saving projects, but some don't have the budget to invest $10 million now to save $100 million later, said Tim Hoechst, CTO at Agilex Technologies, an IT services firm.
Despite the budget concerns, it's a good time to be a small business focused on government IT contracts, said Hoechst, whose company is five years old. Many agencies are splitting up contracts so that they can zero in on the expertise they need "for a particular problem," he said.
"We've tried to ride that wave," he said. "We'll take problems in smaller bites, and prove our value until they give us another bite."
In many cases, the contracts lead to short-term work, instead of long-term deals, he said. "You have six-month engagements rather than six-year engagements, and that means a lot more work to keep the flow of business going. But we think it's part of the new reality."
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is email@example.com.
- 10 Hot Big Data Startups to Watch
- 11 Unique Uses for Google Glass, Demonstrated by Celebs
- How to Export Your Google Reader Account
- How to Better Engage Millennials (and Why They Aren't Really so Different)
- Telltale signs of ATM skimming
- 20 security and privacy apps for Androids and iPhones
- Big screen con artists: 7 great movies about social engineering
Today, many government agencies – civilian and defense – find themselves in a technology quandary: the volume of data that must be stored is growing rapidly, while shrinking budgets are limiting capital expenditures (i.e. – servers, storage devices, etc.) required to store all of this data.
- IT Certification Study Tips
- Register for this Computerworld Insider Study Tip guide and gain access to hundreds of premium content articles, cheat sheets, product reviews and more.
- Federal IT Innovation Caught in a Catch-22
- Fed resources shoring up old infrastructure, holding back new technologies.
- ESG Lab Validation of QLogic's Caching SAN Adapter
- ESG details the results of their testing of QLogic's new 10000 Series 8Gb Fibre Channel Adapter with a focus on scalable database performance...
- Deliver Customer Value with Big Data Analytics
- Big Data requires that companies adopt a different method in understanding today's consumer. Read this white paper to learn why Big Data is...
- Cloud Analytics for the Masses
- Learn the best practices in building applications that can leverage volume, variety and velocity of Big Data for organizations of any size.
- An Interactive eGuide: DDoS Attacks
- In today's world, Distributed Denial of Service (DDoS) attacks on organizations are becoming more prevalent. The number of attacks are increasingly annually with... All Government IT White Papers
- 3 Reasons Why Sepaton is the World's Fastest Backup Solution
- Leading analyst, Storage Switzerland learns how Sepaton backs up and deduplicates massive data volumes while maintaining the industry's fastest performance - all in...
- Virtustream (Vayence) video taking a 3000-Seat SAP Environment to the Cloud
- How can public cloud services help your organization reduce costs and increase security for your mission
- Williams & Fudge on Transforming IT with EMC
- Watch Williams & Fudge Data Center Director Phillip Reynolds discuss why this accounts receivable management firm turned to EMC.
- The Success Network: Driving Business Forward
- The communications and connectivity infrastructure of your organization is the focus of this KnowledgeVault Exchange, sponsored by Comcast Business.
- Advanced Voice Solutions for Your Business
- How can hosted business class voice services help mid-sized business be more agile, competitive and ready for growth? All Government IT Webcasts