Although two months late in delivery, the president’s FY2014 Budget Request continues promotion of administrative priorities while proposing cuts and savings to trim the deficit. Deltek's newly released report, FY 2014 Federal Budget Request: Challenges and Opportunities, analyzes the spending priorities, policy plans and information technology trends and initiatives in the FY2014 budget request.
The Obama Administration is requesting $3.8 trillion for FY2014. The budget focuses on jobs creation and economic growth to strengthen the American middle class. Deltek’s report examines patterns in the $1.2 trillion discretionary budget, as well as the $82 billion information technology budget, including market trends, drivers, and contractor-addressable spending.
Using a well-honed methodology for gleaning the contractor-addressable portion of federal spending, Deltek calculates projected expenditures for FY2014 for ten different federal product/services market segments.
The chart above shows the contractor-addressable portion of funding across federal agencies, as well as compound annual growth rate for each from FY2012 to FY2014. Nearly all of GSA's budget authority is under "Spending Authority from Offsetting Collections, Discretionary" to provide GSA the authority to fund its operations using funds collected from sources other than appropriations, primarily service fees.
Should the budget pass as written, Deltek estimates the contractor-addressable portion of IT spending for FY2014 to be $106 billion, which includes traditional IT spending captured in the Exhibit 53, as well as IT spending not typically captured in Exhibit 53 reporting, such as in embedded weapons systems.
Additionally, Deltek predicts contractor-addressable federal spending on architecture, engineering, and construction services will reach $27.7 billion in FY2014. Aerospace and defense spending will reach $149 billion. And operations and maintenance spending will reach $80.6 billion.
The budget request and Deltek’s research reveals the following in regards to the different market segments:
- Information Technology: IT priorities are largely the same as the past 2 years, including shifting from an asset to a service mindset, infrastructure and data center consolidation, and continued transition to cloud computing.
- Architecture, Engineering & Construction: Expect a continued shift in funding from major to minor construction, including deferred maintenance, especially in civilian agencies.
- Aerospace & Defense: Despite budget constraints, DoD is focused on protecting investments that support the new defense strategy, and the war drawdown continues to impact spending on ground systems and mission support equipment.
As the federal government strives to reduce the deficit and decrease spending, finding contracting areas of opportunity becomes increasingly difficult. The request provides insight into the administration’s priorities, however the eventual enacted budget is somewhat of a wildcard. Don’t expect appropriations to conclude prior to Oct. 1, continuing resolutions are likely to prevail.
For more information on Deltek’s report FY 2014 Federal Budget Request: Challenges and Opportunities see the GovWin IQ website at www.govwin.com.
In his FY 2013-2015 Executive Biennium Budget, Hawaii Governor Neil Abercrombie highlighted the daunting challenges that faced his administration during the last biennium, including a $1.3 billion potential budget shortfall that threatened deep programmatic cuts to department operations statewide. The governor utilized a fiscal strategy to only address pressing needs while investing in the state’s future, with goals to improve government efficiency and transparency. For this biennium, Hawaii’s gross domestic product (GDP) is expected to increase by 2.4 percent in 2013, while unemployment rates continue to decrease.
The new biennium budget (seen above in Figure 1) has several areas of investment, including:
- Early learning and early childhood health
- Education IT and digital curriculums
- Increased resources for Hawaii’s aging population
- Environmental sustainability and protection
The biggest gains by department from FY 2013-2014 include the Department of Human Services ($309 million), Department of Budget and Finance ($251 million), and Department of Transportation ($52 million). The Department of Hawaiian Home Lands saw a budget decrease of $140 million. Investments for FY 2014-2015 include $151 million for the Department of Human Services and $91 million for the Department of Budget and Finance.
Although the numbers in Figure 2 look as if Hawaii has invested millions in information technology, the numbers actually represent more transparency into Hawaii’s IT reporting. Deltek was able to gather more data on the total value of IT projects in the state for the biennium budget. Health IT was a major investment, including $2 million for its health information exchange (HIE), $45 million for Medicaid IT initiatives, and $15 million for an electronic medical record (EMR) system. The Department of Taxation is also investing nearly $32 million into its tax system modernization project for FY 2013-2015.
Despite tough times that followed the economic recession, Hawaii has laid the groundwork for a stable foundation and is continuing to increase both its GDP and IT spending. Vendors working in the education, health, and environmental space should check out Deltek’s analysis on Hawaii’s budget here, and brush up on the Aloha State in our state profile application. For a free trial, please click here.
Drilling into the available data, we find that like other areas of the Defense budget, Army IT funding has been declining. Specifically, Army’s IT budget has decreased from $9.76B to $9.27B, or -4.94%, over the period from FY 2012 to FY 2014.
Starting with programs whose funding is declining, listed below are the five programs experiencing the largest percentage decrease.
Long Range Advanced Scout Surveillance System – LRAS3 is a legacy system that has been fielded.
Lastly, here is a quick look at programs receiving 100% DME funding. These programs may be efforts for which new contracts will be competed or which will require follow-on contracts for the work to be completed.
Despite a financially cautious approach, Georgia Governor Nathan Deal proposed an additional $2.1 billion to the FY 2014 budget compared to FY 2013, bringing total spending to $40.8 billion for the coming fiscal year.
The governor wants the FY 2014 budget to focus on eliminating waste, streamlining government operations, stimulating economic growth, and preparing for economic uncertainties. While most agencies’ base spending is reduced in FY 2014, investments will continue in key areas of health care and education. Governor Deal has defined health care as the largest cost driver in Georgia’s recent budgets, and that increased Medicaid expenses will require an additional $246 million in both FY 2013 and FY 2014 over current funding levels.
True to his word, the governor increased the Georgia Department of Community Health’s budget by $888 million, and the Department of Education saw an increase of $812 million. The University System of the Georgia Board of Regents also received a healthy increase of $220 million. The average reduced funding for departments was pretty minimal – the highest being a $23 million decrease for the Technical College System, and an $8 million decrease for the Office of the Governor. Unlike states that report proposed IT budgets alongside new fiscal budgets, Georgia only reports actual IT expenditures from the year prior. The data collected for FY 2012 also reflects a change in IT reporting methodology. In previous years, project portfolio amounts were included, but those amounts are no longer included in an effort to ensure more consistent reporting and to better compare IT spending with other states. It is also important to note that some state entities with large IT expenditures expected, like the University System of Georgia, are not required to report. Only 80 percent of required agencies reported in FY 2012, with just 41 agencies having a commissioner signature on their proposals. Due to the reporting style of Georgia’s IT spending, FY 2013 and FY 2014 are projected by Deltek. Despite a cautious outlook on state and national futures, Georgia maintains a steady spending rate in its total fiscal budgets. The Georgia Technology Authority (GTA) has made several new investments in recent years, and its current momentum is self-described as the nation’s largest state IT modernization. GTA officials said the primary focus in FY 2012 was building strong partnerships with the state’s strategic IT service delivery partners in support of collaboration; this is expected to continue in the years ahead. For more information on Georgia FY 2014 budget, visit the state profile here.
True to his word, the governor increased the Georgia Department of Community Health’s budget by $888 million, and the Department of Education saw an increase of $812 million. The University System of the Georgia Board of Regents also received a healthy increase of $220 million. The average reduced funding for departments was pretty minimal – the highest being a $23 million decrease for the Technical College System, and an $8 million decrease for the Office of the Governor.
Unlike states that report proposed IT budgets alongside new fiscal budgets, Georgia only reports actual IT expenditures from the year prior. The data collected for FY 2012 also reflects a change in IT reporting methodology. In previous years, project portfolio amounts were included, but those amounts are no longer included in an effort to ensure more consistent reporting and to better compare IT spending with other states.
It is also important to note that some state entities with large IT expenditures expected, like the University System of Georgia, are not required to report. Only 80 percent of required agencies reported in FY 2012, with just 41 agencies having a commissioner signature on their proposals. Due to the reporting style of Georgia’s IT spending, FY 2013 and FY 2014 are projected by Deltek.
Despite a cautious outlook on state and national futures, Georgia maintains a steady spending rate in its total fiscal budgets. The Georgia Technology Authority (GTA) has made several new investments in recent years, and its current momentum is self-described as the nation’s largest state IT modernization. GTA officials said the primary focus in FY 2012 was building strong partnerships with the state’s strategic IT service delivery partners in support of collaboration; this is expected to continue in the years ahead.
For more information on Georgia FY 2014 budget, visit the state profile here.
- Governors’ renewed interest in performance-based management, particularly in education
- More effort to cut corrections and incarceration costs by investing in probation, parole and electronic monitoring programs
- Heavy focus on Medicaid expansion (both for and against), and how to reduce its costs
- Increased dedication to developing a strong future workforce by establishing a wealth of present educational opportunities, led by digital learning platforms
- Amplified justice and public safety initiatives due to natural disasters (Hurricane Sandy) and national tragedies (the Newtown shootings)
- Continued plans to streamline and consolidate government operations through technology
- 2013 by vertical
- 2011-2013 comparison by vertical
- 2008-2013 average by vertical
- 2013 Agenda Item Popularity vs. 2011-2013 average by vertical
- Top 25 cross-over agenda items
- Agenda items with mention of technology, 2013
- Agenda items mentioned by state, 2013
- Community development, economic development/regulation, natural resources/environment, and transportation agenda items, 2013
- Education agenda items, 2013
- General government services and public finance agenda items, 2013
- Health care and social services agenda items, 2013
- Justice/public safety agenda items, 2013
The Department of Veterans Affairs’ FY2014 budget request allots $2.5 billion for more efficient benefits processing through technology enhancements, improved business processes, and intensive staff training. This is a $294 million increase over 2013 enacted levels.
The VA budget request proposes to invest in the Veterans Claims Intake program (VCIP) that will allow for the conversion of paper to digital images into the Veterans Benefit Management System (VBMS); supports the completion of 1.3 million disability compensation and pension claims; and provides funding to complete 4.3 million education claims.
VA’s huge backlog of disability claims has received much negative press in recent months, coming under fire from Congress and veterans groups. The backlog of disability claims crossed the 900,000 mark in March. VA’s FY2014 budget request seeks to cure the backlog through investment in people, processes and technology.
VA plans to invest $136 million in a Veterans Claims Intake Program that will allow VA to directly receive and convert paper evidence, such as medical records, into a digital format for increased efficiency in claims processing. Additionally, the budget also supports the continued development of a digital, near-paperless environment that allows for greater exchange of information and increased transparency for veterans, providing $155 million for the VBMS. These overall efforts support VA’s pursuit of eliminating the claims backlog and achieving VA’s goal of processing all claims within 125 days with 98 percent accuracy in 2015.
VA hired the Space and Naval Warfare (SPAWAR) Systems Center Atlantic out of Charleston, SC to manage the strategic, tactical, business and technical components of the program execution back in 2009. This SPAWAR office also worked on VA’s post 9/11 GI Bill education benefit program. L3 is the prime contractor supporting SPAWAR on the VBMS program. VA’s IG criticized SPAWAR for its 10-13% program management fees in a 2009 report regarding an interagency agreement with VA.
VA endured another unfortunate incident with VBMS last week, when VA experienced a series of outages due to troubleshooting of the VBMS rating module. At the time, technicians were not able to provide an estimated time of resolution.
Tracing VBMS IT dollars back to FY2014 budget documents for more funding details is no easy task. The Exhibit 53, the detailed IT budget document specifying IT investment by program name and line item, does not show an investment line item for VBMS. However, it does show the Benefits 21st Century Paperless Delivery of Veterans Benefits which is described in its Exhibit 300 description as the primary software component of VBMS. The Exhibit 53 and 300 both show an IT budget request of $108 million for FY2014. The Exhibit 300 shows that $491 million has been spent to date on this program.
VA plans to finish the rollout of VBMS to its remaining regional offices in 2013.
Now the budget is in the hands of Congress, which has historically appropriated more for IT than what the President requests. With fiscal priorities clashing and sequestration impacts now being felt across the market, federal IT could weather the current fiscal storm in relatively good shape.
Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about . Follow me on Twitter @GovWinSlye.
Today President Obama delivered a $3.8 trillion spending plan to Congress which includes a $1.2 trillion request in discretionary funding levels and nearly $82 billion for information technology for FY2014. The budget focuses on jobs creation, economic growth and to strengthen the American middle class.
The budget proposal also includes $1.8 trillion in additional deficit reduction measures over 10 years to reach a total deficit reduction of $4.3 trillion. The proposed deficit actions would reduce the deficit to 2.8%of GDP by 2016.
Additionally, the budget proposes $400 billion in cuts to health programs including Medicare. Savings and cuts would come from negotiating better prescription drug prices, fighting waste and fraud, and requiring the wealthiest seniors to pay more.
The table below shows the FY2013 enacted budget levels and the proposed FY2014 levels.
Other budget highlights:
- Includes $50 billion for upfront infrastructure investments to invest in repairs to highways, bridges, airports, transit systems, and to encourage innovative infrastructure projects
- Invests in in education reforms and training with a commitment to early childhood education
- Simplifies the tax code and raises $580 billion for deficit reduction by limiting tax benefits, but not raising tax rates
- Creates new “ladders of opportunity” to ensure that hard work leads to a decent living by developing pathways to jobs and partnering with communities to rebuild after the recession
- Includes $200 billion in savings from other mandatory programs, such as reductions to farm subsidies and reforms to retirement benefits
- Proposes $200 billion in discretionary savings from both defense and non-defense programs
- Offers $230 billion in savings from changes in the way the government calculates inflation for annual cost-of-living adjustments for benefits programs
The president’s budget proposes nearly $82 billion in IT funding, a 1.8% increase from the FY 2013 CR and a 2.1% increase over FY 2012 estimated level.
IT-related budget highlights:
- $575 million in savings is anticipated from DoD Data Center Closures.
- $324 million is being cut from the DoD’s Global Hawk UAV program.
- $22 million is being cut from Computer and Information Science and Engineering Research Programs at the National Science Foundation; CISE is the organization responsible for promoting R&D on big data. NSF’s budget takes big hits for its small size, which will affect grant spending on technology R&D.
- $81 million is being cut from the DoD’s Precision Tracking and Space System, which is part of Ballistic Missile Defense at the Missile Defense Agency.
- $38 million in savings related to the Joint Polar Satellite System is anticipated at the Department of Commerce.
- $29 million in savings is anticipated from IRS Business Systems Modernization at the Treasury.
All told, the president’s budget request includes 215 cuts, consolidations, and savings proposals, which according to the administration, are projected to save more than $25 billion in FY2014. The budget proposal outlines the administration’s priorities and proposed methods for generating more revenue, cutting costs, and reducing the deficit. However, it joins competing budget plans in the House and Senate. Serious Capitol Hill budget negotiations are not likely to take place until this summer.