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.

 

• Deliverables Based Information Technology Services (DBITS)
• TEX AN Next Generation Communications Technology Services
• Data Center Outsourcing (Services and Integration)
• Statewide Information Technology Staff Augmentation
• Statewide Cloud Services
• Statewide Wireless Voice and Data Services and Equipment
• Statewide Seat Management Services
• Statewide Software Products

• Inadvertent or deliberate misuse of federal assets,
• Unauthorized modification or destruction of financial information,
• Inappropriate disclosure of sensitive information, and
• Disruption of critical operations.

• Security management,
• Access to computer resources (data, equipment, and facilities),
• Changes to information system resources,
• Segregation of incompatible duties, and
• Contingency planning.

Much has been said about the national security concerns over the information security preparedness of public- and private-sector critical infrastructure, including energy, financial, transportation, health, communications, and others. While some legislative and policy initiatives seek to increase federal regulatory authority over these areas it seems that such moves may be premature until federal agencies can get their own information security house in order. As GAO recognized, until agencies identify and resolve these and other information security deficiencies and more effectively manage information security risks going forward, federal data and systems will remain at risk of disruption, destruction and unauthorized disclosure. This ongoing challenge is why, even in an atmosphere of budget scrutiny where no area or program seems safe from the budget axe, information security remains a priority and will likely seen increased resource allocation – in internal staffing, outside contractor support, and technological tools and infrastructure.

After a protracted pre- and post-election battle, President Obama and Congress have reached an agreement to avoid what is probably the most telegraphed punch in history: the “fiscal cliff.” But before we get too excited (whether it be because they were able to accomplish much of anything in this session of Congress or because we could possibly be retiring the annoyingly overused phrase “fiscal cliff), let’s take stock of what’s actually happened and what it means for federal contractors.

The most significant outcome of this legislation (aka the American Taxpayer Relief Act of 2012), for citizens is that there will be tax increases for households with taxable income over $450,000, tax stability through extended tax relief programs for everyone else, and an extension of unemployment benefits. The most significant outcome for government contractors: you have to wait another 2 months to know if and how sequestration will occur. While most are glad to see the players reach any kind of agreement, the general consensus is that this bill avoids the cliff but puts the government on a roller coaster. February and March will see agencies heading up yet another steep hill as Congress and the Administration work through yet another debt ceiling debate, sequestration rears its head again on March 1, and the current FY 2013 Continuing Resolution expires on March 27. March 27 is also the date that the spending reductions must be evaluated and implemented unless other legislation is enacted.

• Which budget accounts fund their contracts.
• Potential percentage cuts to the relevant budget accounts.
• The priority placed on the contract and/or contract options and modifications to learn if they will likely be funded even under sequestration.
• The possibility of moving options, modifications, task orders, etc. to be funded in the second quarter of FY 2013 to avoid the sequestration ax.

Vendors considering moving into the K-12 IT market should know that this market has its own needs, demands, budget cycles, and procurement approach, all separate from the general state and local market. With 13,600 K-12 school districts in the U.S., including private and charter schools, there is no shortage of customers. K-12 public schools spend, on average, $580 billion a year, $70 billion of which is spent on non-instruction expenditures. The task at hand is finding your footing in the market and finding customers who are seeking your services and/or goods. Before that step, vendors should learn the terrain to determine if demand for their goods and/or services is congruent in the K-12 market, and worth the venture now or in the future.

The Obama administration has placed strong emphasis on incentivizing education reform to raise student and teacher performance, with the hopes to meet future workforce needs of a globalized U.S. economy. Federal funding such as Race to the Top and statewide longitudinal data system grants help fuel many states’ focus on education performance initiatives. Due in part to increased federal funding, many governors’ priorities have piggybacked on federal initiatives to improve classroom performance.

Another driver stems from the apparent collapse of No Child Left Behind (NCLB), as states are being allowed to pursue a wide range of uncoordinated reform strategies. Still, in the wake of NCLB, nationally accepted and verifiable criteria of best practices and cost-savings models are still a long way off. State-level response has come in the form of the National Governors’ Association Common Core State Standards, which is a set of curriculum standards to ensure college and career-ready students. This is currently the closest thing to a nationwide education standard. 

Nationwide school enrollment is at 54 million, and student population is expected to increase by nearly three million more students by 2019 (CAGR: 0.7 percent). More than half of that total (1.7 million) will come during the next five years. Spending in public schools continues to increase year over year, and is averaging around $12,700 per pupil. The need for public school teachers is also expected to rise. With roughly three million classroom teachers today, approximately 225,000 more teachers will be in classrooms within five years (CAGR: 1.4 percent).

Landscape

Contracted goods and services in the K-12 market are expected to enjoy a compound annual growth rate (CAGR) of 2.9 percent over the next five years, down from 3.1 percent in the 2010-2015 forecast period. This decrease is due primarily to the fact that by the end of 2010, most IT projects funded by federal stimulus dollars had worked their way through the system.

Lifecycle PC consumption is a continual concern for many school districts. In the average school district, most PCs are more than five years old, with many being closer to 10 years old. Unfortunately, few districts can afford to adhere to a five-year PC lifecycle turnover, even in the best of times. Procuring maintenance and support services to keep computer equipment operational is the next best thing. Most school districts participate in statewide or regional cooperative contracts to satisfy general IT maintenance needs.

Emerging classroom and administrative technologies are naturally seeing an increase in demand, while much of market capacity remains primed for growth. The low market capacity for classroom technologies, ranging from 4 to 16 percent, has more to do with specific technology availability and usage rates during classroom instruction. As demand increases, so will opportunities for interactive whiteboards, classroom response systems, handheld/mobile devices, computer/Web-based assessments software and classroom learning software. Because many of these mentioned technologies are viewed as “extras” rather than essentials to increasing student performance, there is a lot of head room for potential demand in the long term. Once K-12 budgets get back on track, more funds will free up for these emerging classroom technologies.

The market capacity for administrative technologies is relatively open, with an average range of 65 to 75 percent still available. This is where federal and state policies, mandates, and grants really drive the growth of technologies, including student information systems, business intelligence/analytics solutions, assessment management systems, and special education management systems. These technologies are quickly becoming the go-to tools for increased efficiency and performance on both the state and local K-12 education levels.

For the full report on the Primary/Secondary Education IT Market, 2011-2015, please go here.

Tracked opportunities by vertical segment and number of new solicitations released:

• Defense-wide: Defense Health Program, Operation and Maintenance, and Research, Development, Test and Evaluation
• Navy: Operation and Maintenance
• Army:  Operation and Maintenance and Procurement
• Air Force: Research, Development, Test and Evaluation

• HHS Child Care and Development Block Grant
• HHS Social Services Block Grant
• HHS Affordable Insurance Exchange Grants
• HHS State Grants and Demonstrations 
• HUD Homeless Assistance Grants
• DOT Capital Investment Grants