GovWin
State budget overview: Critical information on priorities and funding for vendors

As spring progresses, news from most states is centered on legislative actions (some controversial) passed before the annual sine die adjournment of the state legislature. With that backdrop, many state legislatures will approve budgets for the coming fiscal year or biennium. Beyond the headlines about the growth of government and funding cuts to pet projects, or the spin promulgated by lawmakers’ press releases and governor budget addresses, vendors can find essential information on state priorities.

A state’s budget and how it passed into law is important information for a vendor to have when deciding in which states or localities to compete for business. For most states, the budget process follows the same approval path by the full legislature and the governor’s signature. The first step in this process generally comes from the state agencies themselves. In most cases, these agencies report to the governor as part of the executive branch. The agencies conduct their own planning and budgeting process and submit a request to the governor’s budget team or office. The governor and his or her team then decide which priorities and funding to include and compile a document of the governor’s recommendations for submittal to the state legislature.

At Deltek, we spend quite a bit of time compiling and analyzing the state governors’ recommended budgets. The budgets, along with other compiled data,  are contained in Deltek’s State Government Profiles. The profiles provide essential and in-depth reference and research on state budgets, procurement, and organizational details to assist contractors in building important state buyer relationships and quickly ramping up new government sales professionals.

A governor’s proposed budget is by no means the final budget that makes it out of a state legislature, though it provides valuable insight about the executive priorities and the fiscal condition of the state. These documents also provide us with historical expenditure data, which allows for a more in-depth analysis of budget trends and fiscal realities. 

Following the governor’s lead, the state legislature begins work on their own version of the budget. Sometimes they use the governor’s recommendations as a starting point, but this is not always the case in adversarial political environments. Both houses of the legislature (for every state but Nebraska) weigh in on the budget as it goes through the normal process of committee and floor votes, and then conference committees work to reconcile any differences. The legislature submits the budget to the governor and he or she decides to approve it or not.  

For vendors, both the governor’s proposed budget and the final version are important documents. They can help to understand both the priorities of an administration and the reality of the political system and/or fiscal climate. Of course, they also offer insight into exactly where state funding is flowing and which departments will be looking for vendor support. 

In the coming months, look for the compilation of state budget data, including IT line items and detailed Deltek analysis of this data. In addition, vendors in the architecture, engineering and construction (AEC) space should watch for more budget data specific to state investment in AEC as outlined in state capital budgets.

You can learn more about state budgets in Deltek’s State Government Profiles. Not a Deltek subscriber? Click here to learn more about Deltek's GovWin IQ service and gain access to a free trial

 

GovWin Recon - April 27, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Health IT:

Big Data / Analytics:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Legislation:

Mergers and Acquisitions:

State and Local:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

GovWin Recon - April 24, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Sequestration / Budget:

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Cloud Computing / Data Center Consolidation / Virtualization:

Health IT:

Big Data / Analytics:

Mobility:

Transparency and Performance:

Defense / C4ISR / Embedded Technology:

Legislation:

AEC News:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

GovWin Recon - April 23, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Sequestration / Budget:

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Cloud Computing / Data Center Consolidation / Virtualization:

Health IT:

Transparency and Performance:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Legislation:

State and Local:

AEC News:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

State and Local AEC Snapshots: Harris County, Texas

Harris County is the largest county in the state of Texas and the third-largest county in the United States. With a rising population exceeding 4 million residents, the county’s expenditures are rapidly increasing at a Deltek-estimated rate of 7.1 percent.

Harris County is also home to the largest medical complex in the world, the Texas Medical Center (TMC). As the county expenditure charts below illustrate, the county spends the most money on hospitals, and construction is a major component. For example, the University of Texas M.D. Anderson Cancer Center was estimated to spend $198 million on hospital expansions in 2014. The total size of the TMC is currently 45.8 million square feet and is estimated to reach 59 million square feet in the near future, according to the Greater Houston Partnership. 

Another category that pulls in high dollars is toll highways. The Texas Department of Transportation (TxDOT) recently awarded the SH 288 Toll Lanes Project in Harris County to Blueridge Transportation Group, which will be tasked with the development, design, construction, finance, operation and maintenance of tolled lanes, general purpose lanes, and associated facilities along a 10-mile stretch of SH 288 – from US 59 to the Harris County line at Clear Creek in Harris County.

 

Additionally, the Aggie Highway project involves work within Harris County and Montgomery County to provide a direct route from College Station to Houston. Harris County began constructing their portion of the toll way in 2013, and work is expected to be completed in 2015.

 

With both the population and spending on the rise, Harris County will also see an increase in construction and/or transit projects over the next several years. Architecture, engineering, and construction (AEC) firms should pay particular attention to the rapidly growing hospital and toll markets, and also take note that the county has set aside $145 million in the FY 2015-16 budget for infrastructure and systems projects.

 

 

You can learn more about Harris County in GovWin IQ’s government snapshot tool, which combines government data with Deltek’s expert analysis and forecasting tools. Our government snapshots provide vendors with key information on spending, population, agency contacts, employment, bids, and more so that they can make informed business decisions in their target markets. Not a Deltek subscriber? Click here to learn more about Deltek's GovWin IQ service and gain access to a free trial.

 

 

Energy Department Continues Collaborative Supercomputing Investment

 

The Department of Energy’s (DOE) Office of Science and the National Nuclear Security Administration (NNSA) provide high-performance computing facilities that enable world-class scientific research. Mid April 2015, DOE extended its exascale supercomputer development program under its Collaboration of Oak Ridge, Argonne, and Lawrence Livermore (CORAL) initiative with a third and final contract. 

The $525 million CORAL project was established in early 2014 with the goal of improving supercomputing investments, streamlining procurement, and reducing development costs for high performance systems that will be five to seven times more powerful than today’s top supercomputers. Through collaborating across the department’s labs on the effort, DOE aims to help the nation accelerate to next-generation exascale computing. The three CORAL labs specified requirements in a single Request for Proposal (RFP) released in January 2014. The recent $200 million award will deliver Aurora system to the Argonne Leadership Computing Facility, completing the final supercomputer investment of the CORAL initiative. DOE earlier announced a $325 million investment to build state-of-the-art supercomputers at its Oak Ridge and Lawrence Livermore laboratories.

The entire scientific community will have access to the system once it is commissioned in 2018. Key research goals for the Aurora system include: material science, biological science, transportation efficiency, and renewable energy. The next-generation system, Aurora, will use a high-performance computing scalable system framework to provide a peak performance of 180 PetaFLOP/s.  The Aurora system will be delivered in 2018. In the interim, Argonne and Intel will also provide the Theta system, to be delivered in 2016, which will help ALCF users transition their applications to the new technology.

Additionally, DOE Under Secretary Orr announced $10 million for a high-performance computing R&D program, DesignForward, led by DOE’s Office of Science and NNSA to accelerate the development of next-generation supercomputers. The recent announcement complements the $25.4 million already invested in the first round of program. Through this public-private partnership, technology firms will work with DOE researchers to study and develop software and hardware technologies aimed at maintaining a national lead in scientific computing.

 

Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWinIQ. Follow me on twitter @FIAGovWin.

 

Half-way Through FY 2015, Pt.2 – How Much Are Agencies Spending on Information Technology?

With all appropriations and budgets finally settled and in place for FY2015, agencies have been spending on information technology (IT), among other things. So at the mid-point in the fiscal year, how are agencies doing at getting their IT contract dollars obligated and what might we expect in the second half of FY 2015?

Last week, I looked at the total market contract obligations at the mid-fiscal-year point. This week I’ll look specifically at IT obligations. In this, and other similar scenarios that I have explored, I took a rough “back of envelope” approach to projecting potential contract obligation rates for the remaining two fiscal quarters. For consistency, I will use the same baseline: If agencies obligate at least 90% of what they did in FY 2014, what might that project for spending on contracts in the second half of the 2015 fiscal year.

In the latest federal FY 2016 IT budget request, OMB reported the total enacted FY 2015 IT budget to be about $78B, which is $2.4 billion (3.2%) more than the $75.6B agencies spent in FY 2014.  So this 90% threshold that I am using for potential FY 2015 spending, while not a particularly scientific approach, might be playing it safe.

IT Contract Obligations Compared

For Information Technology spending in FY 2014, the twenty top-spending departments accounted for 96% of all federal IT contract obligations. In FY 2014, these twenty accounted for $10.5B and $14.2B in Q1 and Q2 obligations respectively. For comparison, these departments reported $16.6B and $26.3B in IT contract obligations for Q3 and Q4 respectively for FY 2014. (See table below.)

In FY 2015 so far, these top twenty departments have reported $10.1B and $5.0B for Q1 and Q2 respectively, although DoD lags in their contract data reporting by up to 90 days so Q2 is significantly understated. Nonetheless, if these top agencies spend 90% in FY 2015 of what they did in FY 2014 they will have more than $45.B left to obligate in the remaining two quarters of this fiscal year.


Observations

  • Each of the defense branches have reported lower IT contract spending amounts in Q1 of FY 2015 compared to Q1 of FY 2014. Even with hedging our bets with a 90% spending assumption, the FY15 Q1 percentage of total FY15 obligations is down slightly for Army and Navy compared to their FY 2014 relative proportions. The Defense Agencies and Air Force, although down in dollar terms, got a slightly higher proportion of their IT dollars spent in Q1 of this fiscal year compared to FY 2014, if the 90% assumption holds. Due to DoD’s data reporting lag, which could take up to 90 days to settle out, we won’t know what Q2 of FY 2015 really looked like until June or July. They’ll need to post more than $8B in IT contract spending to keep pace with Q2 of FY 2014.

  • Among the civilian agencies in the top twenty, five have reported lower Q1 FY 2015 obligations compared to Q1 FY 2014. Among those, DHS, DOT, and DOI are the three where the reductions are proportionately sizable, reporting drops of 21%, 14%, and 22% respectively. For comparison, HHS, VA, DOJ, State, DOC and SSA say year-to-year growth in Q1 spending of 13%, 38%, 37%, 30%, 21%, and 54% respectively, although some of the individual spending levels are modest by comparison. The Q2 comparison from 2014 to 2015 are less positive, with only NASA and the Department of Education reporting higher spending in Q2 from year to year. Still, looking at the relative percentages that the civilian agencies spend in Q3 and Q4 leaves plenty of room to catch up and surpass FY 2014.

The delay of some yearly appropriations bills, like for DHS, may explain some of the downturn or slowdown in FY 2015 IT contract spending so far. Historically, agencies have made up ground in the second half of the fiscal year – especially Q4. One thing seems fairly clear though: IT contract spending tends to be a bit more consistent and predictable than contracted spending as a whole.

When I crunched these IT numbers last year, I arrived at approximately $43B in potential Q3 and Q4 IT contract spending among the top twenty departments for FY 2014. The final numbers came in around $44.7B, so the 90% assumption was not a bad one, but it points to the fact that many agencies are tightening their fiscal belts.

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Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWin FIA. Follow me on Twitter @GovWinSlye.

GovWin Recon - April 22, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Mobility:

Transparency and Performance:

Waste, Fraud and Abuse:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Mergers and Acquisitions:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

Reducing Areas of Duplication and Overlap in Federal Programs Could Save Billions

Last week, GAO released its fifth annual report on duplication, fragmentation and overlap in federal government programs.  The report is meant to identify areas of opportunity to gain efficiencies, reduce costs, and increase federal revenue by decreasing duplication and overlap.

The report identifies 24 areas of opportunity to improve effectiveness and efficiency, and 66 new actions to this end.  In this year’s report GAO found 12 new areas in which there is evidence of fragmentation, overlap, or duplication, such as the Military Health System US Family Health Plan which duplicates the efforts of DoD’s managed care support contractors.  GAO also offers recommendations for reducing the cost of government operations or enhancing revenue collections in 12 other areas.

Many of the identified areas for improvement involve defense or health related programs and activities, but the report did point out that hundreds of millions of dollars could be saved government-wide if agencies applied better management of software licenses.  GAO suggests OMB issue a directive to assist agencies in this area.

The report also reviewed progress toward areas and actions identified in previous reports to reduce fragmentation, duplication and overlap. 

The chart below shows progress toward ending duplication and overlap in areas identified in FY 2011-2014 reports, as well as progress toward specific actions offered in those reports.

According to GAO, 76% of 458 actions identified had been addressed or partially addressed, and 20% had not been addressed.  Executive branch and congressional efforts to address these actions over the past 4 years have resulted in over $20B in financial benefits, with about $80B more in financial benefits anticipated in future years from these actions.

GAO urged Congress and executive branch agencies to continue progress toward reducing duplication and overlap. Fully addressing the remaining actions identified in GAO’s annual reports could lead to tens of billions of dollars of additional savings.

GAO recognizes the difficulty in addressing duplication and fragmentation, in part due to the lack of reliable performance and budget data.  It suggests that implementation of the DATA Act and the GPRA Modernization Act of 2010 should improve the amount and reliability of financial and performance information.  GAO has also developed an Evaluation and Management Guide to assist agencies in identifying and resolving fragmentation and overlap, and options to consider for addressing or managing such instances.

 

 

GovWin Recon - April 21, 2015

GovWin Recon, produced by Deltek's Federal Industry Analysis (FIA) team, is designed to support awareness and understanding of the issues impacting the government and the contractors that serve it. Recon highlights key developments surrounding government technology, policy, budget and vendor activities.

Headlines beginning with an * include quotes from Deltek analysts.

Federal IT:

Agency News:

Vendor News:

Cybersecurity:

Cloud Computing / Data Center Consolidation / Virtualization:

Health IT:

Big Data / Analytics:

Defense / C4ISR / Embedded Technology:

Contracting / Acquisition:

Legislation:

Mergers and Acquisitions:

State and Local:

AEC News:

GovWin Recon is Deltek's daily newsletter highlighting federal government contracting news and analysis from around the government contracting world. Get it delivered to your e-mail inbox, free!

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