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Half-way Through FY 2015, How Much Are Agencies Spending on Contracts?

It’s April, and that means we are half way through fiscal year (FY) 2015. So I thought I would take a look at the available federal contracting data to see what can we tell so far about how much federal departments have spent on contracts at the mid-point in the year and see what might be in store for us in the second half of FY 2015.

For comparison and context I looked the federal contract obligations reported for each federal agency for FY 2014, quarter by quarter, and then the first two fiscal quarters of FY 2015, which just closed at the end of March. Then, to get what I thought would be a conservative approach to estimating what spending might look like for the remainder of FY 2015 I took 90% of each agency’s total FY 2014 contract spending and subtracted out what agencies have already reported for actual Q1 and Q2 contract spending. In other words, my assumption is that agencies would spend at least 90% of what they did last year. Finally, based on this 90% spending assumption I calculated each agency’s FY 2015 Q1 and Q2 relative percentages of total (90%) estimated obligations.

Contract Obligations Compared

Historically, the twenty top-spending departments accounted for about 98% of all federal contract obligations, so I focused my attention on these departments. In FY 2014, these accounted for $85.9B and $105.2B in total contract obligations for Q1 and Q2 respectively. For comparison, these departments reported $104.7B and $141.7B in contract obligations for Q3 and Q4 respectively for FY 2014. (See table below.)

In FY 2015, these top twenty have reported $89.3B and $34.1B for Q1 and Q2 respectively, although DoD lags in their financial reporting by up to 90 days so Q2 is understated. Still, if these top agencies spend 90% of what they did in all of FY 2014 they will have more than $270B left to obligate in the remaining two quarters of this fiscal year.


Observations

  • A handful of departments have Q1 FY 2015 obligations lower than they did in Q1 of FY 2014 (DoD, USAF, State, DoT, Ed, and Labor). Most have marginally higher obligations year-over-year, although Navy reported over $6B (+40%) more in obligations in Q1 in FY 2015 than last year.
  • More departments appear to be lagging in Q2 FY 2015 compared to Q2 of last year and some of these are fairly large relative proportions. For example, HHS shows a $1B (-24%) decrease in Q2. Similarly, VA has reported a $1.1B (-30%) decrease. Finally, State, GSA, and DOT each have reported about a 50% drop in Q2 FY 2015 obligations from Q2 FY 2014. Of course, given the DoD’s three-month reporting delay we will not know the contracting rates among those departments until this summer.
  • Taken together, the four defense branches in Q1 FY 2015 have reported $3B more in obligations than they reported in Q1 of FY 2014, although the DoD and Air Force have reported lower levels year-over-year.  

A graphical representation of the relative proportions of each department’s contract spending gives a sense of seasonality and/or changes from year to year. Due to the sheer number of departments I have split these into Defense and Civilian segments. This further highlights the yearly changes for Navy, HHS, VA, State, GSA, and DOT. (See charts below.)


 


 

This kind of macro-level analysis is useful in getting a general sense of quarterly and yearly patterns across the departments. Of course, the remaining FY 2015 obligation estimation depends on its main 90% assumption. Last year, this approach pointed to roughly $285B in combined FY 2014 Q3 and Q4 obligations among the top twenty departments. A year later, the final FY 2014 Q3 and Q4 data shows that actual obligations came in at $246.4B, so at first glance it appears that my 90% assumption was a bit optimistic. However, the difference turns out to be a matter of timing rather than magnitude. The final FY 2014 Q1 and Q2 obligations given above come in at $69B higher than what agencies reported at this time last year, reflecting revisions due to lagging obligation data being added later in the year. So the numbers effectively washed out once the dust settled. Unfortunately, there is no reliable way of predicting how consistently agencies will report their contract spending from year to year.

As most federal business development people will attest, understanding your agency’s spending patterns goes a long way to being able to successfully work with them to get contracts awarded as well as develop your yearly business plan. 

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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.

 

FY 2016 Budget Request – Information Technology Highlights

Information Technology (IT) budgets are UP for fiscal year (FY) 2016 nearly across the board for major federal departments. The Obama Administration released its FY 2016 Budget request Monday morning, and around 6 p.m. the Office of Management and Budget (OMB) posted details on the Information Technology budget proposal, revealing a return to year-over-year budget increases for both the Defense and Civilian top-line numbers and net increases for most Executive Branch departments and agencies.

In a previous entry we looked at the overall FY 2016 discretionary budget highlights across the top agencies. Here, we will focus on IT.

According to the IT budget request for FY 2016, the overall IT budget for Executive Branch departments and agencies comes in at $86.3B, up 2.3% from the FY 2015 enacted level and 5.5% higher than the $81.7B spent in FY 2014. However, factoring out grants to state and local governments, the total IT budget for FY 2016 comes in at just over $79B, an increase of 4% from FY 2015, which was effectively flat from FY 2014. (See table below.)


 

AGENCY HIGHLIGHTS

In addition to the many budget increases for the next fiscal year, many agencies are also allocating greater funds to Development, Modernization, Enhancement (DME) efforts over Operations and Maintenance (O&M). These and other funding observations are included in the following agency highlights.

Department of Defense

The DoD is allocated a total of $37.3B in IT funds for FY 2016, a 3% increase over the FY 2015 enacted level of $36.3B. The total funds are split between classified and non-classified areas, $6.6B and $30.7B respectively. If enacted, this would mean a 2% increase in classified DOD IT and a 9% increase in non-classified DOD IT.

OMB released only top-line IT budget numbers for DoD and promised detailed updates in early March. This is fairly common practice each budget cycle, but shrouds DoD IT spending longer than any other department. Until then, we pursued what IT-related spending information could be gleaned from other DoD budget documentation.


Air Force

  • $1.8B in Procurement funds for Electronics and Telecom Equipment, an increase of more than $400M (30%) over FY 2015
  • $2.6B in Space Procurement funding, which budget materials note that FY 2016 marks the first year that such procurement are broken out.
  • $2.4B in Science and Technology RDT&E funds, an increase of $96M from FY 2015
  • $287M in Procurement funds for the Strategic Command And Control program, up from $140M (+105%) in FY 2015
  • $103.7M for AFNET, up 15% from the $90.5M level in FY 2015
  • $31.4M in Procurement funds for “General Information Technology,” down from $43M in FY 2015.
  • $9.6M for Integrated Strategic Planning & Analysis Network (ISPAN), an increase of $500K (6%) from the FY 2015 level

Army

  • $3.5B in Procurement funding for Communications and Electronics Equipment
  • $783M in O&M funding for upgrades to the Warfighter Information Network-Tactical (WIN-T)
  • $260M in Procurement funding for the Distributed Common Ground System-Army
  • $152.2M in Procurement funding for Automated Data Processing Equipment
  • $103M in Procurement funding for the Installation Information Infrastructure Modernization (IMOD) Program
  • $72.2M in Procurement funding for the Communications Security Program
  • $43.5M in Research, Development, Test, and Evaluation funding related to WIN-T for developing Network Operations software to meet the Army Network Convergence goals
  • $22M in Procurement funding for the Unified Command Suite

Navy

  • $17.9B in R&D funding, up nearly 12% from the FY 2015 level of $16.0B
  • $55M in R&D for Cyber (ORT/TFCA only), up from $3M in FY 2015
  • $2.4B in Navy Procurement funds for Communications and Electronics Equipment, up $158M (7%) from FY 2015
  • $279M in Procurement funds for CANES, down from $336M in FY 2015
  • $31.8M For the Distributed Common Ground System-Navy (DCGS-N), up from $23.7M in FY 2015
  • $135.7M for the Information Systems Security Program (ISSP), a 26% increase over the FY 2015 level of $108M
  • $740M in Marine Corps Procurement funds for Communications and Electronics Equipment, including $67M to support NGEN. The total is up from $570M in FY 2015

Defense-Wide

  • $12.3B in funding for the Science and Technology program for future technologies
  • $7.4B in funding for C4I systems
  • $7.1B for space-based systems
  • $800M for the MQ-9 Reaper Unmanned Aircraft System
  • $84.4M in Procurement funding for equipment for the Joint Information Environment, a 539% increase over the $13.3M invested in FY 2015
  • $57.7M in Research, Development, Test, and Evaluation funding for SOF Advanced Technology Development
  • $11.7M in Research, Development, Test, and Evaluation funding for Insider Threat detection

Agriculture

The USDA’s FY 2016 budget request for IT is $1.95B, 1.56% higher than the estimated level of $1.92B in Fiscal Year 2015.

Funding highlights include: 

  • $431M in the USDA’s Working Capital Fund, with money in this account used to finance central services in the USDA, including automated data processing systems for payroll, personnel, and related services; telecommunications services; and information technology systems
  • $66.3M in funding for information technology related to Farm Service Agency IT programs, including work related to the Modernize and Innovate the Delivery of Agricultural Systems (MIDAS) program
  • $29.5M in DME funding for the Natural Resources Conservation Service’s Conservation Delivery Streamline Initiative (CDSI)
  • $29M in DME funding for the Office of the Chief Information Officer’s Optimized Computing Environment (OCE)
  • $28M for the USDA’s cyber security requirements and programs
  • $7.6M to fund a USDA Digital Services team that will focus on transforming the department's digital services in line with the White House’s Smarter IT Delivery initiative
  • $4.25M for information technology infrastructure at the Animal Plant and Health Inspection Service
  • $3M to implement the Digital Accountability and Transparency Act, including changes in business processes, work force, and/or information technology assets
  • $1M for the Common Computing Environment, a shared information technology platform for the Farm Service Agency, the Natural Resources Conservation Service, and Rural Development

Commerce

The president’s budget request provides $2333.2M in funding for the Commerce Department’s information technology, an 8% increase over FY 2015 enacted levels. 62% of FY 2016 funds are dedicated to operations and maintenance, a 3% increase over the FY 2015 enacted levels. Funding to support development, modernization, and enhancement efforts totals over $880M for FY 2016, rising above the amount enacted in FY 2015 by 38%.

Funding highlights include:

  • The top ten investments by requested funding for FY 2016 combine to make up just over 57% of Commerce’s entire IT budget.
  • Includes $339.7M in new investments for FY 2016.
  • Funding for upgrades is set to receive $5.2M for FY 2016, level with the enacted amounts for FY 2015.
  • Mission delivery and management support efforts request an additional $84M, bringing the total for FY 2016 to $1,415.5M and marking a 9% increase over the enacted level from FY 2015.
  • Commerce aims to provide $798.3M in funding for infrastructure, office automation, and telecommunications, an increase of 8% over levels from FY 2015.
  • Increasing 27% over the enacted level for FY 2015, Commerce has identified $116.2M for efforts related to enterprise architecture, capital planning, and CIO functions.

Energy

The president’s budget request provides $1,469.1M in funding for the Energy Department’s information technology, a 1% drop from FY 2015 enacted levels. 92% of FY 2016 funds are dedicated to operations and maintenance, a 1% increase over the FY 2015 enacted levels. Funding to support development, modernization, and enhancement efforts decline below the amount enacted in FY 2015 by $25.M, marking a drop of 18%.

Funding highlights include:

  • With details for over 700 investments for FY 2016, the top ten investments by requested funding combine to make up around 11% of Energy’s IT budget.
  • Includes $72.7M in new investments for FY 2016.
  • Consolidation activities are set to receive $43.6M.
  • Funding for upgrades is set to receive $3.5M for FY 2016, level with the enacted amounts for FY 2015.
  • Energy is targeting $663.8M in funds for mission delivery and management support, marking a drop of 2% from FY 2015.
  • Maintaining the enacted funding level from FY 2015, Energy aims to provide $747.6M for infrastructure, office automation, and telecommunications.
  • Increasing 7% over the level for FY 2015, Energy is looking to provide $73.5M for efforts related to enterprise architecture, capital planning, and CIO functions.

Health and Human Services

The president’s budget request provides $11.4B in total IT funding to HHS, a 10% decrease over FY 2015 enacted levels. Grants account for $6.4B of the total IT budget.  HHS’ proposed IT budget without grants totals $4.9B which is a 2% decrease over FY 2015.

Funding highlights include (excludes grants):

  • DME accounts for $1.1B or 22% of the total IT budget, a 14% decrease from FY 2015 enacted levels
  • 545 total investments of which the top 10 represent 37% of the total IT budget at $1.8B
  • $149M slated for cloud investments, a 5.5% decrease from FY 2015
  • Notable changes in agency IT budgets include CMS $2.3B down 3%, NIH $781M down 2.4%, FDA $584 up 1%, and CDC $324M down 6.5%
  • Notable program changes include CMS IT Infrastructure – Ongoing down $95M, CMS Federally Facilitated Marketplace (FFM)down $60M, and CMS Beneficiary e-Services up $22M

Homeland Security

The budget request provides $6.2B for IT investments at DHS for FY 2016, a 4% increase over the FY 2015 enacted level of $5.9B.

Funding highlights include:

  • DME accounts for $1.0B or 16% of the total IT budget, a $76M increase from FY 2015 enacted levels
  • $150.3M in DME funds for USCIS Transformation, which makes up 83% of the total FY 2016 funding of $180.9M
  • $463.9M for the National Cybersecurity & Protection System (NCPS), including $95.8M in DME funds, 21% of the total
  • $102.7M for the Continuous Diagnostics & Mitigation (CDM) program, of which $91.4, or 89%, are DME funds
  • $88.5M in DME funds for the CBP Non-Intrusive Inspection (NII) Systems Program, which represents 42% of the overall $209.3M for the year
  • $80.3M in funds for the NPPD Next Generation Networks Priority Services (NGN-PS), 100% of which is DME

Interior

The president’s budget request provides $1,098.5M in funding for the Department of the Interior’s information technology, a drop of less than one percent from FY 2015 enacted levels. 92% of FY 2016 funds provide operations and maintenance, a 2% increase over the FY 2015 enacted levels to $1014.2M. At less than $85M for FY 2016, support for development, modernization, and enhancement efforts drops 20% below the amount enacted in FY 2015.

Funding highlights include:

  • The top five investments by requested funding for FY 2016 combine to make up over 61% of Interior’s entire IT budget.
  • New investments receive $5.6M for FY 2016.
  • Requesting $402.1M for mission delivery and management support efforts, Interior looks to slightly raise the funding for these investments bumping the total up by 1% over the FY 2015 levels.
  • Interior’s request of $657.6M for investments targeting infrastructure, office automation, and telecommunications marks a 1% decrease from FY 2015 enacted levels.
  • Dropping 13% from the level enacted for FY 2015, Interior has identified $38.3M for investments related to enterprise architecture, capital planning, and CIO functions.

NASA

The president’s budget request provides $1,390.4M in funding for NASA’s information technology, a 2% decrease from FY 2015 enacted levels. 95% of FY 2016 funds are dedicated to operations and maintenance, maintaining the FY 2015 enacted levels at $1,323.1M. Funding to support development, modernization, and enhancement efforts takes a hit for FY 2016, dropping 27% below the amount enacted in FY 2015 to $67.3M.

Funding highlights include:

  • The top five investments by requested funding for FY 2016 combine to make up nearly 59% of NASA’s entire IT budget.
  • NASA is looking to maintain its spending for mission delivery and management support, requesting $942.8M for FY2016.
  • $445.2M for Infrastructure, office automation, and telecommunications, a 2% drop from FY 2015 levels.
  • Maintaining the funding level enacted for FY 2015, FY 2016 would see $2.5M for efforts related to enterprise architecture, capital planning, and CIO functions.

Justice

The president’s budget request provides $2732.3M in funding for the Justice Department’s information technology, a 4% increase over FY 2015 enacted levels. Topping $2,250M for FY 2016, 83% of these funds are dedicated to operations and maintenance, marking a 5% increase over the FY 2015 enacted levels. At $476.1M for FY 2016, funding to support development, modernization, and enhancement efforts stay fairly level with the amount enacted in FY 2015, dropping by only 1%.

Funding highlights include:

  • The top ten investments by requested funding for FY 2016 combine to make up nearly 37% of Justice’s entire IT budget.
  • Includes $110.6M in new investments for FY 2016.
  • $478.6M is requested for system upgrades, an increase of around $5.5M over enacted levels for FY 2015.
  • Consolidation activities are set to receive $237.3M.
  • Dropping by 2% from the enacted FY 2015 levels, the request for mission delivery and management support activities totals $1,138.0M for FY 2016.
  • Justice aims to provide $1,413.8M in FY 2016 for infrastructure, office automation, and telecommunications, marking an increase of 10% from the level enacted for FY 2015.
  • Rising 23% above the FY 2015 level, Justice has identified $152.2M for efforts related to enterprise architecture, capital planning, and CIO functions.

Social Security Administration

SSA sees a 7% budget increase for FY 2016, growing to $1.7B from $1.6B in FY 2015.

Funding highlights include

  • At SSA DME accounts $705M or 42% of the total FY 2016 IT budget
  • $278.4M is allocated for Non-Major Infrastructure IT investments, of which 275.5M (99%) is DME
  • $55.0M in DME funds for the Disability Case Processing System (DCPS)      , which accounts for 92% of the total $60M budget
  • $68.5M slated for Non-Major IT Security Initiatives, 62% of which ($42.7M) is new development funds
  • $29.1M in new DME funding for the Intelligent Disability program, which makes up 84% of the $34.8M total

State

The State department receives $1.6B in IT funds for FY 2016, up 15% with an increase of $218M from FY 2015.

Funding highlights include

  • $140.4M of total agency DME funds account for 9% of the total FY 2016 IT budget and increases $3M from FY 2015
  • $28.5M for Consular Systems Modernization, of which $18.8M (66%) is DME funds
  • $13.3 in funding for the Architecture Services program, 100%        of which is DME
  • $11.0M in DME funding for Bureau IT Support, which accounts for 5% of the overall $230.3M allocated for FY 2016
  • $10.9M for DME efforts around the Global Foreign Affairs Compensation System (GFACS), or 35% of the total $30.8M in funds
  • $43.3M in total funding for the Integrated Personnel Management System (IPMS), $10.1M (23%) of which is DME
  • $31.6M in total funding for the Earnings Redesign initiative, $27.6M (88%) of which is DME

Transportation

The DOT’s FY 2016 budget request for IT is $3.3B, 6.4% higher than the estimated level of $3.1B in Fiscal Year 2015.

Funding highlights include:

  • $245M in DME funding for the FAA’s Terminal Automation Modernization and Replacement Program (TAMR-P)
  • $238M in DME funding for the FAA’s Data Communications NextGen Support (DataComm) program
  • $215M for the FAA’s Automatic Dependent Surveillance-Broadcast (ADS-B) system
  • $200M for the FAA’s Facilities & Equipment account to finance major capital investments in FAA power systems, air route traffic control centers, air traffic control towers, terminal radar approach control facilities, and navigation and landing equipment
  • $3M to implement the Digital Accountability and Transparency Act, including changes in business processes, work force, and/or information technology assets
  • $60M for NextGen operations planning activities at the FAA
  • $42.6M in funding through September 30, 2018 for information management related to Motor Carrier Safety Operations and Programs
  • $20M for FMCSA’s commercial vehicle information systems and networks deployment program and Information Technology Deployment (ITD) program
  • $9M to fund a DOT Digital Services team that will focus on transforming the department's digital services in line with the White House’s Smarter IT Delivery initiative
  • $8M for cyber security initiatives, including necessary upgrades to the DOT’s wide area network and information technology infrastructure
  • $4M for operation and maintenance of the FTA’s National Transit Database

Treasury

The president’s budget request provides $4.5B in total IT funding to Treasury, a 19% increase over FY 2015 enacted levels.    

Funding highlights include:

  • DME accounts for $933M or 21% of the total IT budget, a 4% increase from FY 2015 enacted levels
  • 280 total investments of which the top 10 represent 56% of the total IT budget at $2.5B
  • $330M slated for cloud investments, a 9.6% increase from FY 2015
  • Notable changes in agency IT budgets include IRS $3.2B up 30%, Fiscal Service $697 down 1%, and Departmental Offices $255M down 5%
  • Notable program changes include IRS Main Frames and Servers Services and Support (MSSS) up $219M, IRS Enterprise Services - PAC 9U up $204M, and IRS Applications Development Program Support (ADPS) up $60M

Veterans Affairs

The president’s budget request provides $4.4B in total IT funding to VA, a 5% increase over FY 2015 enacted levels.

Funding highlights include:

  • DME accounts for $639M or 15% of the total IT budget, a 11% decrease from FY 2015 enacted levels
  • 31 total investments of which the top 10 represent 92% of the total IT budget at $4B
  • $49M slated for cloud investments, a 32% decrease from FY 2015
  • Notable program changes include Benefits 21st Century Paperless Delivery of Veterans Benefits up $116M, Medical 21st Century Development Core down $81M, and Interagency 21st Century One Vet up $75M

We will be publishing our complete analysis of the FY 2016 budget request – including IT investments and initiatives – in the weeks to come.

Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Deniece Peterson, Angela Petty and Alex Rossino contributed to this entry.

 

FY 2016 President’s Budget Request – GovWin FIA’s First Take

The White House released its FY 2016 Budget request today, perhaps the earliest annual budget release of the Obama Administration thus far. Several of my fellow GovWin Federal Industry Analysis (FIA) colleagues and I wasted no time in delving into this budget so that we could provide you with our first impressions of what we found noteworthy.

Similar to each presidential budget, the FY 2016 President’s Budget Request provides a blueprint for the administration’s policy and legislative agenda for the coming fiscal year and beyond. We reviewed the largest federal departments’ discretionary budgets to get a sense of direction and priorities for FY 2016, which begins October 1, 2015. Below is a summary table followed by key funding details and initiatives arranged by department.


Defense

DoD’s discretionary base budget request is up nearly 8% over FY 2015. The $534.3B in discretionary funding is $38.2B more than the FY 2015 enacted level.

Funding highlights include:

  • $126.53B for the Army (an increase of $7.B from the FY 2015 enacted level)
  • $161.0B for the Navy (an increase of $11.8B from the FY 2015 enacted level)
  • $152.9B for the Air Force (an increase of $16B from the FY 2015 enacted level)
  • $94.0B for Defense-Wide operations (an increase of $3.4B from the FY 2015 enacted level)
  • $51B in Oversees Contingency Operations (OCO) funding across all DoD (a decrease of $13.4B from the FY 2015 enacted level)
  • $209.9B for DoD operations and maintenance funding (an increase of $14.5B from the FY 2015 enacted level)
  • $107.7B for DoD procurement funding (an increase of $14.1B from the FY 2015 enacted level)
  • $69.8B in DoD RDT&E funding (an increase of $6.3B from the FY 2015 enacted level)
  • Invests $12.3B in DoD’s Science and Technology (S&T) Program, including $5.5B in Advanced Technology Development
  • Provides $7.4B for C4I systems
  • Includes $7.1B for DoD Space Investment Programs
  • Funds construction of the Joint Operations Center for U.S. Cyber Command at Fort Meade, Maryland
  • Funds ongoing investments in the DoD’s Joint Information Environment
  • Modestly increases the budget of the Defense Advanced Research Projects Agency from $2.9B to 3B
  • Allocates $32.3B for the Defense Health Program
  • Allocates $109.4M for communications upgrades at the new U.S. Strategic Air Command headquarters building

Agriculture

The president’s budget request includes $23.5B in discretionary appropriations for the Department of Agriculture, 1.25% below the enacted level of $23.8B in Fiscal Year 2015.

Funding highlights include:

  • $1B in financial assistance to rural businesses
  • $2.2B in community facility loans for rural areas
  • $6.4B for direct and guaranteed farm ownership and operating loans
  • $450M for competitive, peer-reviewed research for fundamental and applied agricultural sciences
  • $200M in funding for Watershed and Flood Preventions Operations
  • $206M to invest in the backlog of priority facility construction and renovation for the Agricultural Research Service
  • $60M to modernize the Headquarters South Building
  • $7.6M for a digital services team to improve the efficiency and effectiveness of USDA IT systems

Commerce

The president’s budget request provides $9.8B in base discretionary funding to Commerce, an 11% increase over FY 2015 enacted levels. These funds are intended to promote growth through trade, invest, and innovation as well as a data-driven economy.

Funding highlights include:

  • Provides funding to National Institute of Standards and Technology in support of advance in areas like cybersecurity and advanced manufacturing. Efforts to work with industry are called out in particular, such as implementing the Cybersecurity Framework of standards and best practices. Funding will also sustain work on initiatives like cybersecurity automation and the National Strategy for Trusted Identities in Cyberspace (NSTIC).
  • $1.5B to Census to support research, development, and implementation of the 2020 Census. The Census Bureau will also include planned increase for the Economic Census and advance initiatives to make data and resources publicly accessible.
  • Continues strong funding for National Oceanic and Atmospheric Administration, including $2B for next generation weather satellites, including $380M for the Polar Follow-On satellites. $147M in funding is also provided for the construction of an ocean survey vessel.
  • $1.1B for National Weather Service includes increases in funding for critical infrastructure.
  • Includes $3M to establish an in-house Idea Lab to pursue innovative approaches to achieve the agency’s strategic goals and objectives.
  • Requests $6M to build a digital services team for Department of Commerce dedicated to improving IT systems and services.
  • $497M for the International Trade Administration includes $20M to expand SelectUSA efforts to grow business investment in the United States.
  • Auctions 500MHz of federal spectrum, aiming to reduce the deficit by $40B over the next decade and provide greater commercial access to spectrum.

Energy

The president’s budget request provides $29.9B in base discretionary funding to Energy, a 10% increase over FY 2015 enacted levels. These funds are intended to support nuclear security, clean energy, environmental cleanup, climate change response, as well as science and innovation.

Funding highlights include:

  • $5B in funding supports transformational research and development for critical technology areas such as nuclear safety, grid modernization, solar and renewable energy, and energy efficiency.
  • $5.3B to support scientific research, especially in the physical sciences.
  • $12.6B for National Nuclear Security Administration, an 11% increase over FY 2015 enacted levels.
  • $5.8B for critical nuclear legacy cleanup responsibilities.
  • Expands efficiency initiatives introduced in FY 2015 to advance key priorities and improve project integration.

Health and Human Services

The president’s budget request provides $79.9B in base discretionary budget authority to HHS, a 0.3% decrease over FY 2015 enacted levels. 

Funding highlights include:

  • Supports the Affordable Care Act and operation of the Health Insurance Marketplace.
  • Provides $4.2B to serve 28.6 million patients at more than 9,000 health center sites in medically underserved communities. $2.7B of this amount is new mandatory funding.
  • Funds reform of health care delivery by finding better ways to deliver care, pay providers, and distribute information.
  • Promotes innovative medical research to maintain the nation’s leadership in the life sciences including research into Alzheimer’s disease.
  • Advances product development efforts to support procurement of next-generation medical countermeasures against chemical, biological, radiological, and nuclear threats with a $522M investment.
  • Accelerates progress in scientific and public health efforts to detect, prevent, and control illness and death related to antibiotic-resistant infections with funding of $993M.
  • Proposes targeted reforms to Medicare and Medicaid which are projected to save more than $400B over the next decade.
  • Provides the Indian Health Service with $5.1B, an increase of $461M over FY 2015 enacted levels, to expand health care services and construct clinics and sanitation facilities.
  • Includes $1.6B to bolster food safety activities.    
  • Promotes continued efforts to cut waste, fraud and abuse in Medicare and Medicaid including removing social security numbers from Medicare beneficiary ID cards.

Homeland Security **

DHS would receive $41.2B in base discretionary funding in the president’s budget request, a 7.9% increase over the FY 2015 $38.2B budget request level. DHS is currently operating under continuing resolution (CR) at the FY 2014 enacted budget level of $39.8B. This CR expires on 2/27 by which time Congress is expected to pass appropriations to cover the remainder of FY 2015.

Funding highlights include:

  • $3.7B for Aviation Security and Screening at the Transportation Security Administration (TSA) sustain aviation security and effectively align passenger screening resources based on risk. These risk-based security initiatives maximize security capabilities and expedite the screening process for low-risk travelers.
  • $132.3M for the Customs and Border Protection (CBP) Trusted Traveler Programs (TTP) to provide expedited travel for pre-approved, low-risk travelers through dedicated lanes and kiosks.
  • $101M for Radiological and Nuclear Detection Equipment for detecting and interdicting illicit radioactive or nuclear materials by the Domestic Nuclear Detection Office and other DHS components.
  • $85.3M for the CBP Non-Intrusive Inspection (NII) program for passive radiation scanning and X-ray/gamma-ray imaging of cargo and conveyances
  • $373.5M is provided to maintain necessary border security infrastructure and technology to improve CBP’s ability to detect and interdict illegal activity
  • $480M for network security, including the EINSTEIN3 Accelerated program to detect and prevent malicious traffic
  • $102.6M for the Continuous Diagnostics and Mitigation (CDM) program for hardware, software, and services that strengthen the operational network security
  • $1B to replace aging Coast Guard cutters, aircraft, electronic systems and shore infrastructure
  • An increase of $86.7M to enhance U.S. Secret Service capacity to protect senior leaders

Justice

The president’s budget request provides $28.7B in base discretionary funding to Justice, a 5% increase over FY 2015 enacted levels. These funds are intended to support core law enforcement needs, safe and secure prisons, and other Federal, State, Tribal and local programs.

Funding highlights include:

  • Strengthening investment in cybersecurity through over $200M in IT upgrades and tools to detect and deter cyber-attacks. Funds also support plans for a Federal Cyber Campus to co-locate critical civilian cybersecurity agencies.
  • Provides $97M to expand training and oversight for local law enforcement, increase the use of body worn cameras, and provide additional opportunities for reform through technical assistance and training.
  • $482M in funds to address the back log of immigration cases at the Executive Office of Immigration Review. These funds will support hiring judges and legal representation as well as expanding the Legal Orientation Program.
  • Efforts to combat violent extremism include $4M for research, $6M for model development, $2M for technical assistance, and $3M for projects to enhance collaboration between law enforcement, communities, and other stakeholders.
  • Credits applied to Justice’s discretionary budget authority for FY 2016 include $13.5B from the Crime Victims Fund (CVF) and $304M from the Assets Forfeiture Fund (AFF). Both of these figures are up from the FY 2015 enacted levels. The CVF is up 39% over FY 2015, while AFF is up 58% for the same period.

Transportation

The president’s budget request includes $14.3B in discretionary appropriations for the Department of Transportation, 3.5% less than the $13.8B enacted in Fiscal Year 2015.

Funding highlights include:

  • Creates a new Office of Safety Oversight to coordinate and improve safety efforts across all modes of transportation
  • Provides $956M in discretionary funding for modernization of the Next Generation Air Transportation System
  • Provides $478B in mandatory and discretionary funding over six years for a surface transportation reauthorization proposal, including:
    • $1.25B per year for the TIGER Grant program
    • $18B over six years for the President’s National Export Initiative
    • $23B for transit and passenger rail programs and $144B over six years to expand transit capital investment grants
    • $6B over six years to provide credit assistance for nationally or regionally significant transportation projects through the Transportation Infrastructure Finance and Innovation Act Program
  • Provides $29.4B in mandatory and discretionary funding over six years for a Critical Immediate Safety Investments Program to provide targeted infrastructure investments
  • Provides nearly $6B in mandatory and discretionary funding over six years for the National Highway Traffic Safety Administration
  • Invests $935M in mandatory and discretionary funding over six years for vehicle safety and innovation, including vehicle automation and vehicle-to-vehicle technologies

Treasury

The president’s budget request provides $12.8B in base discretionary budget authority to Treasury, a 4.9% increase over FY 2015 enacted levels.   

Funding highlights include:

  • Includes $2.9B for Treasury’s international assistance programs to promote economic growth, poverty reduction, action on climate change, and security through Multilateral Development Bank (MDB) investments in developing and emerging economies.
  • Funds increases in transparency and accountability in federal financial management and implements the Digital Transparency Act of 2014 (DATA Act). 
  • Proposes funding to transform Treasury’s digital services with the greatest impact to taxpayers and businesses so they are easier to use and more cost-effective to build and maintain.
  • Provides IRS with $12.3B in base discretionary resources, an increase of $1.3B from FY 2015, to restore taxpayer services to acceptable levels.  Funds are also provided to continue major IT projects, which aim to protect taxpayer information, modernize antiquated systems, continue development of a state-of-the-art online taxpayer experience. 

Veterans Affairs

The president’s budget request provides $70.2B in base discretionary budget authority to VA, a 7.8% increase over FY 2015 enacted levels. VA also received $15B in the Veteran Access, Choice, and Accountability Act of 2014.

Funding highlights include:

  • Continues the largest department-wide transformation in VA’s history through MyVA, an effort to reorient the department around the needs of veterans.
  • Improves veterans’ access to medical care by investing $60B.
  • Supports improvements in veterans’ mental health care, telehealth care, life-saving treatment for Hepatitis C, specialized care for women veterans, long-term care, and benefits for veterans’ caregivers.
  • Provides $1.4B for programs aimed at ending veteran homelessness in 2015.
  • Strengthens veterans benefit programs by proposing an increase of $85M to hire 770 new staff to improve timeliness of non-rating claims, reduce the inventory of veterans’ appeals, strengthen the fiduciary program and further enhance disability claims processing accuracy and efficiency through centralized mail and the national work queue.

FY 2016 Federal Information Technology Budget Request

As of publishing time, the Office of Management and Budget (OMB) had not yet published IT budget specifics, but topline numbers show a 2.5% increase for FY 2016. This puts the total IT request (including state and local grants and classified defense spending) at $86.4 billion compared to the FY 2015 estimate of $83.4B.

The administration’s priorities fall in line with many of the initiatives discussed in the FY 2015 request along with those launched by OMB and the Office of Federal Procurement Policy (OFPP).  Focus areas include:

  • $450 million to drive forward progress on cross-agency management priorities such as the U.S. Digital Service (USDS), PortfolioStat, Freeze the Footprint, and Open Data.
  • Providing funding to 25 agencies for the development of their own agency digital services teams.
  • Piloting new initiatives in IT acquisition that will increase digital acquisition capability within agencies, train agency personnel in digital IT acquisitions, and test innovative contracting models.
  • Increasing the use of Shared Services
  • Funding that will allow agencies to make progress in implementing the DATA Act and increase Federal spending transparency
  • Continue development of the government’s Category Management initiative to include:
    • Proposing legislation making it easier for vendors to bid on modestly-sized procurements and bringing more new companies into the Federal marketplace.
    • broadening the range of purchases that can be accomplished with minimal complexity and Government-unique requirements by requesting authority to raise the simplified acquisition threshold from $150,000 to $500,000.
    • Seeking new pilot authority to make it easier for agencies to set aside work for new small businesses and other firms with cutting edge/creative solutions that have limited experience selling to the federal government

Stay tuned to FIA as we will be publishing our complete analysis of the FY 2016 budget request in the coming weeks, where we will go into greater detail on the key initiatives, IT investments and contractor implications that will shape the federal IT marketplace for FY 2016.

Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Deniece Peterson, Angela Petty and Alex Rossino contributed to this entry.

 

Congress Passes FY 2015 Funding – Civilian Highlights, Part 1

The U.S. Congress passed an omnibus funding bill for the remainder of fiscal year (FY) 2015 that includes $1.1 trillion in total in discretionary federal funds, roughly half of which goes to federal civilian departments and agencies.

Federal News Radio reported that the Senate voted 56-40 late Saturday for the bill that will fund most agencies through September, the end of FY 2015. The House of Representatives had voted two days earlier on the spending measure, passing it 219-206.

The final bill removes concerns over the possibility of government shutdowns for the rest of the fiscal year and address funding for each of the agencies covered under the twelve individual appropriations bills that traditionally make their way through Congress. The only exception in full-year funding is the Department of Homeland Security, which is funded by at continuing resolution (CR) levels through Feb. 27, 2015, due to congressional concerns over White House immigration plans. Future funding will be taken up by the next Congress.


 

Department Highlights

Energy

Department of Energy funding of $27.9B supports programs across the department’s five primary mission areas: science, energy, environment, nuclear non-proliferation, and national security.

  • National Nuclear Security Administration (NNSA): Funding for NNSA sees an increase of $200M over FY 2014 levels to maintain the safety, security, and readiness of the nation’s nuclear weapons stockpile. This increase brings NNSA’s funding to $11.4B for FY 2015.
  • Funding includes $8.2B for weapons activities as well as $1.2B for naval reactors. Advanced simulation and computing efforts receive $598.0M, including $50.0M for activities related to the exascale initiative.
  • Energy Programs: Support for programs that encourage U.S. competitiveness drive an increase of $22M over FY 2014 enacted levels, bringing funding for Energy Programs at DOE to $10.2B.
  • Science Research: Funding for energy science research is maintained at FY 2014 levels, providing $5,071M to strengthen innovation and support basic energy research, development of high-performance computing systems, and exploration into next generation clean energy solutions.
  • Advanced Research Projects Agency-Energy (ARPA-E): The advanced research organization ARPA-E receives $280.0M, $45M below the level requested for FY 2015.

Commerce

Department of Commerce funding of $8.5B marks an increase of $286M above the level enacted for FY 2014.

  • Patent and Trademark Office (PTO): $3,458M for the U.S. Patents and Trademark Office, the full estimated amount of offsetting fee collection for FY 2015. The Patents and Trademark Office had nearly $651M in unobligated balances at the end of FY 2014.
  • National Institute of Standards and Technology (NIST): $675.5M for the scientific and technical core programs at the National Institute of Standards and Technology (NIST).
    • This amount includes $15M for the National Cybersecurity Center of Excellence and up to $60.7M for cybersecurity research and development.
    • National Initiative for Cybersecurity Education receives $4M. These funds also provide $16.5M for the National Strategy for Trusted Identities in Cyberspace (NSTIC), which includes up to $6M for the lab-to-market program and up to $2M for urban dome programs.
  • National Oceanic and Atmospheric Administration (NOAA): $5,441M for the National Oceanic and Atmospheric Administration (NOAA). This amount includes $3,333.4M for coastal, fisheries, marine, weather, satellite, and other programs.
  • Census Bureau: $1,088M for the Bureau of the Census, which includes $840M for periodic censuses and programs.
  • International Trade Administration: $472M in total program resources for the International Trade Administration. $10M of those funds are expected to be offset by fee collection, resulting in a direct appropriation of $462M.  Of those funds, up to $9M ins for the Interagency Trade and Enforcement Center, up to $10M is for SelectUSA, and Global Markets are funded at levels at least equal to FY 2014.

Go to Part 2 of Civilian Highlights, or check out our Defense Highlights of the FY 2015 Omnibus here.

Fellow GovWin Federal Industry Analysis (FIA) analysts Kyra Fussell, Angela Petty, and Alex Rossino contributed to this entry.

Congress Passes FY 2015 Funding – Civilian Highlights, Part 2

The U.S. Congress passed an omnibus funding bill for the remainder of fiscal year (FY) 2015 that includes $1.1 trillion in total in discretionary federal funds, roughly half of which goes to federal civilian departments and agencies. In part 2 we’ll look at HHS, DHS, Justice and State.

Read our Civilian Highlights, Part 1.

Health and Human Services    

HHS funding is part of the broader Labor, Health and Human Services, and Education Appropriation which totals $156.8B in discretionary funding which is the same as FY 2014 enacted levels, $926M below the president’s budget request.  Deltek estimate the HHS portion of these appropriations to be $80B.  HHS highlights of the omnibus bill include the following:

  • $2.7B in emergency funding to address the Ebola crisis.
  • $3.6B for CMS management and operations, which is equal to the level put in place by sequestration and the same as the FY 2014 enacted levels.
  • $6.9B for CDC for disease prevention and bio-defense research activities, $43M above FY 2014 program level.
  • $30B for NIH, $150M above the FY 2014 level.
  • $20M to combat prescription drug abuse around the country.
  • The bill contains several provisions to protect life, continues all longstanding restrictions on abortion funding that have been included in appropriations legislation in prior years, and promotes abstinence education.
  • $17.8B in discretionary resources for the Administration of Children and Families, which is a $108M increase.
  • The bill provides no new funding for the Affordable Care Act.

Homeland Security

The Department of Homeland Security is the only department in the Omnibus that is not receiving funding through the remainder of FY 2015, i.e. September 30, 2015.  The Omnibus funds DHS with a continuing resolution at the FY 2014 annual level of $39.3B through February 27, 2015 as media reports indicate that the Republican majority will seek to influence the implementation of the president’s recent immigration policy actions.

Justice

Department of Justice funding of $26.7B marks a reduction of $600M below FY 2014 enacted levels.

  • $25.8M for Justice Information Sharing Technology
  • Federal Bureau of Investigation (FBI): $8.4B for the FBI increases resources by $93M over FY 2014 levels to support activities around counter-terrorism, cybersecurity, and human trafficking.
  • Drug Enforcement Administration (DEA):  $2.4B marks an increase of $21M over the 2014 enacted level.
  • Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF): An increase of $22M above 2014 enacted levels brings ATF funds to $1.2B for 2015.
  • National Instant Criminal Background Check System (NICS) Initiative grants: $73.0M in grants are provided to improve NICS records. These grants are expected to assist states in identifying and executing approaches to add more records to the system, particularly mental health records.
  • Prescription Drug Monitoring Programs (PDMPs): New state laws promoting the increase of PDMP best practices around prescribing controlled substances maintain support for technical assistance for PDMPs, PDMP data users, and other key stakeholders.
  • Additionally, DOJ is expected to identify and report on specific metrics related to cybercrime and cybersecurity efforts that may be measured.

State and International Programs

The Department of State and USAID appropriation of $49B includes $15.7B in base and contingency funding for operational costs of the State Department and related agencies, of which $5.4B is targeted for embassy security.

  • $1.4B for USAID base and contingency funding
  • $2.5B in Ebola emergency funding
  • $8.4B in base and contingency funding for international security assistance


Go to Part 3 of Civilian Highlights, or check out our Defense Highlights of the FY 2015 Omnibus here.

DOD Publicly Releases Joint Cyber Doctrine

Last month, Defense Department publicly released the joint cyber doctrine that was first issued in March 2013. The document sheds light on the policies and strategic direction shaping the joint Defense cyberspace operations information security activities. The document provides definitions of the roles and authorities across the Defense Department as well as outlining the roles of other organizations responsible for the nation’s cybersecurity, like the Department of Homeland Security and the Department of Justice.

As the document details, the Joint doctrine “applies to the Joint Staff, commanders of combatant commands, subordinate unified commands, joint task forces, subordinate components of these commands, and the Services.” This document takes precedence over any service level doctrines.

While some media coverage has noted the mentions of offensive capabilities, the definitions and discussion of capabilities in the public version remain at a high level. The doctrine offers three categories of cyberspace operations: offensive, defensive, and Department of Defense Information Network (DODIN).

CO missions are categorized as offensive cyberspace operations (OCO), defensive cyberspace operations (DCO), and DODIN based on their intent. OCO are CO intended to project power by the application of force in and through cyberspace. DCO are CO intended to defend DOD or other friendly cyberspace. DODIN operations are actions taken to design, build, configure, secure, operate, maintain, and sustain DOD communications systems and networks in a way that creates and preserves data availability, integrity, confidentiality, as well as user/entity authentication and non-repudiation.

The view addresses the varying types of activities (offensive, defensive, and infrastructure-related) as well as describing the operational environment and government roles within cyberspace. The military increasingly relies on cyberspace for command and control capabilities and also for logistics functions supported  by non-defense networks. The outline of organizational structures in the document help to illustrate the connections and  relationships within cyberspace.

For vendors, these details may be useful as the Defense Department targets moving towards shared services for information security solutions. It is important for contractors to understand that “Forces conducting CO may simultaneously support multiple users” and which organizations those users may represent. In terms of identifying potential solutions that meet operational requirements, anticipating this interplay between agencies and commands will require extensive coordination, planning, and early integration of requirements.

Although this publication provides broad perspective on the government’s operations in cyberspace, business opportunities with the Defense Department will continue to revolve around defensive capabilities, infrastructure enhancements, communications and network services, and professional services like training.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin.

 

What Portion of Federal Civilian Information Security Spending Is Contractor Addressable?

With the inconsistencies in reported federal spending, it can be difficult to determine how much agencies are investing in different technology areas, like information security. That lack of visibility can make it even more challenging for contractors to determine the size of the addressable market. The reported data for top and mid-tier civilian agencies suggests around 80% of IT security funds could be in play for contractors.

 

Drawing on agency rankings from FIA’s previous information security market reports, we see that the top five civilian agencies along with mid-tier agencies account for the lion’s share of spending on IT security outside the Defense Department. According the FY13 FISMA report, these agencies comprised 87% of civilian cyber spending. While the FISMA figures give a sense of historic direct security spending, they do not reflect current addressable funding.

 

One approach to determining the current addressability of information security spending leverages the IT budget details that agencies report to the Office of Management and Budget (OMB). First the information security related categories within the Federal Enterprise Architecture (FEA) Business Reference Model (BRM) services are identified. These categories allow investment details to be filtered by determining primary and secondary service requirements. The results that meet the FEA BRM service criteria are reviewed for relevance to information security. This process yielded 208 IT investments reported for FY 2015. Then, the contractor addressable portion of spending for each of these investments is calculated. Finally, the figures for each of the investments are used to approximate averages for the spending per investment and for the contractor addressable portions.  

Key Findings

  • Contractor addressable information security at the top 10 civilian agencies amounts to nearly $3 billion.
  • On average, contractors vie for 81% of civilian IT investments that address information security.
  • Addressability varies across the civilian agencies and does not necessarily correspond to the highest levels of spending.
    • While the Energy Department appears to have the highest contractor addressability, it has the lowest average for funding per investment.
    • Not surprisingly, the Department of Homeland Security also has a high level of addressability and the funding per investment is significantly higher, indicating a high reliance on contracted goods and services.

There are some drawbacks worth acknowledging with this approach. Obviously, the calculations rely on the accuracy of agency reporting and consistently coding investments to FEA BRM service areas. This analysis also only takes public data into account, which omits any classified funding or details. Numerous investments include an unspecified portion of spending dedicated to security. In such cases, the whole amount has been included. Additionally, the funding level associated with each of the investments reflects the requested, not approved or actual, sum. Despite some of the limitations around the conclusions, the offer a decent starting point for sizing contracted spending on information security within the federal civilian government. 

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin.

 

Raising the Stakes of Contractor Past Performance Information

Contractor past performance information is one tool federal agencies are being pressed to use more effectively to guard against acquisition risk and recent White House acquisition policy and a Government Accountability Office (GAO) assessment signals that the pressure in this area will only continue to grow. Some efforts are fairly standard government approaches, but others expand into new areas and have implications for both agencies and their contracting companies.

The Office of Federal Procurement Policy (OFPP) has issued numerous reporting compliance guidelines and recommendations over the last half-decade or more to move agencies to improve their reporting of contractor past performance. Further, Congress has included past performance reporting mandates in the last several National Defense Authorization Acts (NDAA). In typical fashion, GAO is looking for continued signs that these efforts are materializing so that agencies have this information available to make informed acquisition decisions.

Most Agencies Fall Short of Contractor Past Performance Reporting Compliance Targets

In August, the GAO released an assessment of how federal agencies were doing with regard to improving their reporting of contractor past performance information. According to OFPP’s annual reporting performance targets, agencies should have been at least 65 percent compliant by the end of fiscal year 2013. GAO found that agencies generally have improved their level of compliance with past performance reporting requirements issued by OFPP. However, the rate of compliance varies widely by agency and most have not met OFPP targets. As of April 2014, for the top 10 agencies, based on the number of contracts requiring an evaluation, the compliance rate ranged from 13 to 83 percent and only two of the top 10 agencies were above 65 percent compliance. (See chart below.)


 

OFPP Expanding Scope of Contractor Past Performance Information

In July, the OFPP directed agencies to research past performance more deeply before awarding complex IT development, systems and services contracts greater than $500 thousand in value. Further, OFPP directed agencies to expand the scope of the research processes used to collect contractors’ past performance information during source selection.

In order to have the most relevant, recent, and meaningful information about potential contracting partners considered in the pre-award phase of the acquisition process agencies were instructed to have their acquisition officials perform the following steps:

  • Recent Contracts - Contact contracting officers (COs) and/or Program Managers (PMs) on at least 2 of contractors’ largest, most recent contracts to review work history.
  • News Searches – a Review articles and publications (include. GAO and IG reports) on contractor performance and business integrity.
  • Commercial Sources - Review public sources and databases for business reviews, customer evaluations, contractor management reports, etc.
  • References – a Request 3-5 references from public and commercial customers, partners, subcontractors, etc. for work done in past 3-5 years.
  • Teaming Partners – Request past performance information on subcontractors and team arrangements.

Implications

The impacts on agencies and contractors alike include greater time and effort (i.e. expense) in collecting and providing this performance information. This will stretch an already-overly-tasked federal acquisitions workforce even further and will require that contractors pay broader attention to their performance reputations and those of their teaming partners.

The new OFPP directives and others like them will also likely extend the time it takes to complete the source selection process on applicable acquisitions, at least until all sides of the acquisition process build some repeatable processes and efficiencies into their systems.

What we can hope for in the end is more transparency, better managed acquisitions with fewer protests, and overall better performing contracts that meet the government’s goals with economy and efficiency and provide business growth opportunities along the way.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @GovWinSlye.

Justice to Streamline IT Buying through Service Broker

In the coming year, the Justice Department will join the ranks of agencies leveraging service broker arrangements for acquisition of IT infrastructure and services.

In recent years, Department of Justice (DOJ) has progressed efforts to consolidate contracts, reducing redundancy of acquisition efforts and improving enterprise capabilities. Some of these initiatives began as informal strategic sourcing efforts. The department has actively leveraged Enterprise License Agreements (ELAs) and Blanket Purchase Agreements (BPAs) to achieve cost savings. The majority of the department’s mobile device and wireless services were consolidated through several contract vehicles. By leveraging strategic sourcing and shared services for wireless and telecom needs, DOJ can lower equipment expenditures by moving to contracts with best negotiated prices.

Now, it seems that the Justice Department is taking the next step by pursuing service broker. Other federal agencies that have adopted a service broker model include Defense Department and the National Nuclear Security Administration (NNSA). These broker arrangements allow agencies to identify solutions for common requirements and simplify technology buying within organizations.

According to recent reports, DOJ expects to target infrastructure and commodity IT services initially. These technologies would include wide area network (WAN), data centers, storage, email, telecommunications, security, and Trusted Internet Connection (TIC) services. The “next tier” of services that would be addressed, according to Justice’s CIO Klimavicz, cover business enterprise services, such as voice and collaboration.

The decision to formally adopt service brokerage aligns with the department’s strategic plans and technology initiatives. For a number of years, DOJ has actively leveraged Enterprise Level Agreements and Blanket Purchase Agreements to achieve cost savings. In 2012, Justice established ten commodity area working groups focus on IT functions, like data centers, email, and mobility. These groups provide recommendations to the DOJ CIO Council to address commodity investment areas, to identify potential for consolidation and cost savings, as well as to manage milestone and performance metrics.

DOJ’s near term information resource planning highlights 5 goals including institutionalizing IT portfolio management, streamlining operations, enhancing IT security, delivering innovative solutions, and expanding information sharing. The shift to centralized delivery of IT capabilities, such as multi-component (enterprise) IT services, and use of enterprise platforms is expected to drive greater value than silo solutions. Ongoing assessments and continuous enhancement of existing IT assets and vendor relationships will improve the value of the IT portfolio by evaluating the risks of adopting new technologies too soon or sustaining legacy technology for too long.

Brokerage would facilitate increased use of shared services, enable enterprise capabilities, and consolidate departmental purchasing power to improve pricing through strategic sourcing. The Department of Justice’s vision for strategic sourcing has led to the establishment of a Vendor Management Office (VMO) targeting improvement of buying practices for IT infrastructure. The VMO will lead efforts to analyze procurement data, to identify best practices, and to centralize enterprise procurement vehicles.

As with other federal markets being impacted by strategic sourcing, vendors will need to be increasingly mindful of market positioning. IT spending will be increasingly directed through agencies strategic sourcing and preferred contract vehicles, but that shift inhibits spending as government organizations look to achieve economies of scale for commodity IT purchases. The establishment of Vendor Management Offices means contractors can expect increased oversight and greater need to partner smartly.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @FIAGovWin.

 

Federal Busy Season – Which Agencies are Ramping Up to Spend in September?

August is here and that puts us right at the mid-point of the fourth and final quarter of the fiscal year – the federal “busy season.” But that doesn’t mean that half of this business is already accounted for. In fact, historical spending trends suggest that things are just ramping up for its climax in September and several agencies will have billions of dollars to spend on IT before they face expiring funds.

Recently, I showed how federal agency spending trends in Q4 accounted for an average of 39% of agency contracted IT spending for the year, translating into an average of $30 billion in IT products and services contracted during the fourth quarter. Yet, the spending is even more concentrated than that. Upon further analysis, we can see that federal contract spending is disproportionately large in September, the final month of the fiscal year. Agencies obligate 18% of their total contract dollars across all goods and services and 23% of their yearly contracted information technology spending in September alone. That works out to nearly 60% of Q4 IT contract spending and means that about $17.3 billion in IT is likely to be contracted in the month of September.

Twenty five federal departments and agencies account for about 99% of this IT spending. So which of these biggest spending departments and agencies will have the largest percentage of their IT dollars likely to go out next month? See the chart below.


Twelve of the 25 highest spending departments – roughly half – will obligate 25% or more of their FY 2014 IT contract dollars in September, based on a 5-year average. State and AID will obligate more than a third!  The FY 2009-2013 average September contract spending for these 12 agencies is provided below.


Again, we are looking at an average of over $17 billion in IT spending at these agencies in September. Not all of these funds will necessarily expire at the end of the fiscal year, but the historical spending data averaged over the last five years still supports the trend that these agencies will spend at or near these levels, as it reflects some of the spending impacts of recent trends like shifting and tightening budgets, program delays, and sequestration.

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Originally published in the GovWin FIA Analysts Perspectives Blog. Follow me on Twitter @GovWinSlye.

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