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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.

 

State of the Union – Potential Opportunities and Impacts for Federal Contractors

In Tuesday night’s State of the Union address, President Obama highlighted issues and initiatives he hopes to tackle in his last two years in office such as improving “middle-class economics,” building U.S. infrastructure, and increasing cybersecurity.  

Reading between the lines we can attempt to predict the impact some of these initiatives may have on the federal contracting community.

The potential upside for federal contractors:  

  • Obama’s plan to improve infrastructure in the form of trains, bridges, ports, and internet speed and access could provide opportunities for heavy construction and IT contractors. 
  • Strengthening cybersecurity efforts may provide companies with additional opportunities to sell cybersecurity services and solutions to the federal government, as well as the commercial market.  
  • Easier, more affordable access to higher education and increased training will provide employers with a larger, better trained labor pool. 
  • The president’s Precision Medicine Initiative may provide contracting opportunities in the area of health IT, health informatics, medical research, medical technology, and medical devices. 
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes.  
  • The president’s commitment to continue to fight terrorism may provide opportunities for defense contractors. 
  • Obama’s statements about surveillance and privacy allude to continued funding for intelligence agency surveillance programs, but with emphasis on simultaneously safeguarding citizen privacy.  

The potential downside for federal contractors:  

  • Obama’s call for higher wages in the form of equal pay for women and increasing the minimum wage, may negatively impact companies’ profitability.  
  • The appeal for guaranteed paid sick leave for all employees may place a financial burden on small businesses.  
  • Potential new cybersecurity legislation could impose additional security requirements for federal vendors and service providers.  
  • Revisions to the tax code may adversely or positively impact contractors and other companies depending on specifics of proposed tax code changes. 

The President’s FY 2016 Budget Request, due for release in less than two weeks, will bring to light many of the proposals and initiatives mentioned in the State of the Union address, and is rumored to contain a substantial increase over current year budget levels.

For detailed budget information and federal contractor impacts, watch for Deltek’s future analysis of the President’s FY 2016 Budget Request in the coming weeks.

 

White House Cyber Czar Walks a Thin Line on Cybersecurity Info Sharing

If the federal government knew about the Heartbleed security bug before it became public, would they have said anything? The answer, according to Michael Daniel, the White House Cybersecurity Coordinator, is an unequivocal . . . “maybe.”  

In a recent White House Blog post, Daniel reiterated the NSA assertion that they had no prior knowledge of the existence of Heartbleed, the recently discovered vulnerability in OpenSSL that could expose online passwords and encrypted Internet traffic to hackers. Daniel used the occasion to wade into the murky waters of when the federal government would, and would not, withhold knowledge of a computer vulnerability from the public.  He affirmed the administration’s “commitment to an open and interoperable, secure and reliable Internet, and in the majority of cases, responsibly disclosing a newly discovered vulnerability is clearly in the national interest.”

But he also noted that a major reason they would delay disclosure is if the opportunity for critical intelligence gathering was deemed to outweigh the cost of the delay. At odds are the extremes of saying nothing and maintaining and exploiting a collection of undisclosed vulnerabilities while leaving users vulnerable . . . and saying everything and completely forgoing this knowledge as a way to conduct intelligence gathering.

In an effort to balance the trade-offs between transparency and secrecy with a strong leaning toward disclosure, Daniel outlined a list of question he wants agency officials to address whenever they are proposing to withhold their knowledge of vulnerability:

  • How much is the vulnerable system used in the core internet infrastructure, in other critical infrastructure systems, in the U.S. economy, and/or in national security systems?
  • Does the vulnerability, if left unpatched, impose significant risk?
  • How much harm could an adversary nation or criminal group do with knowledge of this vulnerability?
  • How likely is it that we would know if someone else was exploiting it?
  • How badly do we need the intelligence we think we can get from exploiting the vulnerability?
  • Are there other ways we can get it?
  • Could we utilize the vulnerability for a short period of time before we disclose it?
  • How likely is it that someone else will discover the vulnerability?
  • Can the vulnerability be patched or otherwise mitigated?

The impact of the answers to these questions on the share/don’t share decision is unclear, since by his own admission “there are no hard and fast rules.”

In a previous blog post that ran about the same time that Heartbleed was coming to light, Daniel emphasized the importance of information sharing to improve the nation’s overall cybersecurity posture. In that blog he said “reducing barriers to information sharing is a key element of this Administration’s strategy to improve the nation’s cybersecurity,” and that they would ”continue to work to address the concerns our private sector partners have raised that the government should share more of its own information, so that companies could better protect themselves.” “Our goal is for the government to be a reliable information sharing partner, but only one of many.” 

In an era where government transparency and secrecy issues have become high-profile in the public mind, the above guidelines show the tightrope the White House is attempting to walk.

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

President Obama’s 2015 budget: Bringing back homeland and justice grants

The White House and President Barack Obama posted the fiscal year 2015 budget, which includes a number of initiatives from job growth and fiscal responsibility, to improving the nation’s security. Usually we think of national security at the federal level, with the Department of Defense and intelligence agencies, but often the first line of defense within the United States is held by state and local officials.
 
For nearly a decade, most Homeland Security and Justice Department grant programs have been reduced or remained stagnant. In cases like with the Federal Emergency Management Agency (FEMA), there are numerous grant programs, each with their own rules and regulations. As part of President Obama’s budget for the Department of Homeland Security (DHS), these grant programs will be simplified and consolidated into the already existing Homeland Security Grant Program (HSGP). While it is unclear the amount of funding that will be allocated, a more easily understood program will benefit state and local agencies vying for that money. Oftentimes agencies, particularly smaller ones, get bogged down with grant proposals and ultimately fail to win funds for reasons such as being unqualified for the grant to begin with.
 
As part of the budget proposal, both DHS and the Department of Justice (DOJ) would offer billions of dollars in grant funding. The DHS would have $1 billion for border protection and another half-billion dollars for technology research and development, and other initiatives. The DOJ and the DHS would offer local agencies millions to retain and rehire employees, including emergency management agents and police officers. The Byrne Justice Assistance Grant (JAG) has been funded in previous years, but a renewed commitment to these funds would be a vital source of money for local agencies. Agencies that are not connected to many of the federal criminal databases could utilize these funds to get up to speed as well as invest in officers.
 
Analyst’s Take
 
It is too soon to know whether President Obama’s budget will pass as constructed today. However, the inclusion of the public safety, emergency preparedness and other justice programs is a promising sign, especially to cash-strapped state and local agencies. There are numerous programs, including state criminal history initiatives that could move forward if funding is made available. The use of new technology in the justice system and within homeland security and emergency management would be welcomed by vendors with new tools, software and hardware that could reduce time in the field. Vendors should begin to follow the budget process to see what grant programs are funded, and reach out to existing clients who may want to expand existing systems or explore new opportunities.
 
 

FY 2015 President’s Budget Request – A First Take

The White House released its much-anticipated FY 2015 Budget request yesterday, a month past its legal and historical due date. Several of my fellow GovWin Federal Industry Analysis (FIA) colleagues and I dug right into reading the budget so that we could provide you with our first impressions of what we found noteworthy.

Like any presidential budget, the FY 2015 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 and information technology (IT) budgets to get a sense of direction and priorities for FY 2015, which begins October 1, 2014. Below is a summary table followed by key funding details and initiatives arranged by department.

 

Defense

DoD’s budget request is down this year as FY 2015 discretionary funding of $495.6B represents a 0.8% decrease from the FY 2014 enacted budget of $496B.

Funding highlights include:

  • $120.3B for the Army (a decrease of $1.3B from the FY 2014 enacted level)
  • $147.6B for the Navy (an increase of $300M from the FY 2014 enacted level)
  • $137.7B for the Air Force (an increase of $3B from the FY 2014 enacted level)
  • $89.8B for Defense-Wide operations (a decrease of $2.5B from the FY 2014 enacted level)
  • $199B for DoD operations and maintenance funding (an increase of $6B from the FY 2014 enacted level)
  • $90.3B for DoD procurement funding (a decrease of $2B from the FY 2014 enacted level)
  • $63.5B in DoD RDT&E funding (a decrease of $700M from the FY 2014 enacted level)

Provisions of Interest

  • $128M for military infrastructure in Guam, $51M of which is to establish facilities for Marine Air-Ground Task Forces throughout the region
  • $47.4B for the DoD Unified Medical Budget
  • $2.9B for the Defense Advanced Research Projects Agency
  • $11.5B for basic and applied research and advanced technology development

Agriculture

The USDA’s budget request is down this year as FY 2015 discretionary funding of $23B represents a 4% decrease from the FY 2014 enacted level of $24B.

Funding highlights include:

  • $7.2B for the Food and Nutrition Service (an increase of $124M from the FY 2014 enacted level)
  • $4.8B for the Forest Service (a decrease of $700M from the FY 2014 enacted level)
  • $2.4B for Rural Development (a decrease of $400M from the FY 2014 enacted level)
  • $1.8B for the Foreign Agricultural Service (same as the FY 2014 enacted level)
  • $1.5B for the Farm Service Agency (a decrease of $100M from the FY 2014 enacted level)
  • $1.1B for the Agricultural Research Service (same as the FY 2014 enacted level)
  • $1B for the Food Safety and Inspection Service (same as the FY 2014 enacted level)
  • $837M for the Animal and Plant Health Inspection Service (a decrease of $8M from the FY 2014 enacted level)
  • $815M for the Natural Resources Conservation Service (a decrease of $14M from the FY 2014 enacted level)

Provisions of Interest

  • The Opportunity, Growth, and Security Initiative provides funding to build a new biosafety research laboratory in Athens, GA
  • $45.2M for the USDA OCIO
  • $15M for IT investments for the Comprehensive Loan Program (CLP)
  • $44 million to address climate change’s risk to agriculture, including investments in cyber infrastructure for big data

Commerce

The president’s budget request provides $8.8B in base discretionary funding to Commerce, a 6% increase over FY 2014 enacted levels.  It requests $2B in IT funding, an increase of 5.3% over FY 2014 enacted levels. 

Funding highlights include:

  • Provides funding for NIST to accelerate advances in areas such as cybersecurity and advanced manufacturing
  • Supports key trade promotion activities to stimulate economic growth
  • Seeks to promote business investment in the US to create jobs and promote US competitiveness
  • Provides $753M for innovative design methods for achieving the lowest cost possible 2020 decennial census
  • Establishes up to 45 manufacturing innovation institutes across the US
  • Continues strong support of NOAA, including $2B to continue the development of polar-orbiting and geostationary weather satellite systems
  • Provides $1.6B for research and development
  • Funds a new investment line item for modernizing IT and business processes at PTO ($64.4M)

Energy

The DOE’s budget request is up this year as FY 2015 discretionary funding of $27.9B represents a 2.6% increase over the FY 2014 enacted level of $27.2B.

Funding highlights include:

  • $11.7B for the National Nuclear Security Administration (an increase of $M from the 2014 enacted level)
  • $6.0B for Department Management and Performance (a decrease of $200M from the FY 2014 enacted level)
  • $5.1B for Science Programs (an increase of $100M from the FY 2014 enacted level)
  • $4.0B for Energy Programs (an increase of $300M from the FY 2014 enacted level)

Provisions of Interest

  • $180M in R&D to facilitate the transition to a Smart Grid
  • $325M for Advanced Research Projects Agency–Energy programs
  • $141M ($91M in Science and $50M in NNSA) for R&D related to exascale computing
  • More than $300M for DOE cyber security initiatives

Health and Human Services

The president’s budget request provides $77.1B in base discretionary funding to HHS, a 1.7% decrease over FY 2014 enacted levels.  It requests $8.6B in IT funding, a decrease of 10.4% over FY 2014 enacted levels. 

Funding highlights include:

  • Supports the Affordable Care Act and operation of the Health Insurance Marketplace
  • Provides $30.2B to NIH for medical research
  • Improves mental health services for youth and families
  • Invests in payment innovations and other reforms for Medicare and Medicaid and other federal health programs to improve program integrity and delivery of high-quality, efficient health care
  • Invests in a new initiative to improve access to high-quality health care providers
  • Funds construction of two new Indian Health Service health care facilities
  • Increases the investment in CMS IT infrastructure by $58.6M, a 19.4% gain
  • Increases the investment in CMS Healthcare Fraud Prevention Partnership (HFPP) by $17M, a 354% increase
  • Decreases IT funding for the CMS  investment that developed the health insurance marketplace (-$297M) and transfers to states for CMS Medicaid Management Information System (-$618M) 

Homeland Security

DHS is slated to receive $38.2B in base discretionary funding in the president’s budget request, a 2.6% decrease over FY 2014 enacted levels. The budget also includes and $6.8B for disaster relief. The budget requests $5.8B in IT funding which includes a $3M reduction from the FY 2014 enacted levels, a 0.1% decrease year over year.

Funding highlights include:

  • $514M for research and development in homeland security technology and developing state-of-the-art solutions for first responders – target opportunities in cybersecurity, explosives detection, nuclear detection, and chemical and biological detection.
  • $300M to initiate construction in 2015 of the National Bio- and Agro-Defense Facility to study large animal zoonotic diseases and develop countermeasures
  • $124M to support, expand, and enhance E-Verify system to aid U.S. employers with employment legality verification
  • $112.5M for Secure Flight, under which DHS conducts passenger watch list
  • $3.8B for the Transportation Security Administration (TSA) screening operations. Supports risk-based security initiatives at the Transportation Security Administration that enhance the efficiency of passenger screening operations, while improving the customer experience for the traveling public.
  • $1.25B for cybersecurity activities including:
    • $377.7M for Network Security Deployment, including the EINSTEIN3 Accelerated (E3A) program
    • $143.5M for the Continuous Diagnostics and Mitigation (CDM) program
    • $173.5M to support ICE cyber and cyber-enabled investigations of cyber-crime, etc.
    • $28M for the classified Homeland Secure Data Network to security and info sharing
    • $67.5M for Cybersecurity/Information Analysis Research and Development
    • $8.5M to establish a voluntary program and an enhanced cybersecurity services capability to support Executive Order 13636, Improving Critical Infrastructure Cybersecurity
    • $3.9M for Secret Service Cybersecurity Presidential Protection Measures to support monitoring of protective sites which directly or indirectly support a Presidential visit

Justice

The president’s budget request provides $27.4B in discretionary funding for the Justice department, $122M above the 2014 enacted level – for DOJ core law enforcement needs, safe and secure prisons, and other Federal, State, and local programs. DoJ’s IT budget is just slightly better than flat (+0.4%) year-over-year at $27.4B.

Funding highlights include:

  • $722M for cybersecurity efforts to combat increasingly sophisticated and rapidly evolving cyber threats
  • $13M to the FBI for investment in the National Instant Criminal Background Check System as part of the DOJ’s overall $182M budget for Federal, State, and local gun violence reduction efforts
  • $8.4B for Federal prisons and detention facilities, to maintain secure prison facilities and to continue bringing newly completed or acquired prisons online
  • $15M under the Smart on Crime initiative for prisoner reentry programs and for Prevention and Reentry Coordinators
  • $15M to expand the Residential Drug Abuse Program at the Federal level and $14M to expand the Residential Substance Abuse Treatment program at the state level
  • $1.7M to develop new multidisciplinary program evaluation and policy analysis capability to improve budget, management, and policy decisions
  • $299M for the Department’s Juvenile Justice Programs
  • $423M (roughly half of which are grants) to combat violent crimes against women
  • $9M to establish a National Center for Building Community Trust and Justice to promote procedural fairness in policing, use deterrence strategies to reduce crime, and encourage police departments to track the quality of their interactions with the public

Transportation

DOT’s budget request is down this year as FY 2015 discretionary funding of $13.7B represents a 2.14% decrease from the FY 2014 enacted level of $14B.

Funding highlights include:

  • $48.6B for the Federal Highway Administration (an increase of $7.2B from the FY 2014 enacted level)
  • $15.3B for the Federal Aviation Administration (a decrease of $584M from the FY 2014 enacted level)
  • $4.9B for the Federal Railroad Administration (an increase of $3.3B from the FY 2014 enacted level)
  • $17.6B for the Federal Transit Administration (an increase of $6.9B from the FY 2014 enacted level)
  • $851M in mandatory and discretionary funding for the National Highway Traffic Safety Administration (an increase of $32M from the FY 2014 enacted level)
  • $669M for the Federal Motor Carrier Safety Administration (an increase of $97M from the FY 2014 enacted level)
  • $261M for the Pipeline and Hazardous Materials Safety Administration (an increase of $51M from the FY 2014 enacted level)

Provisions of Interest

  • $302B four-year surface transportation reauthorization proposal to support critical infrastructure projects
  • Funding for FAA NextGen investments is preserved
  • $370 million for National Airspace System Sustainment
  • $5M for cyber security initiatives, a decrease of $7M from the FY 2014 enacted level

Treasury

The president’s budget request provides $12.4B in base discretionary funding to Treasury, a 1.5% decrease over FY 2014 enacted levels.  However, provides total resources of $13.8B which is a $1.2B increase partially funded by proposed program integrity caps. It requests $4B in IT funding, an increase of 13.4% over FY 2014 enacted levels. 

Funding highlights include:

  • Continues implementation of the Affordable Care Act
  • Continues implementation of the Wall Street Reform and Consumer Protection Act to create a more stable  and responsible financial system
  • Invests $12.5B in the IRS, which includes a $480M program integrity cap adjustment.  Aimed at improving enforcement of current tax laws and reducing the current tax gap.  Includes more than a $100M increase to improve customer service, and an additional $165M is proposed to further enhance customer service through the Opportunity, Growth, and Security Initiative
  • $1.5B for a new round of State Small Business Credit Initiatives
  • Expands the level of detail and capabilities of sorting federal spending data to enable better use of the data
  • Calls for a $227M increase to the IRS Main Frames and Servers Services and Support investment over FY 2014 levels

Veterans Affairs

The president’s budget request provides $65.3B in base discretionary funding to VA, a 3% increase over FY 2014 enacted levels, giving VA total budget authority of $68.4B which includes $3.1B of estimated medical care collections.  The budget requests $4B in IT funding, an increase of 4.7% over FY 2014 enacted levels.

Funding highlights include:

  • $56B for VA medical care, and $58.7B in advanced funding for FY16 appropriations for medical care
  • Emphasis on ending veterans’ homelessness. ($1.6B) Working with HUD
  • Supports continued improvements in delivery of mental health care and telehealth technologies ($7B)
  • $1B in mandatory funding to help put veterans back to work protecting and rebuilding America
  • An additional $400M for high priority capital projects
  • Invests $138.7M in the Veterans Claims Intake Program and $173.3M for the Veterans Benefit Management System to address the claims backlog

Stay tuned to FIA as we will be publishing our complete analysis of the FY 2015 budget request later this month, 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 2015.

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

State of the Union Highlights: Contractor Implications

On January 29, President Obama delivered his sixth State of the Union address, and the themes are familiar. The President urged Congress to work with him to pass much needed legislation to address key administration priorities, such as job creation, healthcare, immigration, national defense, tax reform, pay equality and income security, and education and training.

Although there was not much detail, my team of analysts and I walked away from the speech with a few takeaways with contracting implications:

  • No more budget crises. While Obama lauded the efforts of Congress in passing a two-year budget deal, he encouraged Congress to continue with investments that will both support our future and reduce the deficit. He also reiterated another key way to address the fiscal bleeding, which is to close tax loopholes, like those that give $4 billion to the fossil fuel industry each year, that impact our revenue.

  • Give Americans a raise. Although he does not have the power to enforce a national minimum wage increase, President Obama intends to sign an Executive Order requiring federal contractors to pay their federally-funded employees at least $10.10 an hour.This will be an interesting story to watch unfold, considering the burden this will place on the profitability of govt. contracts, especially for small businesses.  We may see contractors restructuring their rate schedules to build in increased wage requirements, which would indirectly lay the burden of higher wages onto the government and therefore U.S. taxpayers. It may also inadvertently impact the number of vendors in the federal market – and therefore price competitiveness – if businesses decide it just isn’t profitable enough to work with the federal government.

  • Accept Obamacare or propose a new solution. Now that healthcare.gov is functional, there seems to be renewed confidence in the possibilities of Obamacare.  The President challenged Republicans to come up with a better solution that makes financial sense rather than spend time on another 40 votes to repeal the Affordable Care Act.

  • Don’t skimp on R&D.  The President called for Congress to restore cuts to basic research that facilitates the development of leading edge technology and will help America regain global dominance in technology, medical research and manufacturing.  Obama noted two high-tech manufacturing hubs where businesses and research universities are working together, and the launch of six more hubs. More emphasis on federal R&D could give contractors more opportunities in this area. Funding basic research has been mentioned as a priority by officials from both the Pentagon and the Army.  Work done by DARPA, DOE labs, NASA, and other technology-focused parts of the government would also benefit. 

  • Refocus on CONUS defense.  There will be an interesting shift to using the Department of Defense here at home, which is a huge historical shift from restrictions on this that date back to the founding.  A major part of that strategy is to shore up cybersecurity defense capabilities and as the President stated, “…keep faith with our men and women in uniform and invest in the capabilities they need to succeed in future missions.” Not surprisingly, cybersecurity remains a critical area with gaps that agencies will need contractor support to fill.

  • Take care of our veterans. Judging by the moving reaction to wounded Army Ranger Sergeant First Class Cory Remsburg, veteran care is a one of those rare, bipartisan issues that draws agreement from both sides of the aisle. President Obama indicated that the administration will “keep slashing that backlog so our veterans receive the benefits they’ve earned and our wounded warriors receive the health care – including the mental health care – that they need.” VA’s Medical IT Support and claims processing budget accounts will continue to have consistent (and growing) funding, at least in the near-term.

  • Create new jobs and train people for jobs of the future. President Obama continues his focus on the national infrastructure – rebuilding roads and upgrading ports.  This could mean opportunities for federal and state and local contractors with Architecture, Engineering and Construction expertise. With a declining federal workforce, training programs are likely to translate into contractor opportunities. Vice President Biden will lead the reform of America’s training programs, which will give employees the skills required to match with company needs. Implications:  Could help contractors looking for specific talents/skills. 
  • Invest in education and the technology to support excellence. The President targeted investment (either grants or contracts) to select providers in his pledge to connect 99 percent of students to high-speed broadband over the next four years. With support from the FCC and companies like Apple, Microsoft, Sprint, and Verizon, more than 15,000 schools and 20 million students will be connected without a negative impact to the deficit. 

  • Invest in energy efficiency and independence. The President restated his commitment to working with industry to support natural gas production and set higher fuel efficiency standards, and with business and communities to reduce energy consumption. This implies additional policy, subsidies and training in “green” professions to help facilitate America’s “shift to a cleaner energy economy.”  

  • Fix the immigration problem. President Obama encouraged the House to follow the Senate’s lead and act on immigration reform, which could result in economic growth (and therefore job creation) and a deficit reduction of almost $1 trillion in the next two decades.

Compared to last year’s State of the Union address, there was much of the same.  The President’s priorities have not significantly shifted.  However, he did raise new issues that will have both positive (defense focus on CONUS and cybersecurity) and negative (higher contractor employee wages) ramifications for companies serving the federal government.  As we typically see in federal contracting, the main issue will be in effectively translating policy into execution.

 

Sebelius testifies on federal health insurance exchange ‘debacle’

In a much-anticipated Capitol Hill hearing on Wednesday, Secretary of Health and Human Services Kathleen Sebelius testified before the House Energy and Commerce Committee on the failures of the federal health insurance exchange website.
 
The hearing, which veered far from the infrastructure of the website to the larger structural failures of the Affordable Care Act, took on a predictable tenor with incredulous Republicans grilling the defensive former governor of Kansas, as her fellow Democrats on the committee took a more conciliatory tone. For anyone who has been following the Obamacare saga, the secretary’s testimony offered limited new information. Here is a synopsis of what we learned at yesterday’s hearing:
  • The buck stops with Sebelius, as she advised both Congress and the American public to hold her responsible.
  • The secretary found the entire website experience a “miserably frustrating … debacle,” for which she apologized to the populace while advising them that no delay in enrollment is necessary as the website is fixable.
  • Sebelius believes that when it is judged “by any fair measure,” the Affordable Care Act is working.
  •  Privacy and security concerns are legitimate and are being addressed by the fix currently underway for the website. 
  • HHS spent $118 million on the contracts to develop the Healthcare.gov website, with another $56 million in IT spending to support the website.
  • HHS has a total obligated contract in the amount of $197 million with CGI through March 2014.
Aside from those above, one more revelation seemed to expose the root of the website’s problem. The secretary reported that QSSI was brought in as the systems integrator after the website launched. Sebelius reported that the company had done excellent work with the Federal Data Hub and she believed it would repeat that performance in fixing the structural problems plaguing the system. This begged the question: Who was the system integrator in charge of the project during the run-up to the exchange launch?
 
Sebelius revealed, after intense questioning from a Republican congresswoman, that a team from the Centers for Medicare and Medicaid Services (CMS) operated as the system integrator at the time of launch. The team, headed by CMS Chief Operating Officer Michelle Snyder, was quite obviously deficient in this role and was rightfully replaced by a proven contractor.
 
Analyst’s Take
 
Politics runs rampant in any discussion of the Affordable Care Act. As one of the most sweeping and contentious pieces of legislation in modern history, this comes as no shock. In the nearly five years since insurance reform became a topic of conversation, not a single elected Republican on the national level has expressed support for the ACA. Some provisions have gained Republican approval in the states, but the thrust of one-half of the political system has clearly been to scrap the law and start over.
 
Enter October 1, 2013. The website launch was a bust. Millions of individuals with insurance on the individual market realized, as the Fact Checker Column in the Washington Post points out, that they could not in fact keep their plans. With that as the backdrop, it is no wonder that many lawmakers are out for blood. Still, through all this noise emerge concrete lessons for governments and vendors alike.
  • The alignment of system implementation deadlines around a political calendar often hinders success. Since the passage of the law, the vendor community knew the deadline for exchange implementation on the state and federal level was unrealistic. Yet, absent a more plausible explanation, it seems politics dictated a steadfast deadline of October 1, 2013, for the exchanges to be operational. 
  • The micromanagement of the website launch by the CMS team, ostensibly unqualified for such an involved task, was a poor move with such tight deadlines. Though needing more time for an excellent product delivery, the private sector could have grudgingly met the stringent deadline with, at the very minimum, a functioning website. 
  • The criticism of the cost of the contracts to implement the website has gained traction only because it doesn’t work. Had the website worked on day one, those who criticize the amount paid to vendors for the build would have been neutered by the success of a signature feature of the ACA. The large amount of taxpayer dollars required to build such a complex infrastructure is understandable only if the infrastructure is a success. Absent that success, greater spending scrutiny occurs from politicians and journalists to accentuate tales of failure. 
Finally, it is clear the website will be fixed, eventually. The question becomes: To what end does all this bad press prevent the overall success of the ACA? From the perspective of state government, it seems clear that this debacle is not going far to convince the reticent majority of governors who rejected a state-run exchange. As time goes on, we will see if those leaders will use the federal experience as a warning shot of the perils inherent in implementing a flawed system, or as inspiration for how not to proceed as they take up the exchange mantle.

 

FY 2014 Federal Budget Request: Challenges and Opportunities

Although two months late in delivery, the president’s FY2014 Budget Request continues promotion of administrative priorities while proposing cuts and savings to trim the deficit.  Deltek's newly released report, FY 2014 Federal Budget Request:  Challenges and Opportunities, analyzes the spending priorities, policy plans and information technology trends and initiatives in the FY2014 budget request.  

The Obama Administration is requesting $3.8 trillion for FY2014. The budget focuses on jobs creation and economic growth to strengthen the American middle class.  Deltek’s report examines patterns in the $1.2 trillion discretionary budget, as well as the $82 billion information technology budget, including market trends, drivers, and contractor-addressable spending. 

Using a well-honed methodology for gleaning the contractor-addressable portion of federal spending, Deltek calculates projected expenditures for FY2014 for ten different federal product/services market segments.

The chart above shows the contractor-addressable portion of funding across federal agencies, as well as compound annual growth rate for each from FY2012 to FY2014.  Nearly all of GSA's budget authority is under "Spending Authority from Offsetting Collections, Discretionary" to provide GSA the authority to fund its operations using funds collected from sources other than appropriations, primarily service fees.

Should the budget pass as written, Deltek estimates the contractor-addressable portion of IT spending for FY2014 to be $106 billion, which includes traditional IT spending captured in the Exhibit 53, as well as IT spending not typically captured in Exhibit 53 reporting, such as in embedded weapons systems.

Additionally, Deltek predicts contractor-addressable federal spending on architecture, engineering, and construction services will reach $27.7 billion in FY2014.  Aerospace and defense spending will reach $149 billion.  And operations and maintenance spending will reach $80.6 billion.

The budget request and Deltek’s research reveals the following in regards to the different market segments:

  • Information Technology: IT priorities are largely the same as the past 2 years, including shifting from an asset to a service mindset, infrastructure and data center consolidation, and continued transition to cloud computing.
  • Architecture, Engineering & Construction:  Expect a continued shift in funding from major to minor construction, including deferred maintenance, especially in civilian agencies.
  • Aerospace & Defense:  Despite budget constraints, DoD is focused on protecting investments that support the new defense strategy, and the war drawdown continues to impact spending on ground systems and mission support equipment.

As the federal government strives to reduce the deficit and decrease spending, finding contracting areas of opportunity becomes increasingly difficult.  The request provides insight into the administration’s priorities, however the eventual enacted budget is somewhat of a wildcard.  Don’t expect appropriations to conclude prior to Oct. 1, continuing resolutions are likely to prevail.

For more information on Deltek’s report FY 2014 Federal Budget Request: Challenges and Opportunities  see the GovWin IQ website at www.govwin.com.

 

Federal FY 2014 IT Budget to Grow, but there’s Winners and Losers

Steven VanRoekel, U.S. Chief Information Officer at the Office of Management and Budget (OMB) released a presentation yesterday outlining the Obama Administration’s FY 2014 Information Technology priorities and budget numbers. The bottom line is that they are seeking 2% growth in the overall IT budget year-over-year, but individual department budget changes vary widely, meaning that there are “winners” and “losers.”
 
Preceding the public release of his presentation, VanRoekel posted a series of tweets on Twitter under the theme: All you need to know about the IT budget in 10 tweets. You can find the series under #FedITx10, but here they are in the descending order in which they appeared:
 
10-Flat or declining. IT=$82B in the 2014 Budget 2.1% increase from FY12, flat, 0.78% CAGR since 09, negative adjusted for inflation
9-Cut & Reinvest: Now more than ever we must use IT to drive savings to fund innovations that change how govt works
8-Priorities: IT priorities in 2014Budget: Innovate. Deliver. Protect. Evidence
7-Innovate: 2014 Budget enables the Digital Gov Strategy to build a 21st century govt, increase mobile services and Open Data
6-Deliver: PortfolioStat = +$2.5B in savings through IT consolidations and upgrades (over 3yrs)
5-Protect: Over $15B of the IT 2014 Budget is going to enhance our Nation’s cybersecurity
4-Evidence: 2014 Budget NEW evidence-based innovation initiative in my office to strengthen evaluations & drive results, beyond IT
3-Innovate with Less: Since 09 we flattened IT $ while FY01-FY09 IT increased ~2x At that rate, we’d be at +$110B on IT today
2-Dogfood: For geeks (like me!) interested in an Open Data 2014 Budget, key tables in XML here:
1-Progress: 2014 Budget enables strategic IT investment for a 21st century govt, drives innovation & protects our national assets
 
IT Budget “Winners” and “Losers”
 
The budget submission information included in VanRoekel’s presentation contains some top-line budget numbers which allows for some initial analysis. The IT budget summary table in the presentation calculates the amount and percentage change for FY 2014 based on FY 2012 budgets, even though he provides FY 2013 Continuing Resolution (CR) budget estimates that are different. To provide a more detailed perspective I ran the numbers comparing the dollar and percentage change for all scenarios. 
 
The tables below are grouped by the “Winners” and “Losers” based on the percentage change from FY 2012 to FY 2014. The third table provides a comparison between Defense and Civilian segments, along with total federal IT.
 
 
 
 
 
 
Conclusion
 
While we are still waiting for the release of detailed IT budget information from OMB the proposed $1.4 or $1.7 billion increase for FY 2014, depending on which baseline year you use, is sure to surprise many who watch this market. Certainly, a 2% yearly growth rate is anemic compared to the growth rates we have seen over the last decade or so. (OMB reports a 7.09% compound annual growth rate (CAGR) between FY 2001 and FY 2009 and they are projecting a 0.78% CAGR between FY 2009 and FY 2014) Yet, many expected lower growth – if not an outright decline – in the federal IT budget for this coming fiscal year.  

Now the budget is in the hands of Congress, which has historically appropriated more for IT than what the President requests. With fiscal priorities clashing and sequestration impacts now being felt across the market, federal IT could weather the current fiscal storm in relatively good shape.

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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.

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