State Department IT Spending is Expected to Grow Modestly from 2016 to 2021

Deltek’s new Federal Information Technology Market, 2016-2021 forecast estimates that spending by the Department of State (DOS) on contracted IT goods and services will grow slightly from $1.3 billion in FY 2016 to $1.5 billion in FY 2021 reflecting a 2.3% compound annual growth rate (CAGR). Deltek’s forecast projects the strongest growth in software products, followed by IT services and communications and network services, with IT hardware showing only slight and targeted increases over the forecast period.

The top-line flat-to-declining spending levels will still sustain targeted investments in high-priority areas like mobility, cybersecurity, cloud computing, and innovative IT initiatives.

Supporting Mobile Diplomacy is the first goal in State’s IT Strategic Plan. The Department supports 36K users worldwide operating on Blackberry, Android, IOS and Windows platforms and has historically allocated about $16M per year to cover these expenses. Digital Diplomacy efforts include data off-shoring, virtual desktop, business/service models that support diverse devices and device-native apps, and restructured, modernized IT infrastructure. The Department’s Responsive Web Design efforts scales content to the screen size of a user's device.

Current cybersecurity policy focuses on risk management, enabling rapid introduction of new technology securely, advancing FISMA compliance and ratings, and maturing security standards. State’s role in the broacher landscape includes advocating for U.S.-proposed international cyberspace policy on Capitol Hill and internationally.

Cybersecurity challenges remain, however. DOS Inspector General (IG) audits have found widespread issues with State’s cybersecurity, including operating and management deficiencies at overseas missions and domestic bureaus, challenges with wireless network security, and inadequacies in IT security officer performance.

State is using a dedicated private cloud environment to consolidate processing and network services and to centralize virtually all information management. State has several key elements in place to enable their private internal cloud, including operating both of its Enterprise Server Operations Centers (ESOC), establishing cloud requirements and SLAs, forming a cloud business model using their Working Capital Fund (WCF), and piloting virtual private cloud services.

On the innovation front, the State Department continues to leverage technology advancements to address evolving diplomatic and national security needs and improve outcomes through biometrics, social media, digital services, and collaboration-minded Strategy Labs.

These and other areas of priority investments will continue to provide opportunities for contractor-provided solutions and services within an overall atmosphere of cost containment and efficiency pursuit that will moderate top-line growth.