Dramatic IT Budget Changes Unlikely with New Administration

Federal IT budget and contracts data from FY 2000 to FY 2017 show no significant changes in IT budgets, actual IT spending, ot IT contract spending during the first few years of a new administration.  The data shows steady year-over-year (YOY) increases in all three categories during George W. Bush’s administration with an average of 6.4% YOY growth in actual IT spending and an average of 10.8% YOY growth in IT contract spending.      

The Obama administration showed growth in IT budgets in the first three years in office, with declines in the out-years.  Actual IT spending and IT contract spending saw growth in the first two years and some declines and minor growth periods in the latter years.  Overall average YOY growth in IT budgets and in actual IT spending totaled 1.2% in each category.  IT contract spending saw an average YOY decline of -.4%.

Although IT budgets and contract spending are not expected to be significantly impacted by the pending administration change, contractors must prepare for changes in agency leadership, program priorities, and IT policies.

50% of the industry executives surveyed by Deltek believe that changes in the makeup of senior agency leadership will have more impact on federal IT priorities than the new president or the change in the makeup of Congress. 

Although Secretary Clinton has published a detail technology agenda which includes plans to modernize government, 80% of Deltek’s industry respondents believe that Donald Trump would have more of an impact on federal IT, if elected.  However, opinions are split as to whether Trump would have a positive (40%) or negative (45%) impact on federal IT. The majority of respondents (43%) believe that Secretary Clinton would have a neutral impact as opposed to positive or negative.

Both presidential nominees vow to invest in VA and DOD which could present areas of opportunity for contractors regardless of which administration takes office.  

If Secretary Clinton is elected, contractors can look for additional opportunities in agencies with missions related to medical research and advancement, healthcare, science, and climate.  Her administration also plans to invest in cybersecurity and government modernization.

If Donald Trump is elected, contractors can expect a drawdown in spending in agencies with missions related to climate, science, and healthcare.  Additional opportunities may be found in the areas of immigration reform, cybersecurity and government modernization. 

Information in this blog is derived from Deltek’s recently release report, Impact of the Presidential Transition, 2016-2017 which examines the environment, transition processes, policy areas, and candidate agendas potentially impacting IT contracting firms during a presidential transition.  Please visit Deltek’s website by clicking on the above report link for more information.