Once upon a time, agency information technology budgets were almost sacrosanct. Not only did spending on IT promise to deliver cost savings by digitizing paper records and automating business processes, it also promised to generate efficiencies that would help agencies fulfill their missions.
That was then, this is now. Today IT is considered a business expense like any other. As such, IT budgets are being targeted for cuts to an extent that would have been unthinkable even three years ago. At no agency has this trend been more obvious than at the Department of Defense, where cutting spending on IT business systems is the new reality. The Navy is leading the way, announcing recently that it is reducing its 2013 IT budget by 25%. This cut comes on top of an earlier 25% cut in spending on IT business systems that the Navy had announced in 2011.
These cuts are substantial, but fears about cuts to the DoD’s IT budget should not be overstated. The department will continue to invest heavily in cyber security and embedded technologies that operate in Intelligence, Surveillance, and Reconnaissance (ISR) systems. Investing to build out the DoD’s network backbone is also of key importance. As long as the U.S. Government remains committed to projecting military force around the world, a significant amount of spending on Defense IT will continue.
Dr. Ashton Carter, the Deputy Secretary of Defense, said as much in a January 10th memorandum outlining how Defense agencies and the armed services should prepare for sequestration. The guidance stated that programs “most closely associated with the new defense strategy” should be protected. Considering the DoD is network dependent, it is safe to say that the words “Joint Information Environment (JIE)” can be substituted for “new defense strategy.”
The importance of the JIE, and of DoD network operations as a whole, is also emphasized in the National Defense Authorization Act (NDAA) for Fiscal Year 2013. According to our analysis of the 2013 NDAA, published in a new concise report on the market implications of the legislation, the Congress is requiring the DoD to develop and submit a strategy document that describes the vision for the JIE. This language suggests that the JIE will be an area of investment that Congress is likely to fund for years to come. Other sections in the NDAA place similar importance on improving DoD network operations to squeeze maximum value out of the contract dollars that will be spent. These areas include upgrading and competing new contracts for DoD tactical data links (think along the lines of Joint Tactical Radio Systems) and increasing the efficiency of collecting and analyzing network flow data.
All told, the FY 2013 NDAA includes 15 sections that will shape Defense IT procurement, cyber security, network operations, and software use and licensing. The NDAA even authorizes a $966 million boost in the DoD’s procurement budget. Should Congress get its act together and pass a budget, authorized increases like this $966 million bump will translate into appropriations. Given the potential flow of funding, therefore, understanding the key requirements in the NDAA will be critical for any vendor seeking to maximize upcoming business opportunities at the DoD.