Small Business Administration FY 2019 Budget Snapshot

In February the White House released its fiscal year (FY) 2019 budget request with detailed spending plans for each Executive Branch department and agency, including the Small Business Administration (SSA).

Each newly proposed budget and the resulting year-to-year changes reflect adjusting priorities and efforts. Normally, I would look at the changes from FY 2018 to FY 2019, but due to the uncertainty of the FY 2018 budget data that OMB provided (i.e. the impacts of being under multiple continuing resolutions), I chose to base the growth comparisons primarily on FY 2017.

Total Discretionary Funding

The SBA budget requests $834M in budget authority for FY 2019, which is a $53M (-5.9%) decline from the FY 2017 level. However, this amount is offset by changes to existing fee structures across the SBA’s business loan guarantee programs and the elimination of unspent funds from prior budget years, reducing the net budget request to $629M.

SBA discretionary funding highlights include:

• Requests $89.9M in total Contracting Programs (including 8A, HUBZone, Women’s, and Prime/SubK), which is $298K below the FY 2017 enacted level.
• Provides $4.7M for Office Security across the agency, an increase of $654K over the FY 2017 enacted level.
• Allocates $5.8M for agency-wide telecommunications, an increase of $800K from FY 2017.

Total IT and New Development Budgets

For FY 2019, the SBA is seeking $89.5M for IT spending, down $16.3M (-15.4%) from the FY 2017 level and down $12.1M from the estimated FY 2018 level. This level of decline places the SBA as the biggest proportional IT budget losers for FY 2019 compared to FY 2017.

Reviewing at how the SBA allocates their IT dollars across Development/Modernization/Enhancement (DME) efforts compared to Operations and Maintenance (O&M) shows a slightly lesser degree of reduction. For FY 2019, the SBA is seeking nearly $19M in DME funding compared to $22M in FY 2017, reflecting a $3.2M (-3.5%) decline. Given the relatively lower percentage decline for DME compared to total IT, DME accounts for a greater proportion of the SBA’s total IT budget for FY 2019. (See table below.)

Noteworthy IT Programs

In their budget support materials the SBA says they have achieved $10.8M in IT cost-savings and avoidance through contract streamlining, category management and cloud computing. Broad OCIO priorities include creating cloud migration roadmap for agency financial systems, updating/issuing data quality plan and implementing a new IT working capital fund per MGT Act/NDAA.

Looking at the specifics of the SBA’s IT investments and initiatives provides further insight into the agency’s immediate priorities and future direction. Here are some initiatives that stand out among others due to relative size, budget growth, and/or proportion of new development spending.

IT funding highlights include:

• Disaster Credit Management Modernization (DCMM) – This investment automates processing and approval for disaster loan assistance by making electronic files available regardless of disaster location. It also provides multiple interaction methods for users, decreasing the cycle time between loan submission, approval, and disbursement. Consistently at or near the top of SBA IT initiatives, DCMM receives $14.7M for FY 2019, which would be $3.2M (-18%) below FY 2017. DME funding makes up 20% of the FY 2019 budget.
• IT Security and Compliance – The SBA’s IT Security Program consists of security solutions, operations, situational awareness and incident response, and training and FISMA requirements. The program receives $12.8M for FY 2019, which is $300K (-2%) below FY 2017 and is 100% O&M funding.
• IT Management – This budget line captures the costs for SBA IT Management activities such as CPIC, EA, IT Policy and IT Governance. This 100% O&M investment is set to receive $8.9M for FY 2019, which is a $1.1M (+14%) increase over the FY 2017 level and remains effectively flat from the estimated FY 2018 level.
• Certify.SBA.GOV – This investment is to modernize the SBA’s Small Business Certifications products and Small Business Search products as well as to create a Data Analytics tool to enhance reporting capabilities agency-wide. It receives $8.9M for FY 2019, which is $1.7M (+25%) more than in FY 2017. At 84% DME funding, this initiative has one of the highest DME funding levels among all SBA IT initiatives.
• Financial Systems – The investment is a consolidated portfolio of the OCFO’s Financial Systems that support the agency's collections, disbursements, administrative accounting, funds control, consolidated general ledger and financial reporting. Slated for $7.1M for FY 2019 this 100% O&M investment sees a $200K (-2%) reduction from FY 2017.

The IT initiatives highlighted above are the five largest budget lines in the SBA’s FY 2019 IT budget and together account for nearly 60% of the agency’s total IT budget, compared to 75% in the FY 2018 budget. This reflects a greater proportional distribution of the SBA’s IT budget across its various initiatives and could offer somewhat greater competitive contract opportunities.