FY 2016 Budget Analysis Points to Increase in Contractor-Addressable Federal Spending

Published: March 18, 2015

BudgetCONGRESSCybersecurityForecasts and SpendingSequestration

Deltek's new report, FY 2016 Federal Budget Request: Challenges and Opportunities, indicates growth in federal contractor-addressable spending from $638 billion in FY 2015 to $660 billion in FY 2016.

The FY 2016 $1.2 trillion discretionary budget request provides new, higher discretionary caps designed to replace sequestration limits set in the Budget Control Act. If passed as-is this budget proposal would offer some reversal of previous spending restrictions and infuse additional funds for both defense and civilian agencies.  As a result, the budget reflects FY 2015-2016 increases for nearly every major agency.

The budget request reintroduces the administration’s strategic priorities which include infrastructure, national defense, education, research and development, homeland security, public health (including veteran care), cybersecurity and cross-government customer services.

The largest projected increase is seen in the area of equipment with a planned increase of 24% from FY 2015 to FY 2016, from $32B to $49B for contractor-addressable spending.  The equipment category encompasses purchases of durable assets that normally may be expected to have a period of service of a year or more after being put into use such as transportation equipment; machinery; construction equipment; furniture and fixtures; tools and implements, instruments and apparatus; and information technology hardware.  This category excludes aerospace and defense equipment.

The aerospace and defense (A&D) market segment is expected to grow 5.8% over FY 2015 to $137B in contractor-addressable spending in FY 2016.  The A&D segment includes full-scale development, production, and modifications of durable assets related to the aerospace and defense industries.  The slight growth of A&D forecast for FY 2016 in the Navy and Air Force reflects a shift in U.S. defense strategy away from U.S. ground forces and toward naval and air power.  Growth among civilian agencies is highest at Homeland Security/CBP, Justice/FBI, Commerce/NOAA, and NASA.

Deltek’s analysis shows a nearly 3% increase from FY 2015 to FY 2016 in the contractor addressable portion of the federal information technology budget, growing from $101B to $104B.  The IT budget shows a continued shift of dollars from Development, Modernization, and Enhancement (DME) to Operations & Maintenance (O&M).  The budget also proposes $450M for initiatives such as Cross-Agency Priority (CAP) goals (e.g. shared services, strategic sourcing), funding for U.S. Digital Service teams at 25 agencies, and PortfolioStat.  It also includes $14B for cybersecurity, including Continuous Diagnostics and Mitigation (CDM) and CyberStat program expansion.  Click here for more information on Deltek’s FY 2016 Federal Budget Request:  Challenges and Opportunities report.