Small Business Administration FY 2020 Discretionary and IT Budget Request Observations

The Trump Administration released its fiscal year (FY) 2020 budget request in mid-March, after a month-long delay from its normal February release due to a partial federal government shutdown. The latest SBA budget request reflects adjusting priorities and efforts as well as economizing efforts.

Total Discretionary Funding

The SBA budget requests $820M in total discretionary budget authority for FY 2020, which represents a $119M (+17%) increase from the FY 2019 estimated level. However, this request is offset by proposals to provide SBA with flexibility to adjust existing fee structures across its business loan guarantee programs, resulting in a net request of $665M, a $36M (-5%) decrease from the FY 2019 level.

Funding highlights include:

• Requests $112.2M in total Contracting Programs (including 8A, HUBZone, Women’s, and Prime/SubK), which is $347K above the FY 2019 enacted level.
• Provides $5.8M for Office Security across the agency, an increase of $1.1M over the FY 2019 enacted level.
• Allocates $6.8M for agency-wide telecommunications, an increase of $991K from FY 2019.
• Provides $24.8M in operating funds for the Office of the CIO.
• Requests $6M to upgrade SBA’s existing headquarters space pursuant to the OMB-approved prospectus for the GSA replacement of the current headquarter lease.
• The SBA plans to consolidate technical support help-desk functions within a public-facing call center for a single enterprise level help desk.
• Plans to increase IT cost savings/avoidance through the streamlining of contracting, category management, and cloud computing to $11.5 million in FY 2020.
• OCIO priorities include creating cloud migration roadmap for agency financial systems and pursue activities to improve efficiency.

Total IT and New Development Budgets

For FY 2020, the SBA is seeking $92M for IT spending, down $17.7M (-16%) from the FY 2019 level and down $19.9M from the final FY 2018 level. This level of decline places the SBA as the third biggest proportional IT budget loser for FY 2020 compared to FY 2019.

Reviewing at how the SBA allocates their IT dollars across Development/Modernization/Enhancement (DME) efforts compared to Operations and Maintenance (O&M) shows a much more significant degree of reduction. For FY 2020, the SBA is seeking nearly about $18M in DME funding compared to $30M in FY 2019, reflecting a $12M (-40%) decline. Given the relatively higher percentage decline for DME compared to total IT, DME accounts for a smaller proportion of the SBA’s total IT budget for FY 2020. (See table below.)

Noteworthy IT Programs

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 $17.4M for FY 2020, which would be $9.6M (-36%) below FY 2019. DME funding makes up 20% of the FY 2020 budget, the same relative percentage as in FY 2019.
• 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 $11.1M for FY 2020, which is a $437K (+4%) increase over the FY 2019 level and is roughly half of the total program budget in FY 2018.
• 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 $11M for FY 2020, which is $1.1M (-9%) below FY 2019 and is 100% O&M funding.
• End User – The End User investment captures capabilities for client computer desktops, laptops, and client related software used by SBA users to perform and achieve the SBA mission. The investment receives $8.4M for FY 2020, which is $3.6M (-30%) below the enacted FY 2019 level of $12M. This investment is 100% O&M funding.
• 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 $7.8M for FY 2020 this investment sees a $108K (-1%) reduction from FY 2019. DME accounts for 13% of the FY 2020 total requested budget.

The IT initiatives highlighted above are the five largest budget lines in the SBA’s FY 2020 IT budget and together account for 60% of the agency’s total IT budget request, compared to 63% and 64% in FY 2019 and FY 2018 respectively. This reflects a greater distribution proportionally of the SBA’s IT budget across its various initiatives and could offer somewhat greater competitive contract opportunities.

For a deeper dive into the details of the FY 2020 budget, check out our report: Insights and Implications: FY 2020 Federal Budget Request.

Get a free report summary of Insights and Opportunities: FY 2020 Federal Budget Request.