Half-way Through FY 2015, Pt.2 – How Much Are Agencies Spending on Information Technology?

Published: April 14, 2015


With all appropriations and budgets finally settled and in place for FY2015, agencies have been spending on information technology (IT), among other things. So at the mid-point in the fiscal year, how are agencies doing at getting their IT contract dollars obligated and what might we expect in the second half of FY 2015?

Last week, I looked at the total market contract obligations at the mid-fiscal-year point. This week I’ll look specifically at IT obligations. In this, and other similar scenarios that I have explored, I took a rough “back of envelope” approach to projecting potential contract obligation rates for the remaining two fiscal quarters. For consistency, I will use the same baseline: If agencies obligate at least 90% of what they did in FY 2014, what might that project for spending on contracts in the second half of the 2015 fiscal year.

In the latest federal FY 2016 IT budget request, OMB reported the total enacted FY 2015 IT budget to be about $78B, which is $2.4 billion (3.2%) more than the $75.6B agencies spent in FY 2014.  So this 90% threshold that I am using for potential FY 2015 spending, while not a particularly scientific approach, might be playing it safe.

IT Contract Obligations Compared

For Information Technology spending in FY 2014, the twenty top-spending departments accounted for 96% of all federal IT contract obligations. In FY 2014, these twenty accounted for $10.5B and $14.2B in Q1 and Q2 obligations respectively. For comparison, these departments reported $16.6B and $26.3B in IT contract obligations for Q3 and Q4 respectively for FY 2014. (See table below.)

In FY 2015 so far, these top twenty departments have reported $10.1B and $5.0B for Q1 and Q2 respectively, although DoD lags in their contract data reporting by up to 90 days so Q2 is significantly understated. Nonetheless, if these top agencies spend 90% in FY 2015 of what they did in FY 2014 they will have more than $45.B left to obligate in the remaining two quarters of this fiscal year.


  • Each of the defense branches have reported lower IT contract spending amounts in Q1 of FY 2015 compared to Q1 of FY 2014. Even with hedging our bets with a 90% spending assumption, the FY15 Q1 percentage of total FY15 obligations is down slightly for Army and Navy compared to their FY 2014 relative proportions. The Defense Agencies and Air Force, although down in dollar terms, got a slightly higher proportion of their IT dollars spent in Q1 of this fiscal year compared to FY 2014, if the 90% assumption holds. Due to DoD’s data reporting lag, which could take up to 90 days to settle out, we won’t know what Q2 of FY 2015 really looked like until June or July. They’ll need to post more than $8B in IT contract spending to keep pace with Q2 of FY 2014.

  • Among the civilian agencies in the top twenty, five have reported lower Q1 FY 2015 obligations compared to Q1 FY 2014. Among those, DHS, DOT, and DOI are the three where the reductions are proportionately sizable, reporting drops of 21%, 14%, and 22% respectively. For comparison, HHS, VA, DOJ, State, DOC and SSA say year-to-year growth in Q1 spending of 13%, 38%, 37%, 30%, 21%, and 54% respectively, although some of the individual spending levels are modest by comparison. The Q2 comparison from 2014 to 2015 are less positive, with only NASA and the Department of Education reporting higher spending in Q2 from year to year. Still, looking at the relative percentages that the civilian agencies spend in Q3 and Q4 leaves plenty of room to catch up and surpass FY 2014.

The delay of some yearly appropriations bills, like for DHS, may explain some of the downturn or slowdown in FY 2015 IT contract spending so far. Historically, agencies have made up ground in the second half of the fiscal year – especially Q4. One thing seems fairly clear though: IT contract spending tends to be a bit more consistent and predictable than contracted spending as a whole.

When I crunched these IT numbers last year, I arrived at approximately $43B in potential Q3 and Q4 IT contract spending among the top twenty departments for FY 2014. The final numbers came in around $44.7B, so the 90% assumption was not a bad one, but it points to the fact that many agencies are tightening their fiscal belts.