COVID-19 Related Federal IT Spending, March-June 2020

Key Takeaways

• Although total IT spending has been declining since April, the data is incomplete, with the Department of Defense reporting only for March.
• IT spending in June rose at 8 departments, including the Small Business Administration, Commerce, Social Security Administration, Labor, Energy, Office of Personnel Management, General Services Administration, and Agriculture.
• Business opportunities are expected to continue appearing as program offices identify needs.

Early last spring federal agencies responded to the COVID-19 pandemic by sending their workforces home to telework. Doing so required they invest in collaboration and teleconferencing capabilities, as well as cybersecurity, and, in some cases, the network infrastructure needed to ensure employees could continue performing their jobs. An explosion of spending on information technology resulted, peaking in April and falling from there.

The top 10 departments in terms of IT spending are shown above. Not surprisingly, those with an explicitly health-related mission – Health and Human Services and Veterans Affairs – reported spending the most on IT. This makes sense given that in addition to spending on the IT goods and services they needed to ensure employees could work remotely, HHS and the VA also spent significant amounts on health IT products, such as ventilators, infusion machines, vital sign monitors, touch-free thermometers, and the like. All of these products are becoming increasingly sophisticated, with integrated software, wireless sensors, and monitors. It is this procurement of health-related technology that propelled HHS and the VA to the forefront of federal spending on IT.

Looking at the data, readers might assume that with the initial burst of spending now in the rearview mirror the opportunity to help agencies respond to the ongoing public health crisis is past. This might not be the case. For one thing, the Department of Defense, with all of its component agencies and military departments, has only reported its IT spending data for March. This means that total IT spending from April through June could be several hundred million dollars higher. It is unlikely that this will change the downward trajectory of COVID-19 related IT spending, but it will raise the totals once the data is fully reported. In other words, departments like the DOD are still spending large amounts of money on IT in response to the pandemic.

Then there is the fact that several departments and offices – a total of 8 altogether – reported an increase in their IT spending in June. These departments and what they spent are shown below in actual (i.e., not $K) dollars.

Several of these departments reported spending a good amount in the initial phase of the pandemic. Their reported spending then declined in the intervening months before rising again in June. A few other departments/offices reported spending more on IT in June than they had during any other month since the pandemic began. The Office of Personnel Management (OPM), GSA, and especially Labor, all fall into this category.

What did they report buying? In Labor’s case, the department purchased nearly $9M in HP Chromebooks for the Job Corps Student Distance Learning Program. The GSA, meanwhile, reported spending almost $1.3M on Enterprise Operations IT Infrastructure and OPM spent $1M on Salesforce Professional Services.

COVID-19 related IT spending will probably continue to decline in the months to come, particularly if the number of infections across the U.S. really begins to abate. Nevertheless, as the reported spending in June shows, there will still be opportunities that pop-up here and there as agency program offices identify needs and move to address them. Ongoing pressure to modernize agency IT environments should also prove helpful for driving investment.