Small Business Administration FY 2022 Discretionary and IT Budget Request Observations

The Biden Administration released its fiscal year (FY) 2022 budget request at the end of May, after a long delay as the administration gained its footing. The new Small Business Administration (SBA) budget request reflects adjusting priorities as well as efficiency efforts.

Total Discretionary Funding

The SBA budget requests $852.5M in total discretionary budget authority for FY 2022, which represents a $73.6M (+9%) increase from the FY 2021 estimated level. The FY 2022 level would place SBA about 1% above the FY 2020 funding level of $847.6M.

Funding highlights include:

• Requests $130.2M in total Contracting Programs (including 8A, HUBZone, Women’s and Prime/SubK), which is $22.5M above the FY 2021 enacted level.
• Allocates $7.7M for agency-wide telecommunications, a decrease of $1.8M from FY 2021.
• Provides $30.2M in operating funds for the Office of the CIO, the same amount as the FY 2021 enacted budget and $1.5M less than FY 2020.
• Allots $10.8M for Government Contracting and Business Development operations, an 86% increase from FY 2021.

Total Information Technology and New Development Budgets

For FY 2022, the SBA is seeking $109M for IT spending, down $20M (-16%) from the FY 2021 enacted level and down $32M (-23%) from the final FY 2020 level. This decrease places the SBA as the biggest proportional IT budget loser for FY 2022 compared to all of the other federal departments and agencies. (See table below.)

Looking 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 2022, the SBA is seeking about $18M in DME funding compared to $26M in FY 2021, reflecting a $7M (-28%) 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 above.)

Other IT highlights include:

• IT priorities include continued improvements to financial systems as the Office of Chief Financial Officer (OCFO) and the Office of the Chief Information Officer (OCIO) create a modernization roadmap for transitioning the financial system to the cloud. FY 2022 plans include enhancing its Surety Bond Guarantee (SBG) information technology system to align with current industry web-based processes. SBA uses its IT Working Capital Fund to finance long-term IT modernization projects including centralized management of systems, equipment, services and maintenance.
• SBA is working to mature its approach to IT governance to ensure the best possible technology decisions to effectively drive results. SBA is also improving IT organizational and workforce functions through workforce planning and competency development.
• FY 2022 plans include achieving $14.7M in IT cost savings/avoidance through the streamlining of contracting, category management and cloud computing. SBA continues to consolidate data centers and integrate to the cloud as well as mature its cybersecurity risk posture.
• The SBA continues to work toward technology modernization with an enterprise approach to digital business through the adoption of cloud-based solutions, building an enterprise data capability, driving innovation through pilots and prototypes, making significant cybersecurity improvements and building the foundation for a zero trust network.
• According to its IT budget submission to OMB, SBA plans IT acquisitions for 20 programs representing $105M (96%) of its total FY 2022 IT budget request.

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 direction. Here are the largest five initiatives that bear a closer look.

• 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 $25M for FY 2022, which would be $628K (-2.5%) below FY 2021. DME funding makes up 24% of the FY 2022 amount.
• 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 $13M for FY 2022, which is $364K (-2.6%) below FY 2021 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 $12M for FY 2022, which is $2.2M (-15%) below the enacted FY 2021 level. 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. Requesting $7.3M for FY 2022 this investment is slated for a $259K (+3.7%) increase from the FY 2021 enacted level. DME accounts for 2% of the FY 2022 total requested budget.
• Certify.SBA.GOV – This effort provides for digitization and automation of the SBA's certification management process for the 8(a) Business Development and All Small Mentor-Protégé Programs. This investment is set to receive $6.7M for FY 2022, which is a $580K (-8%) decrease from the FY 2021 level. However, the investment is made up of 75% DME funding.

These five largest IT budget lines highlighted above together account for $64.5M or roughly 60% of the SBA’s total IT budget request, compared to 49% and 53% in FY 2020 and FY 2021 respectively. This reflects a greater concentration of the SBA’s IT budget among its various initiatives and could indicate a somewhat tighter competitive landscape at the agency.

FY 2022 Outlook

Looking at the budget request for FY 2022 might leave us with a gloomy outlook for IT contracting prospects at the SBA. However, some historical perspective might help. Back in the FY 2020 budget request the SBA asked for $92M for IT, which would have been a 16% decrease from FY 2019. However, in the end the agency received $141M for FY 2020. In similar fashion, while the FY 2020 DME portion was set for $18M, the actual FY 2020 level was $28M. (See table above.)

The point is that Congress has often funded SBA IT above what is requested. And while it might seem that the effects of the federal COVID-19 response may have had some impact on the FY 2020 level it is also the case that Congress had already appropriated funds for the agencies long before pandemic response funding came into the picture. That being the case, it is not a stretch to think that Congress may continue this trend and sustain SBA’s IT budget at or above its current FY 2021 level. Time will tell.