Federal IT Spending: The Expected and Unexpected


Defense, Healthcare, Cyber, and Immigration are the four big federal IT spending areas to watch for the remainder of this year and into next, according to Deltek federal IT budget expert, Kevin Plexico. While many federal IT companies already focus on defense and cyber, the fact that Plexico broke them out and added immigration to the list is an indication that companies should look deeper and to the sides of where their current focus may be.

Defense is an obvious area of focus for federal contractors of all types. Not only is Defense Department (DoD) expected to get new money in May, prospects for getting additional funds look good.  Since a lot of the new spending is expected to be on ships and weapons systems, many IT firms should look to their partners in and around those industries in order to have the best chance of benefitting from the extra spend.  Your IT solution, for example, could be part of a larger retrofit or new construction program for the Navy.  These types of opportunities are likely to be more plentiful than straight IT investments, unless those investments are in cyber.  Plan your strategy accordingly.

Cyber spending is a category where considerable digital ink has already been spilled. Yet, this area remains important. It’s not all in defense, either.  Expect Customs and Border Protection and Immigration and Customs Enforcement to see new dollars this year. Again, much of this funding may go toward construction of a border wall, but there is a huge IT component to that. Even agencies that don’t get new-start funding will make incremental cyber investments to ensure the security of their existing systems.

Healthcare is an area that had been good for federal IT opportunities over the past several years.  Some had expected that to change under a new administration. Deltek’s Plexico argues, though, that health IT spending will continue to provide good opportunities. The Department of Veterans Affairs, especially, continues to increase its investments in this area. The Department also has full funding for this year and is slated for an increase in funding for FY’18. DoD health IT spending may progress along similar lines as those in the VA.  It also remains to be seen whether and how the Affordable Healthcare Act is changed and, as such, IT investments may continue to be made in that area.

Immigration is not an area that many IT companies automatically think of when researching where their next federal business might come from.  Keeping track of who comes into the country, and who goes out, and ensuring that those who come in leave when they’re supposed to, though, all require IT solutions. Federal agencies have received considerable negative criticism for detaining actual US citizens at border crossings, as well.  Improving background check and identification systems are going to be higher priorities as these agencies seek to reduce embarrassing mistakes. At the same time, however, federal, state, and local governments may make additional investments in various monitoring and tracking systems.

Deltek also believes that FY’17 IT spending will be above FY’16 levels, despite the prevalence of a CR for most agencies. Like many, they expect the fourth quarter to be especially strong. For FY’18, Deltek offers that, even if the President’s budget request were to be enacted “as is,” overall IT spending across the federal market would essentially hold steady.

The federal government is open for business and acquisitions are taking place. Make sure your business is tuned in and active.


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