Although the details of federal IT spending and budget plans have yet to be finalized, a general picture of what the rest of Government Fiscal Year (GFY) 2017 will look like is emerging. There is good news, not so good news, and the promise of a very, very busy fourth quarter.
Let’s start with the good news. Congress is likely to pass a real appropriations bill for the Department of Defense (DoD), in addition to a supplemental bill that will fund urgent needs, in late April or early May. This means that your DoD customer will have money to spend at the end of the year and that they will be able to initiate new projects. Priority items, such as cyber, are first in line for the money. Other projects are possible, too, but will have to compete with readiness and weapons system needs. The fourth quarter will be a very busy time for DoD IT business.
In addition to DoD, parts of the Department of Homeland Security (DHS) also look like they could get an appropriation. Customs and Border Patrol and ICE operations that deal with border protection and immigration issues are slated to see real appropriated dollars, perhaps in slightly larger amounts than the current spend rate would indicate. It is important to note that only these DHS functions are in line for an appropriation. The rest of DHS seems destined to operate under a Continuing Resolution (CR) for the rest of year. The silver lining is that the funding rate for DHS programs may not be cut, meaning that your customers who thought they would have a certain amount of money to spend will have it.
In the “not so good” news category: All remaining agencies operating under a CR will likely continue to do so for the rest of the GFY. While the current CR runs out of money at the end of April, a new measure will likely be passed to fund all civilian agencies, except for the VA which got its appropriation at the beginning of the year. A new CR, or possibly a short one, then a long one, will take everyone through September 30. No one is seriously talking about a government shut-down, though CR-funded operations technically mean no new starts for projects requiring appropriated dollars.
Moving down into the “really not very good” news: Most civilian agencies will likely have less money to spend at the end of the GFY than they originally believed. The Trump Administration’s Office of Management and Budget has told officials at the remaining civilian agencies to expect less money in their CR than they may have anticipated. While a CR traditionally funds an agency at the previous year’s budget level, that may not be the case this year. As a result, your customers in these agencies may have less to spend on all but the most essential projects.
Congress may seek to preserve specific programs, but federal managers have to plan as if they won’t have those dollars. As such, some programs in your pipeline may be pushed out to future years. It is unlikely, though, that projects already underway will be stopped, though delays are possible as managers seek to stay in compliance with the Anti-Deficiency Act and other rules.
More details will be known as we approach the end of April. Like your federal customers, however, contractors should start to plan now for the good, bad, and ugly.