Cloud

Elections could affect federal IT contract schedule

Federal information technology budgets and priorities are unlikely to shift much based on who wins November's presidential and congressional elections, experts said Wednesday, but the election results could shake up the government's spending cycle.

"You'll probably see a lot of [contracting] activity at the end of the fiscal year," said Dan Chenok, vice president for technology strategy at the IBM Center for the Business of Government. "With the uncertainty of the election, a lot of program managers will want to get their funds out the door to try to solidify things for the next two to three years. So, all of us will probably be very busy in July, August and September.

"Then there will be a little lull," he added. "If there's a [presidential] turnover, there'll be a lot of activity at the end of the calendar year and in early January because the [Obama] administration will try to get as much out the door as it can. Then there will be another lull when the next administration comes in. If there's a second [Obama] term, that curve will be much more limited."

Chenok, a former branch chief for IT policy in the Office of Management and Budget, was speaking at a TechAmerica Foundation panel discussion on the federal IT budget outlook.

A new administration headed by Republican front-runner Mitt Romney or another GOP presidential hopeful is unlikely to veer too far from Obama's focus on improving IT acquisitions and performance and relying more on technology to improve government services, experts said.

Obama's 2013 fiscal year budget request called for a slight dip in IT funding to about $79 billion. Federal Chief Information Officer Steven VanRoekel credited the rare decline, much of which came from the Defense Department, to the early results of major cost savings programs, especially a drive to drastically reduce the number of federal data centers and to move one-quarter of the federal IT infrastructure to cloud computing.

"Whether it's Obama or not, I just don't see a huge shift from cloud or from using IT to enable cost reduction," said Molly O'Neill, vice president for CGI Federal. "We'll still have budget issues no matter who wins. Cyber will continue to be an issue."

Based on his public statements and position papers, Romney likely would rely more on outside contractors for IT services than Obama has, said Tim Young, a senior manager with Deloitte Consulting, but it's not clear how great a change Romney would implement.

The overall picture of flat or slightly declining agency IT budgets and a focus on smaller, shorter, cheaper IT contracts with concrete goals at each stage also are likely here to stay regardless of November's result, experts said during Wednesday's discussion.

The stock value of federal IT contractors is down about 4 percent so far this year and down more than 20 percent since December 2008, according to a presentation by Bill Loomis, managing director of Stifel Nicolaus, a financial services company. That drop is likely due in part to agencies raising the priority of low-cost contracts over other contract variables, panelists said.

One result of the government's heightened focus on low-cost IT contracts is that more small businesses are subcontracting or working on multiple award contacts because they can deliver some niche services at a lower cost per hour than major IT vendors, according to Tim Hoechst, chief technology officer for Agilex Technologies.

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