Agencies Spent Record $64.7B on IT Contracts in 2018

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Some agencies saw double-digit growth in pursuit of modern systems.

Federal agencies spent a record $64.7 billion on IT contracts in fiscal 2018, according to research released this week by Bloomberg Government.

The nearly $65 billion spent represents a 9.5 percent increase over fiscal 2017 levels, and includes higher levels of spending in cybersecurity ($6.4 billion), cloud computing ($4.1 billion) and almost a doubling of other transaction authority spending, to $4.2 billion from $2.3 billion.

IT spending jumped in both civilian and defense agencies. Across the Defense Department, IT contract spending grew by about 12 percent to $33.8 billion—the highest nominal spending figure ever for the Defense Department, and highest adjusted for inflation IT contract spending since 2012.

In civilian agencies, IT contract spending bumped up 6.6 percent to $30.8 billion—an all-time high in both nominal and real dollars, the report said. The departments of Veterans Affairs, Treasury, State and Education “each saw double-digit IT spending growth pursuant to their goals of infrastructure modernization and rolling out digital services to citizens and end-users.”

“IT spending reached unprecedented levels in fiscal 2018,” said Bloomberg Government analyst Chris Cornillie, who authored the report.

Following an extended government shutdown that saw thousands of federal contractors laid off and 800,000 federal employees furloughed, the report highlights how reliant agencies are on technology contractors.

“These figures underscore just how central IT and IT contractors are to modern government operations,” Cornillie said in the report.

IT spending grew in the past year over every key IT market: technology services, cybersecurity, cloud services, digital services, software engineering and agile development, data analytics and artificial intelligence.