Mar 07 2017

What Will Trump’s Budget Mean for IT Investment and Modernization?

The Trump administration is likely going to propose a fiscal 2018 budget with large cuts to civilian agencies outside of the Defense Department.

President Donald Trump has not yet released a formal budget blueprint for fiscal year 2018, but is expected to do so by March 16, according to Vox. Yet reports indicate that the budget proposal will call for a $54 billion increase in defense spending while requesting cuts of the same amount to non-defense discretionary spending.

What will that mean for IT across the federal government? And will it stymie efforts to update legacy technologies and systems, a key trend from 2016?

Former President Barack Obama’s last budget proposal set aside $89.9 billion for IT, representing a 1.3 percent increase from fiscal year 2016, including $19 billion for cybersecurity. Will those figures change significantly under Trump?

Uncertainty Over IT Budget

Some federal officials don’t think that technology will take a big hit under the new budget. “IT spending probably isn't going to slow significantly,” one unnamed federal official told FCW at a conference on category management in acquisition, held by the General Services Administration ACT-IAC on March 1. According to FCW, this official commented that “IT has become akin to other basic utilities the government needs to operate, such as electricity and fuel.”

An unnamed manager from the Office of Management and Budget (OMB) agreed, “I can't see category management going away since it saves agencies money.” Category management aims to make government procurement more efficient and streamlined by identifying core categories of spending on commoditized goods and services. In the past few years the government has embraced category management to save money on mobile services, software purchases and computer hardware. 

Smaller budgets could push agencies to adopt category management even more than before, Lesley Field, acting administrator for federal procurement policy at OMB, told FCW. She explained, “Given the changes coming at agencies, there's a natural incentive to find savings,” as well as to push more careful procurement.

However, other officials were more pessimistic about the budget outlook. Stan Soloway, a former deputy undersecretary of defense and Professional Services Council president, told FCW that sharp budget cuts could hit agencies like the Environmental Protection Agency, the State Department or Department of Labor. Those cuts could make it more difficult for agencies to invest in and manage IT resources, he said.

Deep cuts would mean “agencies will stop doing things,” Soloway said, such as procuring and planning IT system upgrades. When agencies are told they need to make drastic and immediate cuts, it forecloses the possibility of investing in technologies that will save costs further down the line.

“It’s hard to see to two to three years ahead” when agencies are forced to slash their budgets immediately, Soloway said.

What Will the Effect Be on IT?

How any potential cuts will impact agencies’ IT budgets remains to be seen. Robert Shea, a principal at Grant Thornton and former associate director for administration and government performance for OMB, told Federal News Radio that usually in budgeting, major adjustments are made in an across-the-board “haircut.”

“It’s the least responsible way to do budgeting, but it’s the easiest way to do budgeting,” Shea said. “Agencies have at least some offsets in their back pocket. This is not the first time they’ve been through similar drills, so they’ve got a list of things they would put forward or have considered putting forward in the past that they can bring.”

Shea believes IT budgets could be slashed as a result, but Danny Werfel, former controller at OMB under the Obama administration, told Federal News Radio that cutting IT investments could hurt agencies. That’s because investing in IT modernization has the potential to improve customer service and cut down on waste and errors.

Echoing Soloway, Werfel said that, when faced with demands to cut their budgets, civilian agencies may be reticent to propose investing in new IT that will deliver savings long term. Training and discretionary travel are often items that agencies look to cut to save money, Werfel noted, but he lamented that training budgets might be slashed because “we want our workforce prepared in the best possible way do to our jobs.”

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