By Alex Tzavellas

Federal spending on contractor-supplied IT products and services is forecast to reach $99.5 billion in fiscal year 2017 and is likely to increase to $104.9 billion by 2022 according to a report from Deltek, which explores the market factors, strategic programs, and key initiatives pushing federal IT spending over the next five years.

The report comes as the current administration continues to carry over the previous administration’s push to modernize costly legacy systems. Although, the report notes, since January the new administration has begun to reset some IT policy, particularly with a significant shift toward investment in national defense and homeland security related agencies. However, many primary priorities, such as cloud computing, data center optimization, cybersecurity, big data and infrastructure modernization, remain key objectives.

Specifically pertaining to cloud computing, the report states that spending is projected to grow to $6.4 billion in fiscal year 2021. Helping facilitate this rapid growth in cloud investments is the continued rise in cloud-based offerings from companies like Microsoft, Amazon, and others who have experienced significant growth in the government space over the last few years. Additionally, the proliferation of government-centric marketplaces has help eased procurement processes.

The report also claims that the creation of a centralized IT working capital fund via the creation of a Technology Modernization Fund or the passage of the Modernizing Government Technology (MGT) Act are other contributing factors for increased spending. While a working capital fund would expedite modernization efforts significantly, agencies would be responsible for driving tangible cost savings to ensure the viability of the funds, the report adds.

Yet, while IT modernization spending is forecast to increase, the report surmises that rising federal debt levels will continue to mandate budget sensitivity within Congress, forcing agencies to do more with less while sequestration caps are likely to be renegotiated, either through the end of the originally planned timeframe (fiscal 2021), or for another two-year period (fiscal 2018 and 2019).

About the Author

Alex Tzavellas serves as Practice Marketing Manager where he supports MIL’s cloud solutions marketing and sales efforts. He specializes in developing and executing strategies for federal and non-profit clients.