Down to the wire, IT sales opportunities are there
The fiscal cliff is fast approaching, but that doesn't mean new starts have dried up
If nothing else, the ongoing federal budget drama is helping contractors hone their what-if planning skills. What we know for sure is that the government is operating under a continuing resolution at 2012 spending levels until March 31.
For technology contractors, sales challenges are threefold: 1) Making the most of stretched 2012 opportunities; 2) determining what’s possible under 2013 plans; and 3) finding out what carries into 2014 coupled with brand new initiatives in the upcoming 2014 budget request.
On point two, determining what 2013 plans are possible under the continuing resolution, the situation is not so cut and dried. Some initiatives and program plus-ups can go forward even under a continuing resolution if Congress so determines. Members can and do insert language in continuing resolutions allowing increases in favored, existing projects.
We’ve analyzed the latest IT investment line items--the latest Exhibits 53, and what is available under the current continuing resolution. We found many IT initiatives with greater spending ceilings in 2013 than in 2012. Because these are existing projects, many of which are funded by multiple program line items, your sales strategy should include trying to capitalize on the strong possibility that more spending is actually available under them this year, even with the continuing resolution:
- At the Department of Agriculture, spending rises from $11.9 million to more than $14 million for the Enterprise Information System, a data warehouse and decision-support project.
- Commerce has requested $67 million for research and testing activities for the 2020 decennial count, up from $18.6 million in fiscal 2012.
- The Defense Department is asking for a $260 million increase for its Next Generation Enterprise Network, to $1.88 billion. It looks to double the budget for the Navy’s Consolidated Afloat Networks Enterprise Service project, to $408 million.
Health care reform drives spending at Health and Human Services. The department seeks to rev up spending on programs such as the Insurance Exchange IT Investment and development of systems for improving quality at the Center for Medicare and Medicaid Services.
The key is understanding how the internal budget plumbing works as agencies map expenditures to the spending authority granted by Congress. Don’t overlook crosscutting management initiatives that can pull money from multiple program buckets, including across agencies, even under a continuing resolution.
For example, the government-wide consolidation efforts articulated in the 25-point IT reform plan are ongoing. This means agencies can spend under existing authorities to keep moving toward the plan’s goals. It requires spending on networks, storage, virtualization, and possibly application recompilation to effect data center consolidation. Consolidating email systems in the cloud offers opportunities. On the procurement side, don’t overlook the recent blanket purchase agreement the General Services Administration launched for cloud email procurements based on IT 70 multiple award schedule contracts.
Another example: Under the new Digital Strategy guidance, if agencies can demonstrate overall lifecycle savings, they can potentially spend anew on wireless infrastructure buildouts, the various software packages (and integration work they require) for device management and provisioning, and individual user virtualization. The broadly worded IT investment budget line items can typically accommodate new technology purchases even though continuing resolution preclude new initiatives.
At the highest level, IT spending is trending towards flat or down slightly in the near term. That’s the simple guidance the Office of Management and Budget has given agencies. Beyond that, we have no firm answers to three key wildcard questions that would greatly help your marketing, sales and business planning efforts in the next 12 months.
- Will Congress allow the $100 billion sequester to occur in January as now scheduled?
- Where will those cuts fall disproportionately on people or technology?
- Will Congress pass a 2013 budget for the second half of the current fiscal or will it just extend the continuing resolution with some modifications?
But, as we’ve shown, you still have opportunities. Sometime around Thanksgiving, agencies receive their “passbacks” from the Office of Management and Budget. Analysts will have done their work to help OMB reduce redundancy in IT investments for 2014. OMB’s tweaks to agency requests will lead to the completed budget request due to Congress in early February.
You’ll find more useful information about what agencies are thinking from the publication of the President’s budget request than in trying to divine the effects of the election or Congress’ collective mind.