How COVID is shaking up federal spending

One only needs to look at spending trends pre- and during-pandemic to get a feel for how significantly the market has changed because of COVID-19.

Numbers are presented by Deltek’s Kevin Plexico show the remarkable explosion of spending since the start of the pandemic and the economic collapse from it.

Fiscal year 2020 was already shaping up to be a good year, Plexico said, during his presentation as part a webcast that we co-produced with Government Marketing University.

Thanks in part to the passage of the 2019 Bipartisan Budget Act, spending levels were on the rise with significant increases for both defense and civilian agencies. Discretionary spending was slated to rise by $169 billion for fiscal 2020.

Then came the coronavirus and that planned healthy increase grew significantly.

According to Plexico’s data, more than $13 billion has been spent on coronavirus response efforts by the government through May 24. The spending is continuing but has slowed from more than $2 billion a week to $1 billion a week.

Early spending focused on emergency response efforts -- purchasing ventilators, vaccine research, treatments and constructing emergency medical facilities. The Health and Human Services Department has been the major recipient with the Veterans Affairs Department and Federal Emergency Management Agency also seeing growth, Plexico said.

For just IT spending, Plexico said there was an spike early on for equipment that government employees needed for the shift to remote work. There also has been an increase in spending on professional services to help agencies such as the Small Business Administration with rolling out the Paycheck Protection Program and other programs.

The increase Plexico described was also reflected in the presentation by Joanne Woytek, program director for NASA's SEWP vehicle.

Woytek reported that SEWP has seen these examples of companies vaulting into the contract's top 25 list of manufacturers -- IBM and its storage solutions, Motorola and its mobility products, Citrix and its virtualization tools, and Thales Group with its network security offerings. Those products are supporting the shift to remote work, she said.

Presenter number three in Tom Suder, president and founder of the Advanced Technology Academic Research Center, said the main pillars of IT modernization -- cloud and infrastructure, mobile and digital, security, artificial intelligence and DevOps -- will all likely see increases as part of the COVID response.

Security in particular should grow because of the large number of people teleworking increases the exposure of government networks, he said.

The webcast was presented live but an archived recording should be ready soon. We’ll push that link out as soon as it is available.