Biden's budget promise ... and peril

The numbers are huge but industry should hold off on the celebration

President Biden's fiscal 2022 full budget request is out, following up with some additional details on the so-called "skinny budget" outline submitted in April. And per usual, there is great excitement -- and occasional despair -- in the federal contracting community.

Let's pause for a minute and take a look at three things: What do we know? What can we expect based on both the past as well as the current situation? And what should the private sector do in the next 4-plus months to get ready for the next fiscal year?

The Known

Washington Technology and Federal Computer Week have already produced well done, comprehensive summaries of the budget request and covered the high notes -- a 16% increase in non-defense discretionary spending, a modest 1.7% increase for the Department of Defense, significant investments in infrastructure, IT modernization, cybersecurity, citizen services, and a focus on innovation and new, emerging technologies.

Embedded in funding for state and local governments and infrastructure initiatives are additional monies for IT. The president's budget doesn't detail funding for the judiciary and the court systems, independent agencies like the Federal Reserve or the U.S. Postal Service or certain segments of the national Intelligence community where one could expect similar positive growth in these same areas.

So total up what is in the president's budget and add $15 billion to $20 billion and one would have a grounded estimate of the expected total IT spend in fiscal 2022.

But is that all? As the old adage notes, "The President proposes and the Congress disposes". And while one can expect changes as Congress reviews this request, over recent decades the Hill has often passed greater funding for IT than the president has asked for. 

The Known Unknowns

This White House request comes late, even for the first term of a new administration. The budget hearings that have been held to date have only featured Department Secretaries and were based on the April budget outline. There likely won't be much time to hold additional hearings with agency heads and even if there were, few are yet in place as the administration fills leadership positions from the top down and the confirmation process slowly proceeds.

Much of the details are going to have to be negotiated and filled in by appropriations committee staffs. Given how late we are in the budget process and the other items in front of the Congress, a continuing resolution seems likely. I'm not going out on much of a limb here, since the last time the government began a new fiscal year on October 1 with a full slate of appropriations enacted was –fiscal 1996, so a good 25 years ago. 

Few expect the almost flat DoD budget request to go through the Congress as is. We will hear about an aging fleet, instability in the Middle East, Putin's Russia, an expansive and aggressive China, and so on. The defense budget will surely go up. And while civilian agencies will fare better than they did in the previous administration, the growth isn't likely to be as ambitious as the White House has requested. And there are additional complications. 

The country will run up against the existing debt ceiling on Aug. 1. So expect a summer reprise of the Department of the Treasury taking extraordinary measures to avoid a national default on America's debt, a Republican Party rediscovering a concern about the deficit, and all these concerns commingling with the fate of the FY 2022 appropriations bills.

And last, a number of agencies and programs will be sitting on unobligated balances from the Biden stimulus package. Hill staff usually are skeptical about appropriating more money for a program that has yet to spend dollars previously appropriated. There may be good reasons, a sound rationale for that situation. But with deficit concerns, DoD needs, new emergencies (e.g., another active hurricane season), it really will be hard to justify, as an example, putting more funding into the Technology Modernization Fund if the TMF has a substantial vault of unobligated funds.

The Unknown Unknowns

It is an ambitious budget request -- almost $6 trillion. It is an ambitious President's Management Agenda, one that not only includes the usual suspects but goes beyond them to include new, emerging technologies, green initiatives, social equity concerns, opportunities for small and disadvantaged businesses, and again and again -- INNOVATION. So let me close with some questions and concerns.

The Obama-Biden Administration seemed to feel (or perhaps was unfairly accused of feeling) that to find innovation it had to get outside the Beltway. It had to get outside the usual circle of government contractors, systems integrators and service providers. It had to go out to Silicon Valley and press the thirsty lips of the Federal government to the fountain of cutting edge start-ups who had never sought to bid on government contracts.

Has that mindset changed? Many alumni of that Obama administration have returned in the Biden-Harris Administration. Have they returned with a new understanding and appreciation of government and the industry that supports it? Or do they still feel that innovation can only be found elsewhere?

What companies are prepared to deliver on the new and emerging technologies and green initiatives? Anyone who has been in or around government has seen the cycle, depending on the challenge or focus of the time -- Y2K remediation, e-government, homeland security, authentication, cybersecurity, etc. Suddenly, every company is a (fill-in-the-blank) company. Who really is and who is just claiming to be?

Best to start now to develop a ground-truthed record of performance.

Almost every administration gives lip service to the importance of small business. Some have gone as far as giving it passionate lip service. This administration's commitment is real.

So companies should take a look at who they have partnered with and revisit and update that team. Those companies that go to market through channel partners should do the same. That can be coupled with the above to bring in new partners with new technologies and skills. But this isn't a time to "round up the usual suspects".

Finally, how can this administration "go big" with the team it will initially put on the field. Both sides of government have been pursuing the quest for smaller government ever since Ronald Reagan uttered the phrase "government is not the solution to our problems; government is the problem". Bill Clinton followed that lead. And ever since we have privatized, outsourced, and contracted out the delivery of government services long performed by public sector workers.

No wonder private sector firms and associations that represent them are heralding the Biden initiatives in IT and cyber -- more work for contractors.

So while the budget calls for rebuilding the work force and new personnel practices, where we will find the human resources, procurement, IT, budget and finance and program management staff in government to get us there. Having spent so many years cutting, minimizing and more recently denigrating government and the public service, we may discover they can't work properly when we really need them to.

About the Author

Alan P. Balutis is a former distinguished fellow and senior director for North American Public Sector with Cisco Systems’ Business Solutions Group.

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