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Federal Spending Would Increase for Cybersecurity, Infrastructure, Research & Development and Veteran Care

According to Deltek’s new GovWin IQ report, FY 2017 Federal Budget Request: Challenges and Opportunities, the fiscal stability first achieved with the signing of the Bipartisan Budget Act of 2015 (BBA15) extends into the FY 2017 budget request, providing predictability and more potential business opportunities for the contractor community. The report reveals that if the President’s budget is passed the total federal contractor-addressable market would increase from $664 billion in FY 2016 to $682 billion in FY 2017. With respect to federal information technology (IT) spending, Deltek’s preliminary estimates show a small decrease in the contractor-addressable spending from $99.4 billion in FY 2016 to $97.9 billion in FY 2017.

Deltek’s report dissects the $1.14 trillion FY 2017 discretionary budget request across 10 market segments: IT; Professional Services; Management and Administrative Services; Operations and Maintenance Services; Medical Services; Equipment; Consumable Supplies and Materials; Telecom Services; Aerospace and Defense; and Architecture, Engineering and Construction. The report examines the spending plans and investment priorities contained within the President’s budget request for FY 2017.

Key findings from the FY 2017 Federal Budget Request: Challenges and Opportunities report include:

  • Fiscal Stability – After several years of budget uncertainty, FY 2017 may bring agencies more stability than they’ve had in years to address deferred investments and implement innovative IT solutions. Cornerstone issues include: rebuilding the transportation and power infrastructure, cybersecurity, healthcare, veteran care and federal workforce revitalization.
  • Cybersecurity Growth – The administration is requesting $19 billion, a 35% increase over FY 2016, to address cyber issues across all technology segments, including efforts to fix vulnerabilities, train federal employees and introduce cutting edge analytics-based solutions.
  • Defense Stability and Civilian Growth – Rebounding from sizeable sequestration cuts by the BBA15, the DoD will receive additional funding in FY 2017, which will be directed to enhancing force readiness and Research & Development. Civilian agencies may receive an additional $18 billion in funding, some of which will be used to address deferred programs and investments.
  • Areas of IT Opportunity – Despite a small decrease in the addressable IT market, growth opportunities will continue to be found in key areas such as cybersecurity, big data/analytics, health IT, and infrastructure modernization.

Although spending scrutiny will continue to be high, the additional funding from the BBA15 will drive contractor opportunities, particularly those that increase the efficiency and effectiveness of mission-critical activities. “Government demand looks particularly strong for equipment, O&M Services, Medical Services and cybersecurity, areas that align with the Obama Administration’s focus on modernization, healthcare and veteran’s services,” said Deniece Peterson, Director of Federal Industry Analysis at Deltek. “This is this Administration’s last opportunity to fully influence a budget, so they will be pushing for significant progress before a new administration takes the helm.”

While the BBA15 provides bipartisan agreement on the top line FY 2017 discretionary funding level, the President’s budget is simply a request for Congressional appropriations. During what will likely be a contentious appropriations process, Congress is likely to ignore or underfund some of the requested provisions in the President’s request. From a historical perspective, however, top line appropriated discretionary budgets typically vary little compared to the request levels made by the President. As a result, the President’s budget provides a good guideline for where appropriations will be and ultimately how those appropriations will be allocated once enacted.

To read full press release, click here.

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