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KRT Impact Blog

Federal IT Budget Snapshot

The President’s FY2014 budget was released on April 10th. Though there are still many steps left before the budget passes through congress – it is nice to get some ideas around what are the Administration’s major priorities are. I am still running through the overall President’s budget and may share additional findings in a later blog. For this blog I am focusing on a smaller piece of the overall Federal budget – the IT budget. I spent the last week running through some of the data and had a great opportunity to receive further insights on budget priorities when I attended the Federal IT Budget Preview hosted by AFCEA Bethesda last Friday.

The keynote speaker was Steven Van Roekel the CIO for the United States and also included a great panel of senior executives the Office of Management and Budget (OMB), the Department of Homeland Security (DHS), the Department of Health and Human Services (HHS) and the Department of Agriculture (USDA).

If we dive into the keynote delivered by Steven Van Roekel the main Federal Technology Objectives are:

The full presentation is available here.

Some of the interesting things I noticed is that throughout the 2000s IT spending in the United States expanded at a high rate – the CAGR (Compound Annual Growth Rate) of the IT Budget stood at 7.09% in FY2009. If that rate had remained steady the IT budget for the Fiscal year of FY2014 would have been approximately $111B instead – instead of that the CAGR has remained relatively flat at 0.78%. The result is the expected FY2014 budget is only approximately $81B.

The theme for the IT budget that was echoed repeatedly is doing more with less. There are many initiatives throughout the Federal Agencies to focus on cost-savings and cost avoidance measures – and then channeling that money as investment dollars to improve the effectiveness and efficiency of IT programs.

O&M vs. DME

One of the concerns highlighted at the breakfast was the growth of the operations and maintenance costs in IT programs vs. the investment portion also known as Development, Modernization, and Enhancement (DME). The Government executives present stated that the balance of O&M to DME was unsustainable and they needed solutions in the future that would enable them to invest in Information technology while keeping the O&M portion under control.


Overall IT Investments

If we take a closer look at how agencies are investing their IT dollars – there are 3 broad categories with the dominant one being Agency Investments. The categories are outlined below:

Spending in Cloud Computing?

One of the buzzwords in Federal IT for the last few years has been cloud computing. This type of investment has been one of the most talked about and the hardest to analyze from a dollar perspective. This is because the traditional spending categorization systems of NAICS and the Federal Supply Groups don’t show any visibility into cloud computing.  Fortunately the Federal Government is exposing this spending through the FY2014 budget – the table below illustrates cloud spending as the Federal Government defines it.



Overall the Federal Government has a lot of budget challenges for FY2014 and they will strive to do more with less. The positive here is that there should be plenty of opportunities for companies that can provide innovative solutions and can help the Federal Government find those lucrative investment dollars through cost savings and cost avoidance!

If you have any questions or comments regarding our data or findings – we would love to hear from you! Please reach out to us at