IT Spending Could Top $29 Billion in Q4 FY19: This Is IT

Federal agencies are poised to spend more on unclassified information technology products and services in fiscal 2019 than ever before — just under $70 billion for the year — leaving about $29 billion in expected IT spending for the last quarter of fiscal 2019, according to a Bloomberg Government estimate.

This would be the sixth consecutive year with an increase in IT spending and the trend will likely continue again in fiscal 2020, based on agency IT budget trends.

The $29 billion forecasted for IT spending remaining for fiscal 2019 accounts for an estimate of about $7 billion for Defense Department IT obligations between early April and early July 2019 that hasn’t yet been reported by the government, due to the agency’s 90-day reporting lag. That leaves about $14.4 billion in IT spending for DOD.

Comparing historical IT budgets with contract obligations provides an estimate for the expected remaining IT spending at individual civilian agencies in fiscal 2019. Of the 24 civilian agencies evaluated, BGOV estimates that all have additional IT budget remaining to spend on contracts. The departments of Health and Human Services, Homeland Security, and Veterans Affairs have the most money remaining, with $2.6 billion, $2.1 billion, and $1.8 billion, respectively.

BGOV expects 17 agencies to receive more obligations in fiscal 2019 compared with fiscal 2018, based on the fiscal 2019 estimates. Agencies with the top estimated increases include the departments of Veterans Affairs, Commerce, and Housing and Urban Development.

The remaining obligations will be spent on a variety of contract vehicles and stand-alone contracts, but five vehicles have received 24% of IT contract obligations since fiscal 2015:

• General Services Administration’s Schedule IT-70
• National Aeronautics and Space Administration’s Solutions for Enterprise-Wide Procurement (SEWP) IV and V
• GSA’s Alliant Large Business
• Veterans Affairs Transformation Twenty-One Total Technology (VA T4) and T4 Next Generation (T4NG)
• GSA’s 8(a) STARS II

Historical spending indicates that agencies will spend an additional $8.1 billion on those vehicles by the end of fiscal 2019.

Much of that money, about $3.1 billion, would be through SEWP V. The program is known to spend a large portion of its annual obligations in the fourth quarter. Since fiscal 2015, SEWP IV and V fourth quarter obligations have accounted for an annual average of 53% of its total obligations. That’s because SEWP makes some changes to its acquisition operations to account for the end-of-year rush, including longer hours and more outreach. This makes it easier for agencies to award contracts quickly as money expires.

8(a) STARS II and Alliant Large Business fourth quarter obligations also account for a large proportion of its annual contract spending —47% and 43% respectively.

Contractors can expect a large portion of fourth quarter IT obligations to flow through these contracts, along with other large contract vehicles, as they will be easier to award quickly than stand alone contracts.

To contact the analyst on this story: Laura Criste in Salt Lake City at lcriste@bgov.com

To contact the editors responsible for this story: Daniel Snyder at dsnyder@bgov.com; Zachary Sherwood at zsherwood@bgov.com