It’s not easy to knock out the champ, in this case Schedule IT-70. It had been the top information technology contract for more than a decade, but not anymore. NASA’s Solutions for Enterprise Wide Procurement V (SEWP V) became the top information technology contract vehicle in fiscal 2020. SEWP V will likely remain the top vehicle in fiscal 2021.
A lot of pieces had to line up for SEWP V to rise to the top. This week’s This Is IT digs into the details of SEWP V spending and includes the expertise of SEWP V Program Manager Joanne Woytek to explain why SEWP V obligations have risen so drastically and what to expect in fiscal 2021 and beyond.
Agencies spent $7.9 billion through the the governmentwide acquisition contract in fiscal 2020, up $2.3 billion or 41% compared with fiscal 2019. Use has more than doubled in the four years since fiscal 2017.
The Defense Department accounted for about 38% of spending annually. In the steep jump from fiscal 2019 to 2020, Pentagon’s spending jump hit 42%, similar to the governmentwide increase. Other leading agencies include the departments of Veterans Affairs, Justice, and Treasury.
Woytek told Bloomberg Government the sharp increase resulted from a combination of factors during the past five years, including relationship building, word of mouth, and investing SEWP V proceeds in more staff and better technologies to keep up with the influx of orders. The impact of these efforts is a heavy increase inDepartment of Homeland Security use of SEWP V. DHS obligations on the vehicle increased to $262 million in fiscal 2020 from $16 million in fiscal 2017 , making it the No. 6 SEWP V agency that year. It takes a few years for agencies to get accustomed to using SEWP V, Woytek told BGOV. That probably means DHS continues to ramp up and will spend more through SEWP V this year, something that could be especially prominent asEnterprise Acquisition Gateway to Leading Edge Services II (EAGLE II) task orders end without a designated follow-on vehicle.
The Covid-19 Effect
Covid-19 played a large role in the increase from fiscal 2019 to 2020. SEWP V was the largest IT vehicle for pandemic-related spending, with $804 million in fiscal 2020, mostly for laptops, cloud services, and software to support telework and telehealth. Veterans Administration contracts (VA) account for $524 million of SEWP V Covid-19 obligations, and Covid-19 explains most of the VA’s increased use of the vehicle from fiscal 2019 to 2020. DOD is the No. 2 SEWP V agency when it comes to Covid-19 spending.
When asked why so many Covid-19-related IT obligations went through the vehicle, Woytek told BGOV, “we’re quick, we’re agile,” something that’s especially important during an emergency. “Agencies recognize the speed at which we can operate,” she said. That meant agencies could get security and telework products quickly when federal employees unexpectedly needed to telework.
Pandemic-related spending doesn’t explain the full increase, but it does account for the amount beyond what historical projections would indicate. Bloomberg Government would have projected about $7 billion in fiscal 2020 SEWP V spending without the pandemic. In reality, there were $7.1 billion in obligations were booked unrelated to Covid-19. Based on those same projections, Bloomberg Government anticipates about $8.8 billion in SEWP V spending in fiscal 2021 not including any pandemic-related spending. With Covid-19-related obligations, SEWP V could top $9 billion in fiscal 2019, or an increase of at least 20%.
Woytek isn’t as optimistic. She expects growth at a lower rate of 10%, but she also noted if there’s going to be another year with large increases, fiscal 2021 will be it. Beyond this year, she expects increases, but at slower rates as SEWP V starts approaching its end date in April 2025.
In addition to pandemic-related spending, fiscal 2020 saw large increases in hardware and software purchases. Hardware spending was up $1.1 billion and software obligations rose $779 million over the year. Outside of Covid-19 spending on the vehicle, there weren’t any task orders that, on their own, accounted for a significant increase in spending on SEWP V. Instead, the increase comes from a wide variety of products and services, including different software licenses and related support services, cloud services, hardware maintenance, and more. It shows SEWP V’s growth hasn’t relied on a few initiatives but a high adoption rate, an indication upward trends will continue. With an average task order size under $300,000 in fiscal 2020, this is to be expected and will likely continue in fiscal 2021, even if average task order sizes increase slightly as they have in recent years.
Part of the reason for SEWP V’s rapid increase is likely due to ease of use, even beyond Covid-19 orders. SEWP is heavily used at the end of the fiscal year. That’s because the SEWP program office is set up to move quickly for that time. The office extends customer service hours, adds customer service personnel, and uses outreach extensively in the months leading up to the end of the fiscal year. That sort of administrative agility created about 30% of SEWP V obligations falling in September over the past four fiscal years.
Bloomberg Government will continue to monitor these trends and others, including an apparent shift to spending less proportionally in the last two months of the fiscal year and whether use of services increases more quickly in future years. Fiscal 2020 saw an almost 50% increase in product-related obligations, reversing the trend of services spending increasing more rapidly than products prior to fiscal 2020. Now that product-heavy purchases in reaction to Covid-19 have likely slowed, services spending may accelerate.
Note: This Is IT is a weekly column by Bloomberg Government focused on information technology matters affecting government contractors.
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