The Future of Federal IT Spending

A recently published and well-read blog in this sector recently disclosed that government contractors surveyed by Grant Thornton LLP experienced revenue boosts from federal business during the past year. Here are a couple of thoughts on why that might be the case for those of us in the information technology (IT) segment.

Listen to some of the words being bandied about in the federal government-speak these days: openness, transparency, accountability, cybersecurity, efficiency and healthcare reform. Right in the center of the actual implementation of these concepts is IT. We have reached a point where IT is pretty much a mandatory spending item, like Social Security and Medicare have been over the years in the federal sector. Even some of the recent appointments in the administration - Kundra (CIO), Chopra (CTO) and Zients (CPO) - recognize that IT is a significant investment and requires some level of executive oversight, coordination, and accountability in order to be optimized.

Doing the business of government in the 21st century requires the best that IT has to offer. Some industry research firms like INPUT peg the federal IT spend in the $75-$80 billion range, with a 3-4% growth rate through 2014 (and that excludes the impact on IT spending due to the ARRA funding), and deem that level to be almost "recession proof."

So what does that mean to those of us in this segment? It means the federal sandbox is big and getting bigger. But, it also means that the competition will be getting stronger since it is a very attractive market with real IT needs. Those providing real value will win. Those hoping to get a piece of the market as an adjunct to their downsized commercial business or without really understanding the unique requirements of government will be cast aside. Sharpen your game...the fun is just starting.