At the risk of opening a can of political worms, numbers don't
lie. The federal government's austerity measures of the past three
years have cut into the earnings of America's information
technology industries. The additional cuts forced by sequestration
from the start of this year hurt more. And the two-week government
shutdown that just ended really put the lid on it.
Although the reopening of the federal government seems to have
resolved nothing, the future looks marginally better for federal
spending on information technology, according to
from the TechAmerica Foundation, the non-profit arm of an industry
After several years of steep reductions in federal spending on
information technology, the foundation projects that spending will
increase 2.3% a year from now through 2019. That will bring total
spending from $70 billion next year to $78.5 billion.
projection for 2019
is a bit less than the peak spending of $78.9 billion in 2010, when
government-wide budget cuts began, notes Wyatt Kash, editor of
Kash notes that the months of sequestration cuts led federal
agencies to postpone long-term projects.
The automatic spending cuts known as sequestration were originally
intended to be so unpalatable as to force Congress to agree on a
budget to avoid it.
Its real impact, though, appears to be mixed. A
by the Congressional Budget Office estimates that canceling the
austerity measures would have added .7% to economic growth, and
added 900,000 jobs, through fiscal year 2014. However, it also
found that the eventual impact would have been a further burden to
the national debt and a reduction in economic growth.
This month's budget crisis, of course, stopped decision-making
Meanwhile, technology companies looking for new business are
eyeballing state and local governments, which have made
a surprising recovery
from their near-death experience in 2008. Some governors of states
are even talking "growth agenda," according to InformationWeek.
There must be some happy hunting out there-about 90,000 governments
operate within the US at the municipal, county, and state levels.
Dell, Hewlett Packard, IBM Among To Government
survey funded by
) of government decision-makers showed that budget constraints
continue to be the biggest threat to state and local information
technology organizations. (Federal officials cited cyber-attacks as
the greatest threat.)
Government work for technology companies is, in fact, dwarfed by
The "Top 100" list
of government contractors for 2013 is headed by
), though that spending, too, may decline with the end of the
conflicts in Iraq and Afghanistan.
Familiar information technology names are few and farther down the
), in seventh place;
(DELL), in 19th place, and
(IBM) at number 21.
Of course, the reputation of government contractors has not been
improved by the performance of Healthcare.gov, the key piece of
government health-care reform that notoriously malfunctioned the
moment it went live on Oct. 1. The cost of the site's construction,
budgeted at a maximum of $93.7 million,
ballooned to $292 million
over the past six months as frantic officials threw money at a
project that was clearly in trouble.
No doubt we will hear much more about that now that Congress is
turning its attention from the shutdown to other matters.
Congressional committees are already shooting out requests for
information to general contractor
In the meantime, there's this
by a smaller government contractor, in the
, on just what might have gone wrong with the massive project to
build Healthcare.gov: "If it had been a $4 million website, it
would've had higher likelihood of being a success. It's not just
CGI Federal. It's any collection of government contractors, if you
put them together, will find a way to put together something
complex enough to justify $400 million."
also points out that CGI Federal's stock has not suffered in the
least from the bad press over Healthcare.gov, although it was the
primary contractor on the project.
Just how lucrative government work can be may be illustrated by the
lawsuit brought by
(BP) against the Environmental Protection Agency, for suspending
the oil company from federal contracts after the disastrous Gulf
Coast oil spill, citing its "lack of business integrity."
The latest hearing in that suit, in a federal district court, was
postponed this week,
according to TheHill.com
Ironically, the EPA, along with the entire federal government, was
temporarily out of business.
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