Defense IT Spending: On the Way Up

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Defense Department spending on IT in Fiscal 2016 will exceed 2015 spending, according to two analyses. How much the IT spend will increase depends on whose analysis you read.

Bloomberg Government predicts DoD will fork over $37.3 billion on IT in Fiscal 2016.

In its five-year forecast, covering 2015 through 2019, IDC projects DoD will spend about $30.5 billion on IT next year.

Despite the $6.8 billion difference in the forecasts, both research organizations agree that DoD IT spending is ready to grow after a brief lull. DoD IT spending fell 14.4 percent over the past three years, IDC analyst Shawn McCarthy said.

There’s a lot of opportunity for IT vendors, but will the spending increase last?

DoD Healthcare Modernization
Parsing DoD’s IT budget, Bloomberg Government said one of the most expensive IT projects next year will be the Healthcare Management System Modernization program. DoD requested $527.6 million in 2016 funding, up 254 percent from 2015 funding.

The healthcare contract is described as “one of the most coveted health information-technology contracts” ever, Amy Ellis Nutt reports in The Washington Post. That’s because it could be worth up to $10.5 billion over 18 years.

On July 29, DoD awarded the contract to a team led by Leidos, which is working with electronic health records firm Cerner Corp. and Accenture Federal.

Cloud and Cyber
DoD’s cloud spending will dip modestly in 2016, but over the long term “it’s a huge area for growth,” said Bloomberg Government analyst Jesse Holler.

Bloomberg predicts DoD spending on “cloud and provisioned services,” which includes non-cloud spending, will reach nearly $4 billion next year, just short of 2015 spending.

This general analysis matches the Cloud Computing Caucus Advisory Group’s projection, which analyzed data from the Office of Management and Budget’s (OMB) IT Dashboard. The Advisory Group also found that DoD’s cloud spending will dip by a statistically insignificant amount, from $772.9 million in 2015 to $763.7 million in 2016. The Advisory Group arrived at different numbers because its analysis only measured cloud spending, not all other provisioned services like telephone services, which Bloomberg Government included.

Bloomberg Government foresees DoD spending on cybersecurity increasing by $400 million in 2016, with the U.S. Cyber Command and the Joint Information Environment emerging as the “big winners” because they will be the beneficiaries of that additional funding.

Wrinkle in the Plans?
Government funding runs out September 30, and a shutdown could change everything by putting the brakes on spending.

Bloomberg Government’s analysts believe Congress will reach an agreement on a continuing resolution in September to keep the government open, and resolve the spending issue during the first quarter.

Join the conversation. Post a comment below or email me at bglanz@300brand.com.

Bill Glanz
About Bill Glanz
Bill Glanz is the content director for MeriTalk and its Exchange communities. Over the past 14 years, he has worked as a business reporter, press secretary, and media relations director in Washington, D.C.
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