Report: Government IT Spend Nearly Double Private Sector Average

Federal money spending government

The government spends 6.4 percent of its funding on IT, nearly double the 3.3 percent spent on average by industry, leading to billions spent instead of adopting commercial systems, according to a report by the Alliance for Digital Innovation (ADI) released May 18.

The report compared current government spending to the baseline of 25 years ago, when then-Senator William Cohen released the Computer Chaos report, castigating the government for excessive IT spending and building custom systems.

If government had been able to reverse course and meet the commercial baseline (citing a Deloitte estimate from 2017), the report estimates that it would have been able to save $717 billion over the last 25 years. Even if the government had held spending steady to the 1994 rate of five percent spent on IT, it would have realized $345 billion in cost savings.

“Although the exact amount of waste may be subject to debate, there is every reason to implement IT acquisition best practices well-known by digital leaders,” the report states.

ADI, an industry group comprised of companies like Amazon Web Services, Veritas, Splunk, and Salesforce, advocated for more adoption of commercial technology in government as the remedy to this problem.

“The majority of the government’s old information systems should have been retired and replaced with commercial applications, maintained by commercial software licensors and routinely upgraded with innovation, as the commercial suppliers systematically inject research and development innovations into their installed base of products,” the report argues.

The report notes that only 11 percent of planned Federal IT spending from 2018-2023 is allocated for commercial software, and most spending, 77 percent, is still on operations and maintenance.

“Every citizen and legislator should be alarmed at the wasteful, profligate spending endemic to federal IT,” the report states.

Categories

Recent