Federal IT spending cuts make innovative acquisition a priority

12th September, 2012 - Posted by Meredith Lawrence - No Comments

A few weeks ago, the Office of Management and Budget (OMB) released new guidance designed to cut government IT investments by 10 percent by fiscal year 2014. The move is part of overarching budget cuts designed to save the federal government money in the face of mounting national debt and budget deficits.

According to coverage of the guidance in NextGov, the cuts would be calculated based on spending from fiscal years 2010 through 2012 and should focus on imprudent IT expenditures. This new guidance is just the latest of many directives and mandates for federal agencies to trim IT spending, reduce overlap and direct budget dollars into “smarter” IT programs.

A new report by the Government Business Council (GBC), the research arm of the Government Executive Media Group, highlights some of the ways the federal government is leaning on agencies to cut their IT spending. Included in the list is former federal CIO, Vivek Kundra’s “cloud first” policy that requires agencies to look at available cloud services prior to investing in new IT infrastructure, as well as the federal datacenter consolidation initiative and digital government strategy.

All of these initiatives focus on improving government service to constituents while slimming down the federal datacenter footprint and cutting IT expenditures. They also move the government away from large IT investments and towards acquiring infrastructure and systems as a service.

With emphasis on slashing IT budgets, the GBC report shows that it’s becoming increasingly difficult for agencies to wrangle the money needed for important IT implementations. In fact, a previous report in March 2012 showed that forty-four percent of federal employees surveyed indicated that limited IT budgets were a challenge to meeting employee mobile needs.

These struggles are only expected to increase if sequestration cuts take effect January 2, 2013, as currently scheduled.

It’s not all negative for agencies looking to make essential IT investments, however. Agencies just need to be more innovative when it comes to the acquisition of their IT solutions.

The report cites the Department of Energy (DOE) as a great example. The DOE is using an energy performance contracting (EPC) model that enables them to modernize their infrastructure without any upfront investment. In this model, the agency and the contractor will share in the energy savings for a contractually set period of time.

Other agencies are making their IT acquisitions through monthly or recurring service expenditures rather than one-time hardware costs. This shift from capital expenditures (CapEx) to operational expenditures (OpEx) enables agencies to purchase and deploy needed IT solutions without providing a large upfront investment. This system also helps to protect against obsolescence by transferring the risk of ownership to the IT provider, increases flexibility in the deployment and is incredibly scalable.

The forecast for federal IT spending may be bleak, but there are still ways that agencies can acquire the IT solutions, such as video teleconferencing (VTC) and other Unified Communications (UC) technologies that can make government more efficient and save agencies money over time. By shifting IT expenditures from large, initial investments to recurring operating expenditures and identifying other, innovative contracting models, agencies can still embrace the technologies they need. Additionally, the vendor community can support the federal government’s financial hardships with extended payment plans, such as Polycom’s Extended Right of Use Program (ERUP).

To download a full copy of the GBC report, click HERE.

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