FEDERAL TECH
TRENDS AND
OPPORTUNITIES
TECH DATA PARTNER SUMMIT 2015
Jesse Holler
Quantitative Analyst
Bloomberg Government
May 13, 2015
WHAT DOES THE FEDERAL TECH MARKET
LOOK LIKE
$62B
40%
$21B
$1.4B
in IT obligations for fiscal 2014
of IT dollars awarded through MACs in fiscal 2014
of small-business IT dollars in fiscal 2014
of proposed IT spending growth from 2015 enacted
budget to 2016 request
Source: Bloomberg Government proprietary federal procurement database; ITDashboard, President’s FY 2016 budget request
WHAT’S
THE BUDGET
OUTLOOK?
CIVILIAN AGENCIES WOULD DRIVE GROWTH,
WHILE DOD CLASSIFIED WOULD REBOUND
Civilian fiscal 2016 IT budget request
Defense fiscal 2016 IT budget request
Unclassified spending, current dollars in billions
Current dollars in billions
5.9% CAGR
Unclassified
Classified
0.6% CAGR
$48
$49
$44
$41
FY 2013
actual
FY 2014
actual
FY 2015
enacted
Source: President’s FY 2016 budget request
FY 2016
request
$36
$37
$36
$37
$5
$6
$6
$7
$32
$31
$30
$31
FY 2013
actual
FY 2014
actual
FY 2015
enacted
FY 2016
request
MORE I.T. MONEY REQUESTED FOR MOST
CIVILIAN AGENCIES
Fiscal 2016 IT budget request
Fiscal 2016 IT budget request biggest
winners and losers
Current dollars in millions
Fiscal 2016 request versus fiscal 2015 enacted
HHS
$11,351
DHS
$6,201
HHS
Treasury
$4,503
Treasury
VA
$4,403
VA
Transportation
$3,326
-10%
DHS
4%
19%
5%
Transportation
6%
Agriculture
$2,789
Agriculture
3%
Justice
$2,732
Justice
4%
Commerce
$2,333
Commerce
8%
SSA
$1,694
SSA
State
$1,632
State
Energy
$1,496
Energy
-1%
NASA
$1,390
NASA
-2%
Interior
$1,099
7%
15%
Interior
Labor
$821
Labor
Education
$683
Education
23%
Note: DHS – Department of Homeland Security, DOL – Department of Labor, DOC – Department of Commerce, SSA – Social Security Administration
Source: ITDashboard – President’s FY 2016 budget request
AGENCIES OUTSIDE OF MILITARY SERVICES
DOMINATE THE DOD I.T. BUDGET
Fiscal 2016 IT budget request
Fiscal 2016 IT budget request biggest
winners and losers
Current dollars in millions
Fiscal 2016 request versus fiscal 2015 enacted
Defense-wide
$11,139
Army
Navy
Air Force
$7,555
$6,490
$5,284
Source: ITDashboard – President’s FY 2016 budget request
Defense-wide
2%
Army
3%
Navy
Air Force
4%
-3%
DEFENSE CLOUD FUNDING WAS SLOW TO
START, BUT IS SET TO OUTPACE CIVILIAN
Obligations by fiscal year, in billions of dollars
Defense
Civilian
$0.7
$0.9
2014
actual
Source: ITDashboard – President’s FY 2016 budget request
2015
enacted
$4.0
$3.9
$2.5
$2.6
2016
request
CIVILIAN AGENCIES PROVIDING BETTER DATA
Snapshot of civilian cloud IT budget
in the 2015 budget request
Fiscal 2016 civilian cloud IT budget
request
Current dollars in billions
Current dollars in billions
DHS
DOL
Treasury
DOC
All others
DHS
SSA
$3.0
$3.0
$2.5
$2.5
$2.0
$2.0
$1.5
$1.5
$1.0
$1.0
$0.5
$0.5
$0.0
DOL
Treasury
DOC
All others
SSA
$0.0
FY 2014
enacted
FY 2015
request
FY 2014
actual
FY 2015
enacted
FY 2016
request
Note: DHS – Department of Homeland Security, DOL – Department of Labor, DOC – Department of Commerce, SSA – Social Security Administration
Source: ITDashboard – FY 2016 Presidents Budget Request
MARKET
TRENDS
ALL FEDERAL SPENDING IS BROADLY DOWN
Obligations by fiscal year, in billions of dollars
18 percent decline
$536
2010
$535
2011
$514
2012
Source: Bloomberg Government proprietary federal procurement database
$460
$440
2013
2014
69 PERCENT OF ALL FEDERAL SPENDING WAS
COMPETED IN FISCAL 2014
Obligations by fiscal year, in billions of dollars
Not competitive
Competitive
$166
$177
$369
2010
$174
$358
2011
$152
$135
$308
$305
$341
2012
Source: Bloomberg Government proprietary federal procurement database
2013
2014
THE TECHNOLOGY MARKET BOTH CONTRASTS
AND MIRRORS THE WIDER FEDERAL MARKET
$2B
75%
$10B
increase in IT obligations from fiscal 2013 to 2014
of IT dollars awarded competitively in fiscal 2014
more is spent on defense IT than civilian IT
Source: Bloomberg Government proprietary federal procurement database
TECHNOLOGY HAS FARED SOMEWHAT BETTER
THAN THE LARGER MARKET
Obligations by fiscal year, in billions of dollars
First year of possible
longer-term rebound
$70
2010
$67
2011
$65
2012
$60
$62
2013
2014
Note: Technology obligations are defined as the BGOV Markets “Technology Services” and “Technology Equipment”
Source: Bloomberg Government proprietary federal procurement database
COMPETITIVE SPENDING EXPERIENCED
THE ONLY INCREASE
Obligations by fiscal year, in billions of dollars
Not competitive
Competitive
$21
$19
$49
2010
$18
$47
2011
$17
$16
$44
$46
$47
2012
2013
Note: Technology obligations are defined as the BGOV Markets “Technology Services” and “Technology Equipment”
Source: Bloomberg Government proprietary federal procurement database
2014
DEFENSE AND CIVILIAN TECHNOLOGY
SPENDING ARE CONVERGING
Obligations by fiscal year, in billions of dollars
Defense
$46
$36
Civilian
$26
$24
2010
2011
2012
Source: Bloomberg Government proprietary federal procurement database
2013
2014
ARMY REDUCTION PUSHES DEFENSE LOWER;
WIDESPREAD INCREASE IN CIVILIAN SPENDING
Defense top spenders
Civilian top spenders
Obligations by fiscal year, in billions
Obligations by fiscal year, in billions
Navy
Army
Air Force
DISA
Other
HHS
$50
$50
$40
$40
$30
$30
$20
$20
$10
$10
$0
DHS
VA
Treasury
Other
$0
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
Note: DISA – Defense Information Systems Agency, HHS – Health and Human Services, DHS – Department of Homeland Security, VA – Veterans
Affairs
Source: Bloomberg Government proprietary federal procurement database
MULTIPLEAWARD
CONTRACTS
TOTAL MAC DOLLARS AND SHARE OF MARKET
INCREASING
About 42 percent of all federal IT
dollars flowed through MACs in FY13
Services account for the majority of
IT MAC dollars
Share of total IT MAC dollars, by fiscal year
IT MAC spending,
by fiscal year (in billions)
Share of total IT
contract spending
$30
60%
IT services
Hardware
Software
100%
90%
$25
50%
$20
40%
80%
70%
60%
$15
30%
50%
40%
$10
20%
$5
10%
30%
20%
10%
$0
0%
2006 2007 2008 2009 2010 2011 2012 2013
Source: Bloomberg Government proprietary federal procurement database
0%
2009
2010
2011
2012
2013
2014YTD
SPECIFIC CATEGORIES AND AGENCIES
DOMINATE MACS, OUTSIDE OF THE TOP TWO
Top 15 IT MACs by IT category in
fiscal 2013
Top 15 IT MACs by contracting
agency in fiscal 2013
Dollars in billions
Dollars in billions
IT services
$0
Hardware
$2
Software
$4
DOD
HHS
$6
$0
GSA Schedule 70
GSA Schedule 70
NASA SEWP IV
NASA SEWP IV
Army ITES-2S
Army ITES-2S
GSA Alliant
GSA Alliant
DHS EAGLE I
DHS EAGLE I
DISA ENCORE II
DISA ENCORE II
VA T4
VA T4
HHS ESD
HHS ESD
Air Force NETCENTS
Air Force NETCENTS
GSA Alliant SB
GSA Alliant SB
GSA 8(a) STARS II
GSA 8(a) STARS II
Navy SeaPort-e
Navy SeaPort-e
Army ITES-2H
Army ITES-2H
Treasury TIPSS-4
Treasury TIPSS-4
HHS CIO-SP2i
HHS CIO-SP2i
Source: Bloomberg Government proprietary federal procurement database
DHS
VA
$2
All other agencies
$4
$6
THE TOP AGENCIES ARE PRIMARILY
PROCURING SERVICES THROUGH NONSCHEDULE MACS
Army led all agencies in IT services
spending on MACs in fiscal 2013
Dollars in billions
Dollars in billions
IT services
$0
Top agencies procured IT primarily
through agency-specific MACs
$1
Hardware
$2
Non-schedule MACs
Software
$3
$0
$4
Army
Army
HHS
HHS
Navy
Navy
DHS
DHS
DISA
DISA
VA
VA
GSA
GSA
Air Force
Air Force
Treasury
Treasury
Justice
Justice
State
State
Interior
Interior
SSA
SSA
USSOC
USSOC
Commerce
Commerce
Source: Bloomberg Government proprietary federal procurement database
$1
Federal Supply Schedules
$2
$3
GWACs
$4
HOW
SMALL BUSINESS
IS FARING
MULTIPLE-AWARD CONTRACTS (MACS) HAVE
LED SMALL-BUSINESS BOOM
SB MAC obligations,
by fiscal year (in billions)
SB share of total MAC
spending
$45
45%
$30
30%
$15
$26
$30
$33
$37
$39
$40
$37
$39
15%
$0
0%
2007
2008
2009
2010
Source: Bloomberg Government proprietary federal procurement database
2011
2012
2013
2014
SET-ASIDES HAVE PLAYED A CRITICAL ROLE IN
ENSURING SMALL-BUSINESS SUCCESS
Share of small-business prime contract spending, FY 2007-FY 2014
Set-asides
43%
44%
48%
2007
2008
2009
No set-asides
53%
51%
52%
55%
58%
2010
2011
2012
2013
2014
Source: Small Business Administration and Bloomberg Government proprietary federal procurement database
SMALL-BUSINESSES HAVE FARED BETTER
THAN THE OVERALL MARKET IN RECENT YEARS
The small-business market has been
shrinking in dollar terms…
Percentage change in annual spending, by fiscal
year
SB prime contract spending
Obligations by fiscal year, in billions of dollars
$92
$83
…but the annual SB percentage
decline was less than that of the
overall market in FY 2012 and FY 2013
$97 $98
Small business
$91 $90
Overall market
15%
$83
$75 $78
10%
5%
0%
-5%
-10%
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013
2006 2007 2008 2009 2010 2011 2012 2013
Source: SBA and Bloomberg Government proprietary federal procurement database
TECHNOLOGY SERVICES AND EQUIPMENT HAVE
MORE THAN $20 BILLION IN 2014 SPENDING
Top 10 categories by SB contract
spending in fiscal 2014
Contract spending distribution of top
categories in fiscal 2014
Obligations in billions in FY 2014 (and percentage change from FY 2013)
Percentage of total contract spending, fiscal 2014
0%
$20 ▲10%
Knowledge-based services
$17 ▲14%
Facility-related services
Technology services
$12
Technology equipment
$7
Facilities supplies
Engines and power
Equipment-related services
Materials
71%
27%
73%
▲15%
33%
67%
34%
66%
37%
63%
▲11%
$6 ▲3%
Research and development
29%
▲11%
$9
Construction services
Small
business
than small
business
20%
40% Other60%
80%
100%
14%
$5 ▲8%
$3
▲1%
$2 ▲1%
$2 ▼ 39%
Source: Bloomberg Government proprietary federal procurement database
86%
47%
53%
15%
85%
13%
87%
63%
37%
TRENDS IN
INFORMATION
TECHNOLOGY
INFORMATION TECHNOLOGY MARKET
BECOMING A GOVERNMENT FOCUS
New
IT
Fixed-Price
IT supercategory has a preliminary
definition
outsourcing and consulting services
dominate the landscape
contracts continue their takeover
OUTSOURCING AND CONSULTING ARE THE
LARGEST SUBCATEGORIES WITHIN I.T.
IT obligations in billions, by fiscal year
2010
2011
$0
2012
$25
2013
$50
2014
$75
$100
$125
FY14 Percentage Number of
obligations
change, contracts,
(in billions) FY13-FY14
FY14
Top PSC
by sales,
FY14
IT Outsourcing
$24.68
▲5%
938
D399:
Other IT and Telecom
IT Consulting
$21.46
▼2%
718
R425:
Support Professional Engineering/Technical
Transport Services
$16.51
▲6%
696
D399:
Other IT and Telecom
Software
$17.23
▲9%
361
D399:
Other IT and Telecom
Hardware
$10.04
▼3%
500
5895: Miscellaneous
Communication
Equipment
Secure Identity Services
$1.52
▲73%
132
5810: Communications
Security Equipment
and Components
Notes: PSC – product service code. The following PSCs are included in multiple IT subcategories: D301: IT and Telecom - Facility Operation and Maintenance; D316: IT
and Telecom – Telecommunications Network Management; D318: IT and Telecom – Integrated Hardware/Software/Services Solutions; D321: IT and Telecom – Help Desk;
D399: IT and Telecom – Other IT and Telecom; J070: Maintenance/Repair/Rebuilding Equipment/ADP Equipment/Software/Supplies/Support Equipment.
Source: Bloomberg Government proprietary federal procurement database.
FIXED-PRICE CONTRACTS DOMINATE I.T.
PROCUREMENTS; T&M FALLING OUT OF FAVOR
Fixed-price orders on the rise
Contract type usage varies within
IT subcategories
Share of IT obligations, by fiscal year
Share of IT obligations, fiscal 2014
Fixed-price
Cost-based
T&M
Other
Fixed-price
Cost-based
0%
100%
90%
Hardware
80%
Software
70%
60%
Transport Services
50%
40%
IT Outsourcing
30%
Secure Identity Services
20%
10%
IT Consulting
0%
2010
2011
2012
2013
2014
T&M – Time and Materials
Source: Bloomberg Government proprietary federal procurement database
20%
T&M
40%
Other
60%
80% 100%
I.T. SPENDING HAS TRENDED AWAY FROM
NON-SCHEDULE MACS
Share of IT MAC obligations, by fiscal year
Non-schedule MACs
Schedule MACs
GWACs
100%
80%
60%
40%
20%
0%
2010
2011
2012
Source: Bloomberg Government proprietary federal procurement database
2013
2014
THE BOTTOM LINE
IT Budget
Spending
MACs
set to rebound in fiscal 2016
and competition are trending upward
are increasing their share of IT obligations
ABOUT THE PRESENTER
Jesse Holler is an IT quantitative analyst with Bloomberg
Government. Previously, he was a corporate finance and banking
analyst at Lockheed Martin. He focused on treasury matters ranging
from bank-assisted financing of large deals, to market and firm
analysis. Other previous roles included financial strategy, cost and
pricing. Jesse has a bachelor's degree in economics and political
science from the UCF.
jholler3@bloomberg.net
+1 202 416 3530
LinkedIn: Jesse Holler
@JesseHoller
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