What the Congressional Budget Deal Means for IT Business

NEWS ANALYSIS: Sequestration hasn’t gone away, but the caps have been raised enough that it may not matter this year.

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If there’s good news in Washington, it’s that the leadership of the U.S. Senate found a way to agree on a budget after months of dysfunction and posturing. Despite broad support in the Senate, the bill found the going unusually difficult, mostly due to attempts by individual members of Congress to burnish their egos. However, the bill did pass and was signed into law by the president in the early morning hours of Feb. 9.

It’s worth noting that what passed the Congress is not an appropriations bill, which is where specific amounts of the budget are allocated for specific departments and agencies. This means that for now what we have is a short-term spending bill and a rise in the current spending caps. The new spending limits raise discretionary non-defense spending by about $128 billion and defense spending by about $160 billion.

Congress has until March 23, 2018, to come up with an appropriations bill. However, agencies now have a green light to resume normal operations without the uncertainty of continuing resolutions and impending shutdowns every few weeks. It also means that agencies have enough time to start planning procurements for item such as IT infrastructure that have been on hold, sometimes for years.

Agencies Can't Yet Plan on What to Buy

But for the time being, all they can do is plan. Until Congress appropriates the funding for any spending beyond routine operations, agencies can’t actually do much buying. So while a government office might be able to buy a few laptops off the General Services Administration schedule (a list of pre-negotiated prices for products and services provided by the GSA), major spending programs are still on hold.

What you can expect to see are the beginnings of the procurement process. Companies that provide products to the government or that offer services of some kind will begin seeing requests for proposals. Once the appropriations are voted on in Congress, spending can begin.

But not all of the spending is going to be direct federal spending. For example, some industries with long lead times, such as aerospace hardware vendors, will start gearing up to meet the demand that they know is coming. Others, such as professional services companies, will begin recruiting so that they’re in a position to respond to those RFPs. And of course there will be activity that is spurred by the anticipatory activity.

This will have a series of impacts on IT departments, whether they’re in areas directly affected by government spending or not. Probably the most important is that hiring will increase in general, and that will mean wages will rise. While a hiring freeze is technically still in effect in the Executive Branch, there’s a growing level of urgency about ending it, if only because the federal government is having labor shortages in critical areas.

New Budget Likely Means More Hiring, Higher Pay

This general level of hiring will mean that employees are going to have greater opportunities, and that will mean managers have to start planning on being able to compete in wages if they plan to retain them.

The growing activity will also mean an increase in IT activity to support those who are supporting the increase in government activity. More computers and network infrastructure products will sell, and so will the services to support them.

In general, the budget deal will be good for business, but exactly how good will depend on a lot of factors. For example, the increased demand for IT products could mean that prices will drift upward for the products you need to buy for your own operations. Increased hiring will likely mean that you’ll have to pay more for labor.

But it also means that in some areas of the country, notably those with a large federal presence, the economy will show a strong improvement. Your company may not be at all involved with selling to the government, but the economic activity in your region may still impact your business.

Mid-Term Elections May Play a Role in IT Purchase Planning

Still, there are some important things to remember. This is a two-year budget deal, but during that period are the mid-term elections. Depending on how the elections go, they could be followed by another period of uncertainty, which would basically undo the promise of stability that came with the current budget deal.

What this means is that you’ll need to plan your IT spending based on something other than perpetual money from Washington. While today’s RFPs may generate contracts and revenue, that can change with the stroke of a pen or an immoderate tweet.

In the meantime, your proposal teams will want to be ready to start as quickly as possible when the RFPs hit the street. A two-year period of time is the blink of an eye when it comes to federal programs, so if you want to participate in the opportunity an actual budget promises, you need to be ready.

And yes, I’ve had those weeks of sleepless nights required to draft a winning proposal, and I know the demands it puts on the IT staff to support that. But think of the rewards: If your proposal wins, you’ll have more weeks of sleepless nights defending it against challenges. Oh, and you might actually finally get to deliver what you proposed, which is the good part that eventually comes out of the budget deal. 

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...