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U.S. President's FY2020 Budget investments in IT Modernization

On March 11, 2019, U.S. President Trump issued a proposal to Congress for FY2020, requesting $87.8 billion for unclassified IT budget expenses. The topline figure denotes a modest decrease from the $88 billion federal agencies were expected to spend in 2019. The fiscal FY2020 budget reflects critical investments in technology modernization, especially for those in civilian agencies.

According to the senior administration official who had asked not to be identified, federal agencies are making significant investments, migrating existing applications into the cloud while building out new cloud services simultaneously. These investments are critical in their support of automation, robotics, artificial intelligence (AI), and natural language processing (NLP).

Civilian agencies become the most significant beneficiary

The FY2020 budget request marks $51 billion in IT funding to be directed to civilian agencies, an increase from the $45.8 billion spend requested from the White House in fiscal 2019.

The Department of Defense will be receiving $36.8 billion in unclassified IT funding. This represents a modest decrease from a fiscal 2019 spending of $37.9 billion. The request does not detail the proposed funding of classified IT spending for FY2020.

This funding spend is necessary in support of up-front investments expected to be made in emerging technologies, while in tandem, maintaining all legacy systems that are critical to agency operations and not categorized for fiscal 2020 upgrades or transformation.

Currently, the federal government agencies operate a number of IT systems that are more than 20 years old. The official stated that these systems would cost more in the long run to maintain than to transition them to new technologies.

Budget discrepancies lead to FY2020 IT total amount

There remains a multi-billion dollar delta between what civilian agencies had expected in last year's budget and what Congress enacted. Looking back at the fiscal 2019 request, the Trump administration requested $45.8 billion for fiscal 2019, a figure which was in line with the $45.6 billion civilian agencies were projected to spend in the fiscal 2018 IT budget.

The FY2020 IT budget request instead is showing civilian agencies have spent far closer to $49 billion in fiscal 2018 and are expected to surpass $50 billion in fiscal 2019.

One explanation regarding the FY2019 increase lies in the compromise that followed the month-long government shutdown back in December 2018 to January 2019. Although it was the intent of the president's administration office to increase spending in the departments of Defense and Homeland Security at the expense of civilian agencies' budgets across the board, lawmakers reached a compromise that gave guarantees for a sizable increase in civilian and Pentagon budgets in February 2019. Given a higher funding cap enacted at their disposal, agencies are spending more now on information technology.

These figures remain consistent with the surge specifically in contract IT spending that was reported in fiscal 2018, showing a combined $64.8 billion by civilian and Pentagon agencies, representing near a full 10 percent more than was spent in fiscal 2017. Provided the White House projection for fiscal 2020 holds, more contract spending is on the way for FY2020.

Final Thoughts

Over time, as the government 'unburdens' itself from legacy systems, the official noted that there might be opportunities not only to move a step forward but also to leapfrog a few of those steps by taking advantage of what's available in the private sector.

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