Biden’s budget promise … and danger
The numbers are huge, but the industry should hold back on the celebration
President Biden’s full budget proposal for fiscal year 2022 has come out, followed by some additional details on the so-called “thin budget” that was submitted in April. And, as usual, there is great excitement – and the occasional desperation – in the state client community.
Let’s stop for a minute and look at three things: What do we know? What can we expect from both the past and the current situation? And what should the private sector be doing over the next 4+ months to prepare for the next fiscal year?
Washington Technology and Federal Computer Week have already done well-done, comprehensive summaries of the budget request and covered the high grades – a 16% increase in discretionary spending, a modest 1.7% increase for the Department of Defense, significant investments in infrastructure, IT Modernization, cybersecurity, citizen services and a focus on innovation and new emerging technologies.
Additional funds for IT are embedded in the financing of state and local administrations as well as infrastructure initiatives. The president’s budget does not include funding for the judiciary and court systems, independent agencies such as the Federal Reserve or the US Postal Service, or certain segments of national intelligence that could be expected to see similar positive growth in these areas.
So, if you add up the president’s budget and add 15 billion to $ 20 billion, you would have an educated estimate of the expected total IT spending in fiscal 2022.
But is that all? As the old saying goes, “The President proposes and Congress decides”. And while changes can be expected in Congress’ review of this request, Hill has often approved more IT funding over the past few decades than the president asked for.
The known strangers
That White House request comes late, even for the first term of a new administration. In the budget hearings held so far, only department secretaries have been represented and were based on the April budget. There will likely not be much time to hold additional hearings with the heads of the agencies, and even if they did, there are still few as the administration is top-down and the verification process is slow.
Many details have to be negotiated and supplemented by the staff of the Budget Committee. Given the delay in the budgetary process and the other issues before Congress, a continuation of the resolution appears likely. I’m not going out too much here, because the last time the government started a new financial year with full approval on October 1 was the 1996 financial year, a good 25 years ago.
Few expect the near-flat DoD budget proposal to go unchanged through Congress. We will hear of an aging fleet, instability in the Middle East, Putin’s Russia, an expansive and aggressive China, and so on. The defense budget will surely increase. And while civil authorities will do better than the previous administration, growth is unlikely to be as ambitious as the White House has called for. And there are additional complications.
The country will hit the existing debt ceiling on August 1st. So expect a summer revival of the U.S. Treasury Department, which is taking extraordinary measures to avoid a U.S. national default, a Republican party rediscovering deficit concerns, and all of those concerns mingling with the fate of the budget bills for the FY 2022.
Finally, a number of agencies and programs will sit on non-binding balances from Biden’s stimulus package. Hill employees tend to be skeptical about spending more money on a program that hasn’t spent previously appropriated dollars. There may be good reasons, a solid rationale for this situation. But with deficit concerns, DoD needs, new emergencies (e.g. another active hurricane season), for example, it will be difficult to justify putting more money into the technology modernization fund when the TMF has a sizeable vault of uncommitted funds.
The unknown unknowns
It’s an ambitious budget proposal – nearly $ 6 trillion. It’s an ambitious president’s management agenda that includes not just the usual suspects, but also new emerging technologies, green initiatives, social justice issues, opportunities for small and disadvantaged businesses, and time and again – INNOVATION. So let me close with a few questions and concerns.
The Obama-Biden administration seemed to feel (or perhaps wrongly accused) that in order to find innovation it had to go outside the bypass. It had to come out of the usual circle of government contractors, system integrators, and service providers. It had to go to Silicon Valley and press the federal government’s thirsty lips on the source of innovative startups that had never tried to compete for government contracts.
Has that mindset changed? Many alumni of this Obama administration have returned to the Biden-Harris administration. Have they returned with a new understanding and appreciation of government and the industries that support them? Or do you still think that innovation can only be found elsewhere?
Which companies are ready to implement new and emerging technologies and green initiatives? Everyone who’s been in or near the government has seen the cycle, depending on the challenge or focus of the time – Y2K correction, e-government, homeland security, authentication, cybersecurity, etc. Suddenly every company is a -the-blank) Companies. Who is it really and who just claims to be?
It’s best to start now by developing an in-depth performance record.
Almost every administration pays lip service to the importance of small businesses. Some even went so far as to give passionate lip service. This government’s commitment is real.
Companies should therefore take a look at who they have worked with and revisit and update this team. Those companies that go to market through channel partners should do the same. This can be coupled with the above to attract new partners with new technologies and skills. But this is no time to “round up the usual suspects”.
Finally, how can this administration “get big” with the team that will initially put it on the field. Both sides of the government have pursued the quest for a smaller government ever since Ronald Reagan uttered the phrase “government is not the solution to our problems, government is the problem”. Bill Clinton followed suit. And since then, we have privatized, outsourced and subcontracted the provision of government services that have long been provided by public sector workers.
No wonder that the private companies and associations they represent are announcing the Biden IT and cyber initiatives – more work for contractors.
So while the budget provides for workforce rebuilding and new human resource practices, we will find the human resources, procurement, IT, budget, and finance and program administrators in the government to take us there. After spending so many years slashing, minimizing, and lately denigrating government and civil service, we may find that they can’t work properly when we really need them.