Lower Budget Doesn’t Mean Less Opportunity at HHS

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

Last week, we talked about looking forward to FY15 and beginning to make some strategic decisions about sales targets at your agencies. Well, if you sell to HHS and you followed that advice, you may have noticed something a little concerning – namely, the department’s requested IT budget of $8.6 billion is significantly down from their FY14 enacted level of $9.6 billion. At first glance, it looks like the department may be getting squeezed in the aftermath of the Affordable Care Act rollout, and a lower budget almost always looks like bad news to industry. If HHS is a customer, you’re probably asking yourself how much the projected budget decrease will affect your total addressable market.

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Continuing Resolution On The Horizon for FY15

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

FY14 is quickly coming to a close, and vendors and customers are both scrambling to get the ball rolling on September deals. With all that’s slated to happen in the next few months, and some industry analysts predicting a record-setting Q4 this year, it can be tempting to write off FY15 until October in favor of focusing all your attention on last-minute FY14 sales opportunities. However, it’s always important to keep the big picture in mind. If you don’t spare some thought for the beginning of next fiscal year, especially what the overall appropriations situation looks like, you run the risk of getting left out – or at least failing to properly plan for the first half of the year, when you should be targeting enterprise sales opportunities.

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The $6B Health IT Market: Exploring Opportunities Beyond EHRs

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

Health IT in the federal government represents a $6 billion market.

Let that number sink in. It may seem high, but recent guidance from the Food and Drug Administration (FDA) and the Office of the National Coordinator for Health IT (ONC) indicate that “health IT” as a concept means much more than just EHRs. According to the report, there are three broad categories of health IT:

  • Administrative health IT functions: This includes billing and claims processing, practice and inventory management, and scheduling.
  • Health management IT functions: This category includes health information and data exchange, data capture and encounter documentation, electronic access to clinical results, clinical decision support, knowledge management, and patient identification.
  • Medical device health IT functions: Examples include computer aided detection/diagnostic software, radiation treatment planning, and robotic surgical planning and control software – in other words, devices actively used in medical treatments.

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IRS Security Weaknesses Mean COTS Opportunities

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

Tax day is tomorrow, but the IRS may have more to worry about than an explosion of last-minute returns: This Tuesday, Government Accountability Office (GAO) released a report identifying the agency’s internal control over financial reporting systems a “significant weakness.” This marks the second year running that the office has commented on material weaknesses in the IRS security posture, and while some progress has been made, there are still three critical areas where COTS vendors could help secure taxpayer data. Specifically, the GAO has called out weaknesses in:

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Every COTS Sale Cleared at the Very Top?

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

To many, department-level CIOs are a little bit like the Wizard of Oz – a man in a castle far away, making pronouncements from behind the curtain while the rest of us just keep our eyes on the yellow brick road. But what if every COTS sale had to be cleared at the very top? After some recent developments in the House, it just might happen. Remember the Federal IT Acquisition Reform Act (FITARA)? The bill just passed again on a voice vote last Tuesday. A companion measure, called the Federal Information Technology Savings, Accountability, and Transparency Act (FITSAT), is awaiting a hearing in the Senate.

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Congress Votes to Raise Debt Ceiling

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

The House passed a bill Tuesday to raise the debt ceiling, in a 221-201 vote marked by a distinct lack of the rancor that has accompanied similar legislation in the last two years. As of yesterday, the bill has also passed in the Senate, which eliminates any chance of default well in advance of the current debt ceiling (estimated to have been the end of this month).

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What to Know About the Omnibus Spending Bill

Christopher Wiedemann_headshot-65 x 85by Chris Wiedemann, Senior Analyst

The President signed an omnibus spending bill on Friday, January 17 – which means government will be dealing with all-new appropriations for the rest of FY14, instead of last year’s string of continuing resolutions. This is great news, since government now has fiscal certainty for the next 9 months and can finally start some of the projects that have been on hold, waiting for funding. That being said, here are some key points to know about the new appropriations bill:

  • This is a complete omnibus, which means that every government department has new appropriations this year.
  • Appropriations language is generally vague and almost never gets down to the IT level, so we don’t know how this bill will specifically affect IT spending. However, it’s a safe bet that most of our customers’ IT budgets will basically stay flat.
  • One exception to the point above is groups with a specific cyber security mission, which is receiving high priority in this bill. Keep in mind that more money doesn’t always mean more product purchases, especially on the DOD side – but still, we’re seeing growth in cyber spending when other areas are staying flat. Expect cyber-focused elements of DHS and DOJ, as well as USCYBERCOM at DOD, to receive increased funding in the rest of FY14.
  • Although we don’t yet know how agencies will divide their budgets between steady state (SS) and development, modernization, and enhancement (DME)  spending, recent trends suggest that SS levels will be slightly higher this year than last – and since IT top lines are mostly staying flat, government customers will have less DME funding than they did last year. However, because we have new appropriations, there will still likely be more new purchases this year – so get ready for a busy remainder of FY14.

You can also see an agency-by-agency breakdown of top-line funding levels below:

Agency FY14 Funding
Education $70.6B
Veterans Affairs $63.2B
Health and Human Services $62.5B
Homeland Security $39.3B
Justice $27.4B
Energy $26.5B
Agriculture $18.3B
Transportation $17.8B
NASA $17.6B
Treasury $13.02B
Social Security $11.7B
Commerce $8.2B
National Science Foundation $7.2B
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