The Federal Budget can continues to be kicked down the road with continuing resolutions (CRs) and we know technology spending is one area that will be under the Trump administration microscope. The two guys leading DOGE (Elon and Vivek) are both tech company people, so Big 47 will be looking to them for leadership and ideas on what to cut, but more so, what to invest in. Here’s the outlook through my AI-colored RayBans.
Federal Budget Priorities to Expect
Government Efficiency
It’s in the name, so any reasonable person can see that efficiency will be the coin of the realm. As taxpayers, we want to believe that it always has been. I’ve had enough beer chats with those in and around government to know that isn’t always a controlling principle. When it comes to technology spending, that starts with acquisitions. There are companies whose primary value proposition is to review your current intellectual property (IP) assets and tell you where you are overspending. Many Federal agencies have duplicative, unused legacy software licenses and hardware that are steady burns, if not wildfires, on government cash. These companies may see opportunities.
There are other agencies that are using outdated computers and software that significantly lowers productive output and often presents security risks to internal systems through lack of supported updates and patches. This scenario is the opposite side of the coin. Both will be difficult to manage and smoke out, but services and technologies offering value here should become more visible in Federal requests for proposal (RFP).
Process Automation
Team Trump will be looking to reduce headcount. We talked about that in part 1 of this Federal budget vision. But the work ain’t going anywhere because stuff still needs to get done. That means a potential technology spending boon for technologies engaged in automated workflow, robotic process automation (RPA), self-service reporting and the like and services that promote these activities. These are becoming less expensive and are very powerful and scalable. One of my FedTrax clients is a small business whose entire existence centers around exploiting Microsoft 365 technologies that the government already licenses and rarely uses. Their phones are ringing more these days for Federal work, because using existing platforms provides a smoother glidepath to gain Federal authority to operate (ATO) as well.
Doing It Right the First Time
The US government does not have the proudest history of getting things right out of the gate. Moon landing aside, take a look at more recent debacles like healthcare.gov. Federal budget overruns happen all the time and are typically buried in operational spending or block technology spending that may be much more valuable. There should be a premium placed on effective testing and validation before launch of new technologies, because doing it right up front costs much less than rework later.
For example, another FedTrax client specializes in network testing—network emulation, traffic generation, cyber testing. Government networks are abundant and growing, from enterprise networks for agencies like DISA (the DoDIN) to mobile tactical networks to space. Preventative capabilities like this should thrive in Trump land, which is counter-intuitive to how the government usually works. Testing, training and research and development have historically been the first Federal budget areas to see the axe.
Technologies that Benefit in the New Federal Budget
Cybersecurity
Look, there have simply been too many public embarrassments centered around breaches for the Feds to continue to shirk on cybersecurity. President Biden’s Executive Order 14028 from 2021 provided tiered requirements for responding to cybersecurity incidents. Don’t expect Team Trump to revoke that one considering the technology dudes he has whispering in his ear. However, there will be a push to continually improve cybersecurity with less and less human involvement, consistent with the theme of headcount reduction. However, it will be some time before cybersecurity experts fall out of favor in the Federal budget.
Artificial Intelligence
Folks, no one knows exactly how technology spending will continue to evolve in this area, but this toothpaste ain’t going back in the tube. When you look at the reduction of manpower that won’t be achieved via attrition, AI is the number one replacement technology that, correctly, scares the death out of employees that push a lot of paper around, particularly generative AI that will further help automate activities like document generation. Generative AI is already being used in the creation of your favorite government RFPs and the company responses to them. This is redundant, but Trump’s top advisors here are AI guys. Elon Musk is a co-founder of OpenAI (Chat GPT). This is the lens he sees the planet through.
Mission Essential Capabilities
During the COVID-19 shutdowns, one thing that annoyed me and perhaps you was the governmental determination of what was essential. Doc and nurses were, book store owners weren’t. Pot and liquor stores—essential. Churches, not so much. Yet these same distinctions are very low-hanging fruit for the DOGE picking machine. This applies to entire Federal offices that comprise budget space and to grants and contracts. I mentioned this last time. Sex-change habits of tsetse flies will not be seen as important, but border wall technology will. Tech companies, make sure your program is tied to a mission considered important to the new administration.
Contracting
You can write a whole series of articles on Federal contracts, and I am no expert, but one thing you can expect will be a focus on creativity here that is fair to contractors but that doesn’t allow runaway spending. Cost plus contracts may be fewer and farther between. Think of money flowing toward those that meet goals. Just today I was speaking with the Office of Federal Student Aid (FSA) and to my surprise was informed they are a Performance-Based Organization (PBO). Some of my FedTrax clients are already hearing optimism from some of the agencies they work for that see this as food not only for Federal budget survival, but for potential growth. Others are terrified of this approach.
If this seems contradictory to my last post, it possibly is. The caveat here is this: the administration must see the agency’s mission as something the government should be involved in. You don’t want to be a top performer in a dying agency, or the contractor that supports them.