The federal government’s IT equipment isn’t aging cheaply.
A handful of U.S. agency systems have reached the 50-plus age bracket, according to 2016 data from the U.S. Government Accountability Office. And the country doles out more than 75 percent of its more than $80 billion information technology budget on operation and maintenance of legacy systems, the GAO said.
Enter President Donald Trump. His solution: start from scratch.
“The cost of maintaining our computers is a number that is so high that it's not even a believable number. Now, I've heard anywhere--is this possible?--from $39 billion to $89 billion a year. Is that even possible?” Trump asked a group of executives during a policy forum April 11.
"I think we can buy a whole new system for less money than that, wouldn't you say?" Trump said
Trump singled out International Business Machines Corp. CEO Ginni Rometty across the room, offering to pay her $10 billion on the spot for new equipment.
It’s unclear whether that was a formal offer from Trump. But his comments cast light on growing concerns shared by some lawmakers and agencies that outdated, costly federal IT systems are a risk to government security and operations.
The fix isn’t as simple as a massive buy of new desktop computers, federal analysts say. The complexity of IT systems and the sheer logistics of transferring operations to new platforms without a shutdown of government services would take a gradual, multi-billion dollar investment, Laura Criste, federal market analyst with Bloomberg LP, told Bloomberg BNA.
funding for IT updates is likely to resurface this year after several bills stalled
in the last Congressional session. But it’s uncertain whether Congress is
willing to fund the updates.
“The appetite in Congress for a multi-billion dollar investment is unclear," Criste told Bloomberg BNA.
Last fiscal year, the government spent $18.3 billion on IT hardware alone, as defined by the U.S. General Services Administration’s (GSA) category management IT definition, according to Bloomberg Government data. That’s a 6 percent increase from fiscal year 2015. Total prime, unclassified contract spending on IT hardware and services totaled $56.3 billion in fiscal year 2016, according to the data.
The top IT hardware government contract winners over the past five fiscal years include General Dynamics Corp., Harris Corp., Dell Inc., CDW Corp./DE and Lockheed Martin Corp., according to Bloomberg Government data.
IBM registered as the thirteenth highest hardware
contract winner by revenues, although this data doesn’t include government
contracts with IBM product resellers. Big Blue received $1.2 billion in U.S.
government contract orders in 2016, representing 1.5 percent of the company’s
revenue, according to Bloomberg data.
Still, almost three quarters of IBM's IT contract obligations with the U.S. government are for services like cloud computing and analytics, and therefore are not included in the hardware data, Criste said. This means the company is still poised to benefit from a large-scale push to modernize federal IT, she said.
--With assistance from Paul Murphy
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