Q4: The Federal Fiscal Year End Countdown

You read that title correctly; here we are near the end of another federal fiscal year. If you’re thinking it feels like Congress just passed the fiscal year 2024 (FY24) budget, you’re correct. Half of FY24 was spent in a state of continuing resolutions, with the passage of a final budget a whopping six months into the year, in March 2024. Federal agencies have had effectively half the time they would be allotted in an ideal fiscal year timeframe to spend less, the same, or in some cases more money. September alone is often thought of as two months’ worth of spending in one, meaning some agencies will rush to that end of year deadline with anywhere from 30% to 50% of their budget left to spend in three short months. We’ll take a look at a sampling of agencies who historically allocate the bulk of their spending in quarter four (Q4), and what technologies they’re seeking as we approach September 30.

Fiscal Year End Best Bet Targets

The Department of Defense (DoD)

The DoD’s funding in FY24 topped nearly $825 billion. This was just over three percent higher than the FY23 level. Priorities across the DoD this fiscal year have included the continued push to a Zero Trust Architecture (ZTA), the upcoming implementation of CMMC 2.0, and enhancing a greater overall security posture to deter threats from both Russia and China. New applications of artificial intelligence, quantum science, autonomous weapons designs, and biotechnology caught both interest from officials and traction in funding. We also saw a greater push toward the realization of the Joint All-Domain Command and Control (JADC2) initiative, with $343 million allocated toward it in FY24 alone.  If you offer IT products and services in any of those listed technologies, especially cybersecurity and AI-related needs, tailor your conversations with program and contracting officials to those priorities as we head toward the end of the year.

Social Security Administration (SSA)

The Social Security Administration tends to spend nearly 50% of its budget in the last quarter of the year, based on data from previous year-over-year (YoY) comparisons of fiscal years 2021 through 2023. For FY24, SSA is prioritizing virtual services and will be continuing to accelerate steps to more modern systems. This includes continuing to implement their Technology Modernization Plan, focused on optimizing operational efficiency, improving automation, and increasing productivity. IT companies that specialize in customer experience and digital services will find opportunity particularly with the Office of Systems within the SSA.

Additional spending, especially toward the end of the year, will be directed toward keeping data centers, computer networks, and phone systems operational and up to date nation-wide.

Department of Homeland Security (DHS)

DHS is always a great target to have on your radar in the IT space, as both cybersecurity and cloud needs rank highly among the agency’s priorities for FY24. Of particular note is the Cybersecurity and Infrastructure Security Agency (CISA)’s strategic plan through 2026 to double-down on addressing cyber threats, adopting more robust and resilient security practices. It is calling on IT companies to provide products with security needs baked-in to the full lifecycle of a product, as well as the onus for responsibility to firms on the effectiveness of solutions. And as we see more and more agencies utilizing interoperable systems, pre-existing security across software platforms will be non-negotiable.

DHS also received a bump in funding in FY24 to tackle issues associated with climate change. While that might not strike you initially for information technology concerns, it does present an opportunity to approach the department for those end of year funds for network infrastructure, data and connectivity needs for areas affected by weather-related issues.

Department of Health and Human Services (HHS)

Data, and the ability to make actionable use of it, has been the name of the game for HHS and its agencies in FY24. The agency developed a draft Federal Health IT Strategic Plan in 2024, targeting several IT objectives through 2030. The top of the list includes improving access to, and making effective decisions, utilizing data technologies and AI/ML. They are also looking to advance the access, use and exchange of health information, including the continued need for highly effective cybersecurity tools and practices. In the final months of FY24, IT companies would be wise to approach officials with solutions targeting health data migration, security, and modeling needs as the IT Strategic Plan begins to take shape.

Big Picture Q4 Spending

In addition to the department callouts, several overarching themes for companies to keep in mind as we round out FY24 across any agency of interest include the continued integration and application of AI, initial implementation of zero trust practices by the end of this fiscal year, the ever-growing role of data analytics needs, an uptick in cloud spending and deployment across nearly every federal agency, and the increasingly important role of improving customer experience across government platforms. All of these areas of priority will see money allocated both at the end of this fiscal year and for years to come, as federal agencies work to modernize and move both their systems and people to a better technology posture.

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About the Author: Susanna Patten is a senior manager on the TD SYNNEX Public Sector Market Insights team covering tech trends across the Public Sector. Susanna has over 13 years of experience in public sector IT procurement. Her responsibilities at TD SYNNEX Public Sector include driving market intelligence asset production, ensuring the quality and relevance of deliverables from the Market Insights team, and aligning these insights with sales opportunities.