Federal wireless spending reached a five-year low in 2015 thanks to streamlined procurement policies, according to a new survey released last week.
“The market decline is determined by no one factor, agency or contract,” according to a new Govini report on Internet of Things and wireless devices. “Instead, the negative trend is being driven by government-wide efforts to streamline procurement of wireless devices and support services.”
The government spent $820 million on wireless devices last fiscal year, a 21-percent decrease from its peak of $992 million in fiscal year 2012, according to the report. From fiscal years 2013 to 2014, spending stayed basically flat, barely dipping from $893 million to $892 million.
Of all wireless spending, the Defense Department is the biggest buyer, accounting for more than half of all wireless spending, according to the study. The departments of Homeland Security, Treasury and Justice are the next biggest spenders.
The decrease may seem like a contradiction because federal Internet of Things spending was at an all-time-high last year at $8.8 billion, according to the report — a 20-percent increase from fiscal 2014’s $7.4 billion. Meanwhile, spending on sensors increased 56 percent in 2015, and cloud spending bumped up 48 percent.
Rather, the decline seems to stem from agencies beginning to focus on earning the most “bang for their buck” with efficient procurements, said Matt Hummer, director of analytics and professional services at Govini. He added that wireless procurements tend to be scattered, often leading to agencies overpaying for devices they might not even use.
Last month, for example, an Interior Department inspector general report found that the agency spent more than $600,000 on unused mobile devices.
Meanwhile, policies like the Federal Information Technology Acquisition Reform Act have made it harder for agencies to buy wireless products without specific plans and approvals justifying the purchases.
“Essentially, the government sees the wireless device market in a way as a commodity,” Hummer said of the report’s findings, which Govini built around a database containing thousands of wireless providers’ contracting data. “We should be buying in bulk and leveraging the government’s purchasing power.”
More recently, agencies have become better at understanding and managing contracts, especially since the hurting economy has forced them to make every penny count, said Dave Wennergren, senior vice president of technology at the Professional Services Council.
One of the biggest reasons for the trend is a push for “consolidating contracts to leverage buying power,” Wennergren said, which allows agencies to use a single contract for multiple agreements, securing bigger discounts or more favorable terms for them.
“There’s clearly been a push towards consolidated buying agreements,” he said. “So if that is done effectively, at the end of the day that would drive down total money spent…”
On the private side, not all wireless carriers have fared well to the changes, which have caused more competition. Sprint, once a top competitor, struggled to adapt and is now being “pushed out” by telecomm behemoths Verizon and AT&T, Hummer said.
The future of federal mobility, Hummer believes, lies in how the private and public sector overlap.
“The market is facing top-level pressure,” he said. “Verizon and AT&T are finding ways to survive at the expense of Sprint on the carrier side, but essentially those guys need to work with app developers and IT system integrators to bring IoT applications to federal agencies.”
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