Headlines are filled with news of federal budget cuts and procurement reform through DOGE. State and local governments must answer difficult questions about how best to allocate limited resources. However, while grant-funded state budgets may shrink, now is the ideal time to invest in IT systems that promote efficiency and transparency. Project Portfolio Management (PPM) tools are the way forward.
Here’s what’s changing, why it matters, and what agencies need to do right now.
What Changed in Governments’ Approach to IT Procurement
Federal and state governments are dramatically changing the way they think about IT procurement, as evidenced by several recent initiatives. In April, Executive Order 14240 called for eliminating waste by consolidating federal common goods procurement under GSA, now authorized to act as the executive agent for all government-wide acquisition contracts (GWACs) related to information technology. This encompasses contracts previously managed by other agencies, such as NASA’s SEWP and NIH’s CIO-SP programs. The GSA’s “OneGov” strategy pushes for single, government-wide pricing structures instead of agency-specific deals.
Meanwhile, the Federal CIO has been issuing increasingly detailed software inventory requests. These formal documents, used to gather and review information about the software currently in use within an organization, include new criteria such as business justification, scalability, and mission-criticality, along with typical fields like “number of seats.”
These are not signals of a market in retreat. They are signs of a federal government aligning its purchasing behavior with a renewed emphasis on enterprise value, operational efficiency, and measurable outcomes. The message is clear: Do more, and prove it.
The Double Bind for State and Local Governments
This pressure is cascading to state and local levels. The federal government remains a material source of funding for state operations, with federal grants representing nearly 30% of state revenue as of 2022. However, CMS rules tightly restrict how much of that money can be used for general IT. Unless an IT purchase directly supports a program like Medicaid—for example, an eligibility system or a claims processing tool—those systems must be paid for with state general funds. The result: When grant dollars are pulled back or reprioritized, the cut comes from personnel, project resources, and therefore number of projects. They don’t come from an agency’s operational IT stack, which is largely funded by state and local tax revenue.
That creates a paradox. You can’t hire more people; in fact, you might be losing some. But what if many of your projects started before the current administration and are well underway? How do you reconcile the two realities? By investing in tools that make your existing team more effective, more transparent, and better aligned with mission outcomes. That’s where PPM comes in.
How Can PPM Software Help Government Agencies Achieve Strategic Goals
Project portfolio management software does more than manage timelines and task lists. It helps agencies strategically align initiatives to mission goals, assess the impact of funding shortfalls, justify additional hiring, and reallocate resources dynamically to meet emerging needs. In environments where hiring freezes or personnel cuts are the norm, a robust PPM solution allows you to do more with the staff you already have—by giving them a shared playbook, surfacing risks earlier, and tying project outcomes back to budget and policy commitments.
You might see RFP cancellations or grant program rescissions as evidence that governments are pulling back on IT. But this pattern isn’t new, nor is it a sign of disinterest in modernization. After years of legal wrangling, the Department of Defense has canceled its cloud-computing contract with Microsoft that could have been worth $10 billion….”With the shifting technology environment, it has become clear that the JEDI Cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD’s capability gaps,” a DoD spokesperson said in a statement. In 2020, USDA pulled back an RFP for an AI-enabled grant processing tool because priorities shifted toward pandemic response. These aren’t rejections of technology; they’re course corrections based on alignment and execution.
Meanwhile, actual spending tells a different story. As of today, the Department of Veterans Affairs is spending roughly 17% more than it did in 2024. And while the State Department’s budget is slightly lower this year, it is still expected to spend $1.48B across six key initiatives that make up 39% of their overall budget, projects that indicate infrastructure and operational improvements continue to be critical priorities.
And the momentum isn’t just in dollars. The April 15 Executive Order, “Restoring Common Sense to Federal Procurement,” mandates a top-to-bottom rewrite of the FAR to streamline acquisitions and prioritize commercial, cost-effective, and interoperable solutions. DOGE has made modernization a cornerstone of its mandate, pushing agencies to adopt COTS (commercial off-the-shelf) software over bespoke systems. The logic is clear: Governments want technology that works out of the box, is easy to scale and procure, and delivers real outcomes.
So, what does this mean for a CIO or PMO leader in state or local government?
You’re being asked to do more with fewer people. You must show the value of your work in real-time. You need to ensure every project ties directly to your public mission. How do you balance these competing priorities?
The answer is clear: Now is the time to invest in PPM.
A purpose-built PPM platform like Prism PPM isn’t just an operational tool. It’s a strategic enabler. With it, agencies can:
- Justify project selection and scoping based on strategic value and funding constraints.
- Monitor cross-project dependencies, risks, and impact in one system of record.
- Provide visibility to DOGE regarding federal funding sources as well as tax constituents.
- Adapt quickly to policy changes or resource cuts without losing control of outcomes.
Perhaps most importantly in today’s environment, it gives you the ability to tie IT back to mission performance. The takeaway is simple: Cuts are coming, but they’re not necessarily coming in the places people assume they will. The grant money may ebb, but the work won’t. State and local governments don’t want to find themselves underwater. It’s imperative to invest in the systems that will keep them afloat.
PPM is not a luxury. It’s a necessity. The governments that act now won’t just survive the cuts. They’ll come out ahead.
Whether you’re a public agency or organization looking to optimize your project delivery or a PMO with government contracts, look at Prism PPM for a solution to your need to balance resources with project demand. Book time with us to find out more.