Editor’s note: Geoff Woollacott is Senior Strategy Consultant & Principal Analyst and Joey Cresta, Public Sector Analyst at Technology Business Research. This is the second of three parts.

HAMPTON, N.H. – President-elect Donald Trump’s calls on the campaign trail to increase the size of the U.S. Army and Marine Corps instilled confidence that his policies would benefit defense contractors, although those most likely to benefit appear to be the large aerospace and defense vendors with significant platform businesses, such as Lockheed Martin and Northrop Grumman. There has been less certainty around how his policies would impact federal IT vendors, as technology was not among his top priorities during the campaign.

However, the appointment of Michael Dougherty to Trump’s transition team indicates technology advocates will have the president-elect’s ear and likely help to shape policy that benefits IT services contractors. Dougherty, who will have responsibility over transitioning the Department of Homeland Security (DHS), is CEO of the Secure Identity and Biometrics Association, where he raises awareness of security identity technologies and biometric solutions that secure and improve travel, borders, healthcare, law enforcement, commercial transactions and emergency situation management. Member organizations range from Unisys to General Dynamics Mission Systems to Leidos, all vendors likely to benefit as Trump latches onto next-generation technologies that support his vision of a more secure United States.

Additionally, Trump’s hawkish stance on national security and border protection will benefit vendors that do substantial business with the DHS, such as CSRA. Notably, CSRA’s chief biometrics technologist, Cathy Tilton, works with DHS program managers on biometrics-related programs, leading TBR to believe CSRA is poised to benefit from the Dougherty appointment.

Trump vs. Silicon Valley?

The companies most threatened by a Trump presidency in the federal IT space are the disruptive Silicon Valley entities that President Obama courted heavily and that largely supported a potential Clinton presidency. Given that support for Clinton and Trump’s past criticisms of Apple for its reluctance to help the FBI unlock the iPhones of the San Bernardino, Calif., shooters, it is possible Trump may pull back on the federal government’s drive to partner more with Silicon Valley, ultimately helping more traditional IT vendors, such as Hewlett Packard Enterprise and IBM.

Trump’s team recently announced plans to avoid a government shutdown by extending the current continuing resolution (CR) through March 31, 2017, with no new spending included. While this is a bit longer than federal contractors would prefer, companies now build an expectation for a CR into their annual strategic planning, and we do not expect a CR through March to have a significant impact on companies’ performances. However, should the CR extend further, it would begin to negatively impact companies’ backlogs. While FY17 revenue and earnings would not likely be impacted as a large portion of backlogs are already funded from prior fiscal years, this would ultimately lead to growth headwinds in the longer term, especially for vendors that rely more heavily on shortcycle IT programs.

Next: Transforming education and tech policies through ‘the art of the deal’

(C) TBR