Here’s a better way to procure public sector technology

The Department of Defense (DOD) requested $66 billion in IT spending for FY 2026, a $1.8 billion increase over 2025. The Navy alone asked for a 22.7% jump in AI funding. Across civilian agencies, IT contract spending was on pace to hit nearly $50 billion in a single quarter by the end of FY 2025, a record.

Public sector technology spending is accelerating at every level of government. Agencies are investing heavily in AI, cybersecurity, cloud modernization, and digital infrastructure. The FY 2026 IT budget breakdown shows $13.4 billion earmarked for AI and autonomy and $15.1 billion toward cybersecurity initiatives at the DOD, and $7.3 billion for IT at the Department of Veterans Affairs, with significant portions flowing toward cloud-hosted electronic health record modernization.

The demand is clear. The challenge is procurement.

Public sector organizations still face rigid purchasing requirements, constrained staffing, and budget pressures that make acquiring the right technology harder than it should be. Understanding how that process works, and where it creates friction, is the first step toward fixing it.

The procurement landscape has shifted

Last year, the city of St. Paul, Minnesota, suffered a ransomware attack that compromised HR files, financial records, and personal identification documents. Multiple local governments in Texas, Tennessee, and Indiana endured cyber incidents that disrupted payments, court operations, and internal access. A breach at Conduent, a major government services provider, exposed data for millions of people across multiple states.

While cybersecurity makes up a significant portion of government IT budgets, accounts for a significant portion of government IT budgets, CISA’s fiscal 2026 funding is set at $2.6 billion, roughly $300 million below its current annual budget, and the agency has CISA’s fiscal 2026 funding is set at $2.6 billion, roughly $300 million below its current annual budget, and the agency has reduced staff by approximately a third. Federal funding for the Multi-State Information Sharing and Analysis Center (MS-ISAC), which served as the central cybersecurity resource for state, local, territorial, and tribal governments, ended in September 2025. The State and Local Cybersecurity Grant Program received only a temporary extension through the end of FY 2026.

K-12 school districts face a particularly difficult moment. Tens of thousands of devices purchased with ESSER funding between 2020 and 2022 are reaching end-of-life simultaneously, and districts must now sustain 1:1 programs, cloud platforms, and cybersecurity without temporary federal dollars. Ransomware attacks against K-12 institutions surged 92% in 2024. Federal resources that once supported school cybersecurity, including programs run through the MS-ISAC and the Office of Educational Technology (OET), were discontinued in 2025.

New challenges have emerged, including AI

AI adds another layer of urgency. The FY 2026 National Defense Authorization Act (NDAA) now requires the DOD to establish AI and machine learning cybersecurity policies. It also prohibits DOD contractors from using certain foreign-developed AI tools and mandates a security framework developed in partnership with private industry. Commercial acquisition is becoming the statutory default rather than a policy preference, with Congress raising oversight thresholds and expanding pathways for commercial technology to enter defense procurement.

These pressures are real and growing. Agencies and institutions at every level are being asked to modernize faster, defend more aggressively, and adopt new technologies, all while operating with tighter budgets and fewer staff.

Why procurement remains the bottleneck

Public sector organizations can’t purchase technology the way private companies do.

State agencies, municipalities, school districts, and other government entities are required to follow formal procurement rules. That typically means issuing a request for proposal (RFP), evaluating bids, ensuring compliance with applicable regulations, and awarding a contract through a documented public process. A formal bid can take six months to a year. For large initiatives involving hardware, software, and services, the cycle stretches longer.

That timeline creates real consequences. Short-staffed IT teams must dedicate personnel to scope projects, vet vendors, and manage compliance documentation — while keeping existing systems running.

Budget constraints compound the problem. With deficits dominating conversations at state and local levels, technology leaders are under pressure to demonstrate value from every dollar. They often need to split purchases across multiple contracts and vendors, each with its own procurement cycle, compliance requirements, and pricing structure. A single classroom modernization project might require separate procurements for hardware, software, networking equipment, and audio-visual systems.

The result is a gap between what organizations need and how quickly they can get it.

Cooperative purchasing offers a faster path

Cooperative contracts exist to solve this problem. These contracts are competitively bid and publicly awarded by a lead public agency. With the competitive bid process already satisfied, you can purchase technology without repeating the full RFP process each time.

An agency that might otherwise spend months building a bid, evaluating vendors, and ensuring compliance can instead move forward immediately. The compliance framework is already in place, the pricing has already been negotiated, and the procurement is ready to execute.

Cooperative contracts also eliminate the need to split purchases across multiple vendors and vehicles. A school district building out a smart classroom, for example, can procure computer hardware, software licenses, networking equipment, and AV systems through a single contract rather than running parallel procurement processes for each category. A county expanding broadband to rural areas can scope the entire project under one vehicle.

This consolidation saves time and money beyond listed discounts, including hours that IT staff would have spent managing separate procurements. Of course, this assumes you’re working with a trusted partner that can take this burden off your hands.

How the right partner simplifies the process

That’s where SHI comes in.

We hold contracts across the broadest cooperative purchasing vehicles available to public sector organizations, including OMNIA Partners, NASPO ValuePoint, Sourcewell, Axia Cooperative, E&I Cooperative Services, Edge, PACE, TIPS, and GSA, along with additional federal procurement contracts. SHI’s vast product catalog is available through many of these vehicles, including OMNIA, Sourcewell, and AXIA.

Our public sector team works with you to identify:

• Where your infrastructure needs attention.
• Where you can save by consolidating or optimizing.
• How to align technology investments with the priorities that matter most.

For instance, agencies that know they need to adopt AI but aren’t sure where to start can engage our AI team for open-ended strategy conversations, with no specific project required. Organizations facing cybersecurity mandates can tap into our security expertise to assess gaps and scope solutions.

The savings extend well beyond contract pricing. The vendor vetting, project scoping support, and ability to put an entire modernization initiative on a single compliant contract represent real value that frees resources otherwise consumed by process.

Moving forward in a changing environment

Technology procurement in the public sector has always been complex. The rules that govern it reflect important principles of accountability, transparency, and responsible stewardship of public funds. Those principles aren’t going away, and they shouldn’t.

What has changed is the pace.

Federal budgets are accelerating toward AI and cybersecurity. State and local agencies are absorbing new responsibilities as federal support contracts. School districts are managing device refreshes, cloud migrations, and cybersecurity threats with smaller teams and tighter funding. Cooperative purchasing removes one of the biggest barriers to acting on those priorities.

The technology public sector organizations need is available. The procurement path to reach it should be equally efficient.

NEXT STEPS

Ready to simplify your next technology procurement? Contact us to learn how our cooperative contracts and public sector expertise can help your organization move faster.