At the state level, there’s been at least a partial sigh of relief over the stimulus package (no…not THAT stimulus package). But now comes the knife–President Obama says he’s going to cut the deficit in half by the end of his term with a combination of tax increases (well, non-renewed tax cuts to wealthier Americans) and budget cuts. The biggest piece of the reduction is predicted to be the savings from the draw-down of troops in Iraq and the resulting reduction in GWOT (that’s Global War On Terror) outlays.

But there’s sure to be some serious slashes elsewhere. Considering the ongoing (and expanding) cost of Afghanistan, and that the Defense budget itself is going to be fairly static for at least the next 2 fiscal years aside from GWOT dollars, there’s going to have to be cutting elsewhere.

Arguably, that could be *good* for government IT spending, because improvements in efficiency through new technology will be key to getting the deficit down in a down economy. But the question is, where to start?

There’s a quick and dirty answer to that: procurement reform. The current approach to developing and purchasing just about anything, but particularly technology, is slow, odious and inefficient.

It’s not that the regulations prevent the government from buying things intelligently– as Charlie Croom said last year in an interview I did with him, “There’s nothing in the FAR that says you have to be stupid.” But there has to be a fundamental change in the culture of development and acquisition–there has to be incentive for reducing scope, investing in real technology standards (de facto, not arbitrary), and increasing flexibility for vendors in solving problems.

A study published by Steve O’Keefe’s Meritalk, Red Hat and DLT suggests that there are billions to be saved in a shift to the latest crop of de-facto standard technologies:

Over three years, the potential savings would be US$3.7 billion for using open-source software; $13.3 billion for using virtualization technologies; and $6.6 billion from cloud computing or software-as-a-service, the study said.

While it’s a vendor study–and a study sponsored by vendors who stand to make money over a shift to open standards and the like–there’s still plenty to chew on there. Sure, there are regulatory hurdles to leap to use some of these technologies, but the main barrier to adopting these approaches is cultural.