IT projects take a hit on funding

Some say technology is targeted as war, other priorities draw away funds

Office of Personnel Management officials were stunned when the funding for the massive Retirement Systems Modernization project went missing from the House appropriations bill sent to the Senate last month.

OPM director Linda Springer quickly sent a note to the House Appropriations Committee after the Subcommittee on Transportation, Treasury and Housing and Urban Development, the Judiciary and the District of Columbia passed its fiscal 2007 bill of the same name'HR 5576'without the $26.7 million requested for RSM.

Springer was vexed that Congress would consider leaving out funding for a system that could revolutionize how her agency provides retirement and benefits support for government workers, especially considering that OPM recently awarded two contracts for the 10-year, over $300 million project.

'This commitment to technology, as well as to current and future federal employees, will be halted without adequate funding in fiscal year 2007'a critical measure of support for the modernization project, which is scheduled to be completed in fiscal year 2009,' she wrote.

Springer's assertion did not sway the full committee or the House.

Although most Hill observers expect the Senate to restore the funding when they take up the bill this summer, Congress' willingness to consider gutting a program considered essential for government employees has some industry and government officials wondering if lawmakers are targeting civilian IT projects for cuts because of the ongoing effort to fund the War on Terror.

Besides OPM, other agencies'including the Army and the Homeland Security and the Agriculture departments'have seen funding scaled back for IT programs perceived as nonessential, industry observers said. This is despite the fact that, overall, most agencies will see an increase, if a small one, over 2006 levels'and in most cases, more funding that the administration requested.

'No' and 'no'

'From inside some of the agencies, I am hearing that the directions they are receiving during the budget development process [are], 'No new projects, no additional funds,' and that some projects are either being scaled back significantly or being put on hold altogether,' said Alan Webber, senior analyst at Forrester Research Inc. of Cambridge, Mass.

Tightened budgets during a war are nothing new; many government initiatives lose steam as war efforts consume more funds. Spending for both world wars was so dramatic that it even changed how civilians spent their money, and President Lyndon Johnson was unsuccessful in his attempts to fund both the Vietnam War and the War on Poverty at the same time.

According to some industry officials, the War on Terror is no different, and IT projects in particular are feeling the pinch.

'To a certain extent, this is typical,' said Stan Collender, managing director for Qorvis Communications of Washington and a federal-budget expert. 'When [appropriators] are looking for something to cut, IT is always in play.'

That's because lawmakers have a hard time touting the success stories about IT projects when they head home to their congressional districts, Collender said.

'The problem with IT is that constituents can't see it,' he said. 'You only notice it when it's a problem.'

In fact, one longtime federal IT market consultant who requested anonymity said one of his clients had an IT contract with the Army, providing the service with commercially available software, that was cut this year.

'[The Army] ran out of money,' the consultant said.

The client was told that 'the war effort is draining out the funds,' the consultant said.

But whether lawmakers are specifically looking to cut IT programs remains unclear.

House Appropriations Committee spokesman John Scofield did not comment directly on the question or why the RSM project was not funded, but did say that budget cuts for the war are being felt everywhere, not by any particular program.

Other officials said that as war spending goes up, spending elsewhere goes down, and IT programs, like anything else, are fair game.

'There's going to have to be a loser somewhere,' said James Krouse, director of market analysis at market research firm Input of Reston, Va. 'It looks like if its not a core and immediate need for a mission-specific task, it is probably at risk of being held up.'

Add to that the money being spent on Hurricane Katrina recovery efforts, and lawmakers are looking for any programs'whether IT or not'to cut, government and industry observers said.

One senior Hill official said the budget cuts 'have been going on everywhere; this is not new.'

Even before the 2007 budget made its way to Congress earlier this year, the White House put caps on spending not only because of the war, but because of the hurricane as well, this source said.

DHS' U.S. Visitor and Immigrant Status Indicator Technology program was one casualty, as House lawmakers reduced the president's request.

The White House 'did this by saying they need to move money to fight the deficit, but Iraq is the reason for the deficit,' the source said. 'Plus there was an internal redirection of funds inside DHS for Katrina. Some of those systems ... were very much affected.'

Winners, too

And some IT programs, such as the IRS' Business Systems Modernization, received a boost in funding, noted David Powner, director of IT management issues at the Government Accountability Office. This demonstrates that IT projects are not being singled out, he said.

'IT gets the same type of scrutiny' as anything else in the budget, he said.
Further, an administration source, speaking specifically on OPM, said the RSM project wasn't cut because of the war but because the agency failed to tell appropriators why there was a request for $26.7 million in the budget that wasn't there last year.

'Appropriators look at last year's budget and this year's to see what's different,' said the source, who spoke on condition of anonymity. 'If there's no explanation, it'll get cut.'

This is certainly true in a tight budget year, but 'even in a fat budget year, if something mysteriously appears on the budget,' it gets cut, the source said.

In fact, Larry Allen, executive vice president of the Coalition for Government Procurement, an industry association in Washington, said IT projects should make out quite well in this year's appropriations process because they are intertwined with nearly all government operations.

'IT generally is in more demand and is more essential than furniture,' said Allen, whose organization represents vendors with all sorts of business with the government. 'You're better off being an IT company in this environment rather than a furniture [supplier].'

But no matter what program or department, no one denies that with war spending and the deficit growing, budgets will be even tighter.

Andrew Malay, vice president of SAP Public Services Inc. of Washington, said the squeeze is being felt across government. 'We have been told by virtually every agency that we work with that funding is extremely tight and there will be very limited opportunities to find available funding as we near the end of the fiscal year,' he said.

GCN senior writer Wilson P. Dizard III contributed to this story.

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