Bush plans 12 percent pop in '04 IT spending

Although the increase in overall government spending likely will be less than 5 percent in fiscal 2004, President Bush plans to request more than twice that for federal IT.

When the White House sends its budget proposal to Capitol Hill Feb. 3, the systems request will total $59.1 billion, a 12 percent increase over the $52.6 billion request submitted for this fiscal year.

Mark Forman, the Office of Management and Budget's associate director for IT and e-government, last week said most of the increase'about $6.4 billion'would come in the areas of homeland defense, cybersecurity and enterprise architecture.

'This is a significant increase from the 2003 request,' Forman said. 'Some of it is better reporting, other is more money for modernization efforts for homeland security and the war on terrorism. There will be only a several hundred million [dollar] increase for nondefense related areas.'

Forman said agencies have improved their accounting for IT spending compared with previous years'which also boosted next year's budget request because more accurate accounting resulted in a truer estimate of likely 2004 IT spending. OMB determined that an additional $1.6 billion was spent by agencies last year on IT than was accounted for as systems spending.

'Last year was the first year we put in place rigorous budget reporting requirements,' Forman said. 'Capital planning is a critical element of that, and we also took action to strengthen the roles of CIOs at the departments of Energy and Veterans Affairs, so we got better reporting.'

Mitchell E. Daniels Jr., OMB's director, said earlier this month that there will be moderate growth in the overall budget, especially in civilian agencies' discretionary funds.

Spending deceleration

'The overall approach to the 2004 budget will be more in line with the approach we took for the 2001 budget,' Daniels said. '2002 was an extraordinary year because of the need to fight the war and pay for damages in New York and Washington. The president is recommending a deceleration of moderate spending overall.'

Daniels said the deficit would be around 2 percent to 3 percent and that the 2004 submission includes no money for the potential war with Iraq.

Although most other federal programs will see near-flat funding, IT managers expect an increase in their overall budgets.

'There was a slight uptick in our budget,' said one senior IT manager. 'E-government, broadly defined, received the biggest increase for us, and there were no serious cuts beyond the work we are all doing to become more efficient.'

Another senior IT official said funding focused on the agency's infrastructure and security. 'OMB really telegraphed their expectations, and they followed through with how they adjusted our IT investments,' the official said. 'The rigor of the reporting process helped us see an increase in our budget.'

One senior IT manager said OMB's scrutiny was tougher than ever before but ultimately fair. 'I would like to see some kind of share-in-savings concept because if OMB is going to take 100 percent of your savings, then it might make people less open to reveal spending or savings in the future,' the manager said.

By requiring more comprehensive business cases, OMB also identified more than 700 at-risk IT projects worth more than $21 billion.

This is the second straight year OMB put projects on such a list. Last year, OMB identified about the same number of initiatives as at-risk but cleared nearly all projects off the list by year's end, Forman said. OMB received more than double the number of business cases from agencies this year.

'Every project where we had significant cost growth is on the at-risk list,' Forman said. 'There is a clear correlation between cost and schedule growth and whether the project has the elements of the business case entirely down.'

Daniels also noted a need for better business cases. 'There are tons of overlap and redundancies, and we are going to continue to work at it,' he said. 'There are far too many plans for which we do not have good business cases. Many plans really are counterproductive in the sense that they built systems that cannot talk to systems we have now.'

The administration's request also will focus on consolidation, especially in six areas that cross agency lines: financial management, human resources, data and statistical development systems, public health information, criminal investigations and public-health monitoring.

'This is the first time we are applying a governmentwide governance process to start to rationalize duplication and overlap on these lines of business,' Forman said. 'When we put together the Business Reference Model, we saw 35 subfunctions where there was a lot of redundant spending, and we picked six that we could get some back-office savings from up front.'

Forman estimated that there is more than $100 million of spending in each of the areas. He added that the administration would also look for consolidation possibilities among its 25 Quicksilver projects and in infrastructure systems.

Be enterprising

Finally, OMB will continue to push for agencies to improve their development of enterprise architectures, which would more clearly outline likely redundant spending. Forman said OMB's request of $1 billion for architecture work means agencies would receive at least $15 million to $25 million apiece.

'We received several times the number of requests for funding for enterprise architectures than we have agencies,' Forman said. 'There can be only one enterprise architecture per department, so we chose to make sure everyone hit a commercial benchmark of funding.'

The administration's IT spending plans surprised some industry analysts.

Payton Smith, manager of market analysis for Input of Chantilly, Va., said his company projected only a $2 billion increase over 2003.

'We weren't expecting a decrease, but we expected the growth to be more moderate,' he said. 'I'm wondering if it is the same type situation that happened with the [2003] budget request. We saw a relatively significant increase in the request because the estimate of what was spent in 2002 increased by about $4 billion.'

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