DOD: IT spending rolls along

The Defense Department will spend $12.3 billion on information technology this year.


That's 40 percent of what the department will spend on its command, control,
communications and computers programs. DOD officials said that they expect IT projects
will continue to dominate C4 spending next year as well.


DOD estimates it will spend $12.4 billion--roughly $10 billion for its basic systems
budget and additional funds for selected command and control systems--in fiscal 1999.


The department also will continue to emphasize the use of commercial products instead
of software and hardware built to military specifications.


"We are not building anything from scratch. We are buying a lot of commercial,
off-the-shelf hardware and software," said Anthony Valletta, the recently departed
acting assistant secretary of Defense for command, control, communications and
intelligence.


He was DOD's chief information officer and oversaw IT spending departmentwide.


C3 funding for this year includes more than $7 billion for communications such as
satellites and radio systems, $4.7 billion for C2 systems, $2.5 billion for C3 projects
and $900 million for information security.


The Air Force will take the lion's share of money in the C3 category--more than $7
billion this year and next--compared with the Army and Navy, which will get about $3
billion each annually.


The allocation of general IT funds this year and next is more equitable: The Air Force
and the Army will get more than $2 billion each, and the Navy will get more than $1.5
billion.


"R&D budgets are getting lower and lower--the lowest I've seen in the 28 years
I've been in the department," Valletta said at the recent Virtual Government
conference in College Park, Md., discussing Defense's IT budget trends. He said the trend
is encouraging, because it indicates that DOD is using commercial rather than custom
products.


DOD will devote less than $3 billion a year from its C3 resources and less than $1
billion per year from its general IT resources to R&D this year and next. The bulk of
C3 and general IT funds will go to operation and maintenance as well as procurement.


Though funds for communications from C3 resources will remain stable over the next two
years at more than $7 billion, C2 systems will see a $1 billion decline over funding last
year.


The reason: Some large core projects, such as the Global Command and Control System,
are replacing other systems, Valletta said.


DOD's C3 projects will stay at $2.5 billion for the next two years. But information
security programs will receive $1 billion next year--a $100 million increase over last
year.


There will be an emphasis and increase in the information security arena, Valletta
said.


Capital purchases of IT equipment will increase from $1.6 billion this year to more
than $1.7 billion next year, while capital leases will drop below $700 million in this
year and next. Although software buys will decrease from $370 million this year to $300
million next year, leases will increase from $250 million this year--an increase of $40
million from last year--to more than $260 million next year.


The Army Wholesale Logistics Systems Modernization (WLSM) program is one of the biggest
Defense IT procurements on the horizon. As part of it, the Army Materiel Command will
modernize its logistics systems. The command might also outsource some of its logistics
work now handled by antiquated systems such as the Command Commodity Subordinate System.


"This is the modernization of what's been around in the Army since I was a second
lieutenant 28 years ago," Valletta said. "It's a total revamp of hardware,
software and megacenters over eight to 10 years and will be big bucks."


Valletta said the WLSM contract likely will be worth many millions of dollars. The
Army's Communications-Electronics Command at Fort Monmouth, N.J., will run the
procurement.


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