Study says 2000 systems projects remain top concern for agencies

When the Electronic Industries Alliance surveyed agencies on their five-year systems
spending plans, it turned up an unsurprising fact: Date code work is king.

Year 2000 efforts are eclipsing spending on many federal systems as agencies face
increasing pressure to meet readiness deadlines, agencies told the Arlington, Va.,

“They see Y2K as a sea anchor” that is stifling creativity and other
information technology projects, said Sara DeCarlo, director of marketing for Bell
Atlantic Corp.’s federal division and chairwoman of the EIA forecast team’s
civil group. “When they see year 2000 work settle down, they will see work in other
areas,” she said.

Overall, the survey found that IT spending levels will remain flat over the next five
years, keeping pace with inflation, according to the EIA Five-Year Federal Information
Systems Forecast released during a briefing last month in McLean, Va.

EIA estimates that the government will spend $28.6 billion on IT this fiscal year and
projects that federal spending will remain at roughly the same level through 2003, EIA
officials said.

Mary Freeman, manager of market research for Bell Atlantic’s federal division and
a member of the EIA forecast team, said the projections represent a modest increase of 0.3
percent for the five-year period, 0.5 percent higher than last year’s projections.

EIA attributed the bulk of the increase to planned spending in civilian agencies, where
there is a forecast growth rate of 1 percent from $17.3 billion this year to $18.1 billion
by fiscal 2003. Spending at the Defense Department, however, showed less of a decline,
falling by 0.8 percent compared to 1.3 percent last year.

The year 2000 problem is clearly a major issue across government, the EIA team found.
Agencies are feeling the pressure, both from Congress and the White House, said Michael
Kush, director of marketing for Electronic Data Systems Corp. and chairman of the EIA
forecast team’s defense group.

Most agencies reported that they have the year 2000 problem under control, DeCarlo
said. Kush said that DOD officials reported being comfortable with the status of
mission-critical systems but less sure about interfaces between systems.

Wall Street analysts continue to harp on the year 2000 problem as one of the biggest
concerns about the federal IT market, Freeman said.

The Office of Management and Budget last month increased its total year 2000 cost
estimate to $5.4 billion, but Freeman said EIA still estimates that the government will
ultimately spend more than $6 billion.

Rep. Steve Horn (R-Calif.) last month projected year 2000 fixes will cost the
government $6.3 billion.

The annual EIA survey, which included more than 150 interviews at 50 agencies, found
that the procurement reforms in recent years have made year 2000 fixes possible, DeCarlo

Government officials widely praised the streamlined procurement processes, EIA found.
Agencies are using the General Service Administration’s Multiple-Award Schedule
contracts as a baseline for product prices, DeCarlo said.

On the issue of the GSA’s Seat Management Program, the EIA survey found there was
no pent-up demand among agencies to outsource their desktop PC operations.

“Until there is a more enterprisewide view, it will be difficult to adopt
Seat,” DeCarlo said.

The survey also found that electronic commerce will become a reality when the Internet
moves from being a library of information to a place with more interactive applications,
DeCarlo said. The shift will drive development of tools for encryption, public key
infrastructure and digital signatures.

Other hot-button issues are information assurance, battlefield digitization and
interoperability, EIA found. 

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