In 2000, federal IT budget rises

In 2000, federal IT budget rises

DOD surge will outpace civilian growth

A new study predicts that higher federal IT spending this fiscal year will include the first increase for DOD in several years.

By Christopher J. Dorobek

GCN Staff

As lawmakers wrangle over spending bills for fiscal 2000, a new study projects that federal information technology spending will increase to $33.6 billion this year despite an overall decrease in discretionary spending.

The Government Electronic Industries Association of Arlington, Va., estimates that the government will increase IT spending by 1 percent annually over the next five years to $34.6 billion in fiscal 2004. The government spent $32.9 billion on IT in fiscal 1999.

'This is good news,' said Mary Freeman, manager of market research at Bell Atlantic Corp. and a member of the GEIA forecast team. 'Federal spending is not going up exponentially but there is solid, steady growth.'

The study, released last month at the annual GEIA Vision Conference in Fairfax, Va., is based in part on interviews with IT officials in government and the private sector. It projects the first increase in Defense Department systems spending in several years and DOD's highest level since fiscal 1993. Defense spending is projected to increase by 1.3 percent annually over the next five years, while civilian agencies' IT spending is expected to increase by 0.7 percent each year.

The study shows a significant increase in Army spending, although Freeman noted that all the services will have growth. Furthermore, all budget categories are projected to show increases: mission, infrastructure, office automation, and architecture and planning.

There is a growing understanding within DOD of the importance of technology, said Michael F. Kush of Electronic Data Systems Corp., who is chairman of GEIA's Defense forecast team. The Kosovo conflict was the first Internet war, he said, and although the lessons learned are still being reviewed, DOD leaders have concluded that IT gave NATO troops a tactical advantage.

Kush said there has been a shift in attitude: DOD leaders now see IT as a weapons system. 'That's the first time we've ever heard that,' he said.

Although confident about its year-ahead projections, GEIA is less certain about the longer-term estimates because of the difficulties of foretelling the political future.

'We know there will be a change of administration,' Freeman said, but most of the candidates have not presented detailed agendas, so it is difficult to predict systems allocations.

The government will spend $8.34 billion on year 2000 fixes, and GEIA officials said most agencies reported that they felt ready. There will continue to be some spending on date code efforts into 2000, Freeman said.

'Because IT shops have had such an enormous push getting ready for Y2K, they have not had any time to prepare budgets' for fiscal 2000 and 2001, she said. 'It's not likely we'll see any new programs until 2002.'

The next big thing

The biggest issue facing agencies in the post-2000 period is systems security, the study found.

' 'Security is the next Y2K' is what we heard in every interview,' Freeman said. 'As soon as there is a breach in security, there will be a need to move to the next level of security.'

Various security problems, ranging from those at the Energy Department to widespread Web hacking, have illustrated what a large target government is, said Deidre K. Murray, market development manager at GTE Corp. and a member of the civilian forecast team.

Another hot topic was the work force shortage, which the forecast teams predicted will force agencies to outsource more systems work. Agency officials repeatedly said they cannot compete with the private sector for skilled workers.

Agency officials said they are looking to the General Services Administration and NASA, which are rolling out PC outsourcing projects, for examples of how to shift more systems management to vendors.

GEIA projected that only the departments of Defense, Education, Transportation and Veterans Affairs will increase discretionary spending.

The forecasting teams also noted that recent changes in budget reporting are making it more difficult to track IT spending. Increasingly, systems funding is rolled into program budgets because agencies view technology as a commodity.

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