Federal IT forecast: Healthy through 2005

Government Electronics and Information Technology Association home page

Despite the challenges of an aging workforce, security concerns and an impending

presidential transition, the federal information technology market should

continue to grow at a steady rate through 2005, according to the Government

Electronics and Information Technology Association.

GEIA forecasts that the federal government's fiscal 2001 expenditures

for IT will be $38.9 billion. And with an average growth rate of 1.7 percent

annually, spending is expected to reach $42.4 billion by 2005, said Mary

Freeman, GEIA budget forecast chairwoman and market research manager at

Verizon Federal. The civilian agencies are expected to grow at a rate of

2.2 percent annually, while Defense expectations are half that much, at

1.1 percent, she said.

GEIA presented the estimates in advance of its 2000 Vision conference,

which will be held Oct. 31-Nov. 2 in Crystal City, Va. The event will be

the organization's 12th five-year IT forecast conference.

Civilian agencies' primary IT concern this year — and thus a major area

for spending — is systems security and information assurance, said Jeanmarie

Klitzner, GEIA civil forecast chairwoman and director of business development

at Computer Sciences Corp.

"Agencies are hoping that the security report cards they did this year

will lead to some budget money behind security [in fiscal 2001]," Klitzner

said, much like Year 2000 report cards aided the drive for dollars to help

federal systems survive the date change. "Security is at the foremost of

all their activities."

Information assurance is perhaps the most rapidly growing and under-reported

area in IT security, but that will soon change, said Dennis McCallam, GEIA's

lead on the subject and a member of senior technical staff at Logicon Inc.

"[Information assurance] is Y2K anytime, anywhere," McCallam said, adding

that the fiscal 2001 budget doesn't detail IA spending, but GEIA estimates

it to be a $25-billion-per-year market in the United States that could easily

be three times that much by 2005.

Other crucial factors that could affect civilian agencies' IT spending

include:

* Assessments of agencies' performance under the Clinger-Cohen Act — which put chief information officers in charge of bringing private-sector

discipline to federal IT expenditures.

* An increase of partnerships in which industry accepts greater risk,

such as share-in-savings contracts.

* The use of small businesses as prime contractors.

* Greater use of governmentwide acquisition contracts and indefinite-delivery,

indefinite-quantity contracts, as opposed to requests for proposals.

Klitzner also said that agencies using seat management are still "tentative"

about its benefits. But electronic government has been widely accepted and

has been transformed over the past year into an "interactive venue for conducting

business on the Web," Klitzner said.

"The agencies' main message to industry was to bring solutions" and

not just tools or pieces of the whole, Klitzner said.

Among the resources GEIA uses to compile its data are budget forecasts

of the federal IT market; confidential interviews with hundreds of federal

agency personnel; Wall Street and congressional perspectives; and internal

industry research, said Sara DeCarlo, GEIA conference co-chairwoman and

vice president of business development for AT&T government markets.