EIA predicts spending to stay flat through 2002

Spending on federal information technology will remain nearly level at roughly $27 billion a year through 2002 according to projections that the Electronic Industries Association (EIA) plans to release this week at its annual Federal Information Systems Forecast.

Although showing relatively flat growth the forecast of federal IT spending "represents a more optimistic forecast than last year when overall IT spending was expected to decline about 1 percent " said Gerald Harvey chairman of the EIA Federal Forecast team at a press briefing last week. Harvey director of U.S. business development for Lockheed Martin Corp. predicted that total civilian agency IT budgets will edge up a half percent from $16.4 billion in fiscal 1997 to $16.9 billion in 2002. The Defense Department's IT budget will show a modest 1.8 percent decline during the period with EIA putting 1998 DOD IT spending at $10.2 billion.

George Shaw director of planning for Hughes Technology Services Co. said the Defense total in this budget forecast does not include additional spending of roughly $26 billion a year on what he called the Defense Information Grid which is designed to support information warfare and information superiority programs and projects. This category includes sustaining base information systems strategic and tactical communications satellite and aircraft ground IT systems and information management/protection systems and services that in the past did not figure into traditional accounting for IT budgets.

DOD increasingly will rely on task-order contracting vehicles such as indefinite-delivery indefinite-quantity contracts blanket purchase agreements and the General Services Administration's multiple-award schedule to acquire traditional IT products and services as well as those required to support the development and deployment of the Defense Information Grid the EIA predicted. EIA estimated that IDIQs BPAs and other task-order contracts have increased from about 20 percent of all contracted-out dollars in fiscal 1992 to 40 percent in fiscal 1997. Increasing reliance on these vehicles will push their share to more than 60 percent by fiscal 2002 according to EIA.

Formal requests for proposals will all but disappear during the next five years EIA predicted with the total volume of RFPs slipping to almost zero in 1999 from a peak of 160 in fiscal 1996.

The team further predicted that despite overall flat IT budget growth the portion that is contracted out will grow 1.3 percent annually.

Fixing the Year 2000 computer date problem has emerged as "the most daunting of IT challenges facing the federal government " according to Judie Mopsik a member of the EIA civilian agency forecast team. Mopsik director of business development for Tracor Information Systems Co. predicted that funding for new IT programs will start to slip as agencies shift funding during the next two years from new programs to Year 2000 solutions.