Agencies' IT spending nears $30B in fiscal '99

Federal agencies will spend almost $30 billion with private information technology contractors in fiscal 1999, according to a report released last week by consulting firm Federal Sources Inc.

At its annual conference last week, Federal Sources, McLean, Va., estimated fiscal 1999 IT spending will total $29.8 billion, a 2.8 percent increase from fiscal 1998 projected spending. Federal Sources studied agencies' proposed fiscal 1999 budgets to determine IT spending.

The fiscal 1999 spending level, however, does not include funds agencies may spend on IT contracts awarded to other agencies, such as data processing or database management contracts. Bob Dornan, senior vice president of Federal Sources, estimated agencies will spend an additional $5.6 billion for IT support from other federal agencies in fiscal 1999.

Agencies hiring other agencies for IT business is the subject of a hot debate in the federal government. The House of Representatives and the Senate are considering bills that would require the federal government to determine which of its functions are "inherently" nongovernmental and to let the private sector have a fair chance to compete with government to perform those functions.

Federal Sources estimates civilian agencies will spend $18.5 billion on IT next fiscal year, up from $17.6 billion in fiscal 1998. But Defense-related agencies' fiscal 1999 IT spending will remain flat at $11.3 billion, Federal Sources reported.

The Air Force is expected to spend $2.83 billion on IT in fiscal 1999, the most of any agency. Included in that total is a six-year, $1.1 billion contract that the Air Force plans to award to Northrop Grumman Corp. in the third quarter of fiscal 1998, said John Gilligan, Air Force program executive officer for battle management. Northrop Grumman will provide systems engineering, integration support, upgrades and modifications to systems to locate and track military vehicles, aircraft and other equipment.

The Department of Health and Human Services' fiscal 1999 IT budget is the second largest in government, totaling an estimated $2.56 billion.

Agencies reporting the largest percentage increase in IT budgets are:

- The Transportation Department, which is expected to spend nearly $2.2 billion, an increase of 19.5 percent over 1998 estimates.

- The Commerce Department, which is gearing up for the 2000 census and which estimates it will spend almost $1.1 billion, an increase of 16.3 percent from 1998.

- The Treasury Department, which is modernizing the Internal Revenue Service's systems and which is expected to spend more than $2 billion, an increase of 14.9 percent.

Justice Department officials said fiscal 1999 IT obligations will total $1.15 billion, down from $1.25 billion in fiscal 1998. The larger IT contracts at DOJ include the Joint Automated Booking System, which will link five law enforcement bureaus in DOJ, and a metropolitan-area network program to enhance DOJ's global telecommunications capabilities.

The Environmental Protection Agency is preparing to recompete its Mission-Oriented Systems Engineering Support pact held by Science Applications International Corp. The solicitation for MOSES, estimated to be worth $200 million to $300 million, is expected to be released May 19, with hopes for an award in November.

DOT plans to recompete its Information Technology Omnibus Procurement contract, with a solicitation expected around July 1, said Wendell Berry, ITOP project manager. ITOP-II is estimated to be worth $10 billion over seven years.