IT to miss out on Clinton's DOD budget boost, GEIA says

Little of President Clinton's proposed five-year, $110 billion increase in the Defense Department's budget will immediately flow down to specific information technology programs, according to an analysis released last week by the Government Electronics Industries and Information Technology Association (GEIA).

GEIA—part of the Electronics Industries Alliance (EIA), which plans to release its forecast, "DOD Growth Markets," Jan. 14—predicted some of the $12 billion increase in the fiscal 2000 Pentagon budget would "trickle-down" to specific programs.

George Shaw, chairman of the GEIA DOD Services and Support Committee, predicted that $10 billion of the $12 billion increase would fund a 4.4 percent, across-the-board military pay increase and improve defensive readiness and quality-of-life programs.

The remaining $2 billion probably would support contingency operations in Bosnia and the Persian Gulf, said Shaw, who is an executive with Raytheon Systems Training and Services.

Savings from lower fuel prices and a lower inflation rate should free up another $4 billion, which Shaw predicted could be applied to specific programs. If the Pentagon does receive the total five-year, $110 billion-plus increase, Shaw predicted that "significant funding may become available for both services and support markets in the short term as well as for modernization accounts'' in the out-years.

Shaw said GEIA has developed for the first time an in-depth analysis of the $50 billion DOD services and support market—which is covered primarily by funding from operations and maintenance (O& M) accounts, as well as a smaller pool of research and development funds—and Shaw estimated that out of this, some $13 billion a year is allocated to what he called "information superiority'' projects, such as the Army digitization programs. These funds, Shaw said, are totally separate from procurement dollars and are used by local commands to make purchases through indefinite-delivery, indefinite-quantity contacts.

Richard Wieland, another Raytheon executive who worked on the GEIA forecast, said he identified a pool of $3 billion to $4 billion a year in funding for intelligence and "black'' programs on the O& M accounts also allocated to information superiority support and services.

Kathy Hamm, a Northrop Grumman executive who also worked on the new GEIA study, said aircraft modification is another key DOD services and support market, currently worth about $4 billion a year. She projected that market to grow at 1 percent to 2 percent over the next five years. She said avionics modifications account for two-thirds of that total, with command and control systems accounting for nearly 40 percent of that segment.