IT outlook: Partnerships are key

The Bush administration is likely to spend $53 billion on information technology in fiscal 2003, but do not expect any major new projects that cost billions of dollars and need many IT companies to carry them out, according to the outlook from Federal Sources Inc.

Instead, it seeks better partnerships while saving money as it enhances technology already in the system, according to Jim Kane, president and chief executive officer of Federal Sources Inc., speaking May 8 at the firm's 17th annual federal outlook briefing.

"There are not a lot of big new starts," Kane told a gathering of vendors in McLean, Va. "There will be continual enhancements to programs already in place."

Kane said the government is setting the pace for IT spending, and to expect a strong market for at least the next two years.

Incremental enhancements will be the watchword, he said, and "trusted partnerships" between government and business — as well as between big business and small vendors — will be the name of the game.

In fiscal 2002, government spending was forecast at $48.5 billion, a 6 percent gain over fiscal 2001. In fiscal 2003, federal IT spending is expected to grow 9.5 percent to $53.1 billion, and in fiscal 2004, it is expected to be $54.5 billion, according to FSI.

In the civilian sector, the biggest winners are expected to be the departments of Health and Human Services, which represents 20 percent of the civilian budget, and Treasury, where the Customs Service is on a schedule to implement modernization at U.S. border crossings in four years.

The action in civilian agencies will be focused on several areas, according to the analysis. Among them:

* $500 million for Atlas, the Immigration and Naturalization Service's modernization program.

* 118 million for NASA's integrated financial management system.

* $91 million for the Transportation Department's national distress and response system modernization project.

* $48 million for the Agriculture Department's service center modernization.