Analysts predict a lull in growth of IT spending

Federal spending on information technology is expected to remain flat at least through fiscal 2009 and possibly until fiscal 2011, according participants in an online discussion on Thursday.

Comment on this article in The Forum.Analysts with the research and consulting firm Government Insights noted during a webcast that with the exception of the Defense, Homeland Security and Veterans Affairs departments, federal agencies are operating under a continuing resolution that freezes funding at fiscal 2008 levels.

"The flat line isn't good news," said Shawn McCarthy, director of government vendor programs at Government Insights. "2008 saw only a minimal increase over the fiscal 2007 budget…the 2009 IT spending budget everyone was happy with is not going to gel."

The continuing resolution extends only until March, which in theory would give Congress time to pass an omnibus appropriations bill for the second half of fiscal 2009, McCarthy said. But he added that he was not optimistic.

"What we've seen happen is that the continuing resolution gets passed and the full budget is never fully revisited," he said.

Government Insights Chief Operating Officer and Managing Director Teresa Bozzelli said the exceptions might be the Housing and Urban Development and the Treasury departments, both of which are involved in economic rescue efforts.

The Obama administration also has been left the task of preparing a budget for fiscal 2010, Bozzelli noted.

New administrations typically update the baseline budget left by the outgoing administration, she said, but since there is no baseline for 2010, Obama's team must create its own. The shortened time frame to craft that budget means appointees will likely first see their priorities reflected in the fiscal 2011 budget, she said.

The analysts also said the Obama administration will probably bring more of the federal government's IT work in-house rather than rely on contractors. Adelaide O'Brien, a research manager for Government Insights, recommended the administration concentrate its investments on a few core competencies such as program management and oversight.

"What I believe Obama is doing is focusing on increasing accountability of government and increasing the talent and leadership of our government workforce," O'Brien said. "These are good objectives; we just need to make sure [the administration is] letting both the public and private sector be good at what they are intended to be good at."