Steady growth seen in federal IT spending

Government Electronics and Information Technology Association

The Sept. 11 terrorist attacks have put an unprecedented focus on the federal information technology market and created a shift in priorities now and in the years ahead, according to a new survey by the Government Electronics and Information Technology Association.

The total federal IT budget for fiscal 2002 is expected to top $49 billion, a 15 percent increase over the previous year, and it should be $65 billion by fiscal 2007, said Mary Freeman, market research manager for Verizon Federal and GEIA's budget forecast team chairwoman.

For the first time in years, spending for civilian and defense agencies in the fiscal 2002 budget will be almost equal—$24.2 billion for civil agencies and $25 billion for the Defense Department.

Freeman said that because of the Sept. 11 attacks, "there are new requirements for redundancy; security, security, security; and telecommunications with multiple paths."

Overall, according to GEIA, the attacks that targeted New York City and Washington, D.C., have resulted in a string of demands to fund:

* Homeland defense.

* Financial recovery for the economy and the airline industry.

* Physical recovery at the Pentagon and in New York City.

* Military action around the world to quell terrorism.

* Critical infrastructure protection.

The departments of Defense, Justice, State, Transportation and Treasury and the Federal Emergency Management Agency are expected to have an "overwhelming need" for increased funding to meet those demands, she said.

"It could cost more than $100 billion," Freeman said. "We don't know what funds are going to be needed to recover from the tragedy."

Funding for counterterrorism initiatives, including critical infrastructure protection, is expected to surge past the $13 billion allocated for fiscal 2002, with several agencies, including the departments of Defense, Health and Human Services, State and Justice having large counterterrorism requirements.

"IT is at the core of the new national agenda," said Mary Ann Wangemann, chairwoman of GEIA's federal IT forecast team and a fellow/director of government strategy at Electronic Data Systems Corp. She said that IT is now, more than ever, a "weapon of war."

Jeanmarie Klitzner, director of business development at Computer Sciences Corp. and GEIA's civil forecast team chairwoman, said the Sept. 11 attacks would increase the focus on crossagency cooperation and the creation of a "seamless government."

To make that happen, Klitzner said there will be:

* An initial shift from mission support to counterterrorism initiatives.

* A shift of agency functions as the Office of Homeland Security begins operations.

* An increase in IT requirements for security, redundancy and biometrics.

* An increase in physical security efforts.

* Heightened visibility for critical infrastructure protection programs.

"When they start moving, industry has to be ready because when the government moves, they're going to be moving quickly," Klitzner said, adding that at least one agency manager had already asked department heads to be prepared to cut budgets by 10 percent in anticipation of having to reallocate funds.

Despite the GEIA forecast's rosy outlook for federal IT spending during the next several years, no one really knows what that future will look like, Verizon's Freeman said.

"At this point, exactly four weeks since the tragedy, I feel like I'm in the first act of a play with budgets and spending going forward," she said.

For DOD, although there is new money in the till, some proj.ects may be put on hold to make way for those that are focused on anti-terrorism, experts say. The largest growth is expected in command and control and tactical communications, according to the GEIA forecast.

Many DOD agencies are in a "wait-and-see" mode before officials start making funding decisions, said Mike Kush, senior systems engineer for Vector Research Inc. and chairman of GEIA's defense agency forecast team.

Some early indications are that DOD, having invested in command and control in the past, plans to invest sizable resources into intelligence and security.

To compile its forecast, GEIA conducted more than 275 confidential interviews with government officials at 65 agencies and also sought Wall Street and congressional perspectives and internal industry research.

GEIA officials met with reporters in anticipation of the organization's annual Vision Conference, where they officially present the budget forecast. It will be held this month in Alexandria, Va.