DOD budget to see steady rise

As the Defense Department fights the war on terrorism and its focus on homeland security evolves, its reliance on information technology will grow — and so will the overall DOD budget, according to the Government Electronics and Information Technology Association.

GEIA forecasts that the DOD budget will grow steadily at more than 1 percent per year for the next decade.

Cecil Black, director of market analysis at Boeing Co. and chairman of GEIA's DOD Ten-Year Forecast Committee, said the department's fiscal 2003 budget will total $390 billion, which includes an expected supplemental appropriation next year and funds previously appropriated for emergency response purposes.

By fiscal 2013, GEIA expects the DOD's top line budget to grow to $558 billion in current-year dollars, he said.

Speaking Oct. 29 at GEIA's annual budget forecast conference in Tysons Corner, Va., Black said vendors should seek opportunities in IT and C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) programs that align with the DOD's warfighting and homeland security priorities.

The DOD's research, development, test and evaluation (RDTE) funding is at an all-time high in the current budget, Black said, but procurement dollars are inadequate, "and we need to move these funds out of RDTE and into the hands of the warfighter."

DOD needs about $94 billion to replace aging equipment, but there is a shortfall of about $20 billion this year. Although that figure will decrease over the next decade, it still will result in a $198 billion shortfall through 2013.

Black said the four main DOD funding drivers for the next 10 years are:

* Competition with the proposed Homeland Security Department for discretionary dollars.

* Unanswered questions associated with fighting the war on terrorism, which currently costs about $1.5 billion per month, including how much longer will it go on and where.

* The military services' ongoing transformation initiatives, which Defense Secretary Donald Rumsfeld has said will rely on information dominance.

* Discipline in estimating program budgets based on the compound annual growth rate, which is about 2 percent less than the actual cost but is much better than traditional estimates that are 17 percent less.

Of those four variables, transformation may be the first to get a definitive answer because fiscal 2004 will be a "critical year," Black said.

"It is the administration's premier and perhaps greatest opportunity to really make transformation a thing of the future," he said. "Without it, the administration has passed its midterm...and best opportunity for making a lasting impression past the status quo."