Feds prep for 2005 belt tightening

Outgoing Office of Management and Budget Director Mitchell Daniels Jr. released a memo last month outlining the fiscal 2005 budget process, and it does not look good for many information technology projects.

Daniels, who announced his resignation effective in early June, warned agencies that it would be a tough year because of record spending for homeland secu-rity and the war in Iraq. He said agencies would have to justify their plans to spend money and find funds for new programs by eliminating those that have not worked.

"We should constantly look for ways to save the taxpayers' money," Daniels wrote in his memo, "but it is particularly important to restrain the growth in spending when we need to meet these new [homeland and national security] priorities during a period of unprecedented pressures on the federal budget."

The news was no surprise to most chief information officers, who have been pressured to justify their spending under the President's Management Agenda and to develop enterprise architecture plans to eliminate redundancies and more effectively spend money.

"The importance of enterprise architecture is growing," said Barry West, CIO at the National Weather Service. "It gives us a real feel for the inventory from software to hardware to networks."

Ultimately, West said, such plans will allow agencies to cut redundancies and save money. But the policy coming from Daniels' office is far more direct, according to some CIOs.

"There is more emphasis on IT," said Linda Rosenberg, CIO at NASA's Goddard Space Flight Center. "Business cases are critical. There is more emphasis on certain components of the budget and where we are spending the money."

Rosenberg's IT budget is only about $22 million, a fraction of what many federal agencies spend. But she is facing the same critical tests for every dollar.

"Our missions have been embedded, and for the first time, we're being asked to pull it out and report it separately," Rosenberg said. "You never get all the money you want, and you never can fund everything you want."

With that kind of pressure, CIOs attending the biannual CIO Summit last week in Savannah, Ga., sponsored by FCW Media Group, said they have known that the fiscal 2005 budget cycle would be tougher than the fiscal 2004 budget, which is now making its way through Congress, or even the fiscal 2003 budget, which did not even begin providing money for projects until last month.

So Daniels' marching orders were familiar to most. In his memo, he said the President's Management Agenda remains a top priority.

"We expect agencies to meet the long-standing goal to submit budgets that align resources with performance measures," he said. "If you are seeking increases in any program, make sure [they are] offset by reductions in lower priority or inefficient programs."

Melissa Chapman, CIO at the Department of Health and Human Services, said the word to tighten spending had already filtered down to her staff in a memo from the office of HHS Secretary Tommy Thompson.

"We've had the expectation that OMB would ask us to stretch and continue to target reductions in costs," Chapman said.

The business world is also experiencing budget woes, according to Robert Golas, executive director of business development at Oracle Federal.

If an agency does not do well on its business case, it does not get the go-ahead for the project, he said. And that puts pressure on companies who want to do business with agencies.

Nevertheless, there are some winners this year. For instance, Defense agencies are expected to get the money they need as soon as they need it.

"I'm anticipating that it won't be rough because it's defense," said Carla von Bernewitz, director of the Army's Enterprise Integration Oversight Office.

"There are always budget restraints," said David Borland, the Army's deputy CIO. "We're always on the lookout for projects not succeeding. That's no different now than it's ever been."

What is different is that no agency will be exempt from the spending priorities, even the Homeland Security Department.

By September, DHS will have its own enterprise architecture that highlights the top 20 to 25 initiatives that must be supported. That will be the road map for the agency, according to Steve Cooper, the department's CIO, who said he is comfortable with the new budget scenario.