Performance is king

Despite a seemingly paltry 1 percent increase in the federal information technology budget for fiscal 2005 compared to fiscal 2004, the government market is still a robust business opportunity for IT companies, according to speakers at a conference today.

However, the government is putting increasing emphasis on performance, and the Office of Management and Budget continues to scrutinize IT expenditures to insure the government is accomplishing as much as possible at lower costs, said Ray Bjorklund, senior vice president of consulting at Federal Sources Inc. (FSI).

He was one of the speakers at FSI's Annual Federal Outlook conference in McLean, Va.

"It's all about performance," Bjorklund said. "That phrase was in the budget submission this year." Fiscal year 2004's IT budget was $60.3 billion, and the request for fiscal 2005 is $61 billion. FSI analysts had predicted that the fiscal 2005 request would be $64.4 billion.

"The focus is and will continue to be on delivering government services in ways that are less expensive and faster," said James Morhard, chief of staff for the Senate Appropriations Committee and another speaker at the conference.

Bjorklund identified five business trends:

E-government: The term is losing its novelty, he said, while the principles that the E-Government Act was trying to encourage are being ingrained in agency officials' thinking. It is "more integrated into the normal line of business," Bjorklund said.

Homeland security: The area continues to be hot, but "real homeland security projects" account for only $1.7 billion of the fiscal 2005 budget request. Although that is an increase over fiscal 2004's $1.5 billion, Bjorklund said the buzz of the new category may fade.

Information security: It is mandatory for almost every IT project and OMB has put a renewed emphasis on it, Bjorklund said.

Competitive sourcing: Despite the flurry of activity around revising OMB Circular A-76 last year, agencies are generally not rushing to put work up for competition, he said. "We don't know where that is and where it's going to be headed," he said.

Defense and intelligence: Agencies are increasingly recognizing the value of IT and weapons systems, Bjorklund said.

"I think this IT market for the next couple of years is going to be somewhat agile," he added. "Changes are being made all the time. There is a real requirement [among businesses] for agility."

Morhard and Bjorklund both emphasized the attention that OMB will be paying to IT projects, particularly project management, in the coming months. Bjorklund reminded the audience, made up largely of industry representatives, that programs at risk can mean business opportunities at risk.