Homeland Security growth waning?

Homeland security is losing its luster and the Office of Management and Budget is cracking down on agencies' information technology spending, according to Payton Smith, manager of public sector market analysis at research firm Input.

Speaking today at Input's MarketView 2004 conference in Falls Church, Va., Smith said that the percentage of agency budgets spent on IT is reaching a plateau. After steadily rising from less than 4 percent in 1988 to a peak at just under 7 percent in 2001, the ratio has declined slightly and will grow only a little over the next several years, he said.

"Long term, I think agencies are close to equilibrium," he said.

Spending on homeland security technology is leveling out, he added. Smith predicted that over the next couple of years homeland security will lose its cachet as something new and become just another common element of government business.

"I think we're getting out of the homeland security spending rush," he said. "It's [becoming] normalized."

The other significant factor affecting the federal IT market is OMB's recent assertion of its authority, he said. OMB enforces initiatives including the federal enterprise architecture and e-government programs, and its officials can suspend funds for IT projects that they believe an agency has not justified adequately.

In fiscal year 2004, agencies will spend about $55 billion on projects, according to OMB information, Smith said. With nonexecutive agencies, intelligence agencies, unreported spending and technology embedded in other products included, the total technology expenditure will be somewhere between $80 billion to a little more than $90 billion, Smith said.