Input foresees some DOD market growth

The Defense Department market for information technology products and services should continue to grow, according to Input's market research.

However, the resignation of Defense Secretary Donald Rumsfeld earlier this week, which came the day after Democrats won control of the House of Representatives, could throw some of the assumptions underlying the projects into doubt, said James Krouse, acting director of public sector market analysis at the firm.

Concessions today from Sen. George Allen (R-Va.) and Sen. Conrad Burns (R-Mont.) to their Democratic challengers put control of the Senate in Democratic hands, too.

Input predicts that the DOD IT market will grow at a compound annual rate of 4.3 percent from fiscal 2006 through 2011, compared to 5.1 percent for the civilian budget. That is an increase from $24.1 billion in fiscal 2006 to $29.8 billion in 2011 on the DOD side, and from $2.3 billion to $32.4 billion among the civilian agencies.

The compound annual growth rate for outsourcing will increase even more quickly, Krouse said, predicting a 5 percent annual rate for Defense and 6.4 percent for civilian agencies.

"The issue with DOD is the military part is about as lean as it can get," he said. "The Defense Department work that's going to get outsourced will come from the civilian workforce."

Krouse also believes that DOD contracting practices will come under increased scrutiny, especially with Democrats in control of Congress. "Less and less, there's this idea that DOD can do what it wants out there," he said.

Input found the fiscal 2007 budget to be difficult to analyze, he said. "This is one of the most confusing budget appropriations I've seen passed in a long time," he said. It took analysts several hours just to figure out the total appropriated for discretionary spending, $447.6 billion.

The IT categories that get the biggest pieces of the budget are:

* Communications and computing infrastructure, $14.3 billion.

* Warfighting systems, $8.8 billion.

* Business systems, $4.5 billion.

* Information assurance, $2.3 billion.

* Related technical activities, $1 billion.