IT dodges Bush's proposed budget spending cuts

Administration seeks 7 percent increase in fiscal 2006 spending

Office of Management and Budget officials, wielding sharpened red pencils, decided to make information technology an exception to the tight discretionary spending limits found in President Bush's fiscal 2006 budget proposal.

Federal officials are requesting $65.2 billion for IT spending in fiscal 2006, an increase of about 7.1 percent more than the $60.9 billion approved by Congress for the current fiscal year.

The rise in IT spending comes despite an overall proposed increase of only 2.1 percent in discretionary spending in the $840 billion discretionary spending request OMB officials delivered to Congress Feb. 7.

That amounts to less than administration officials' projected inflation rate of 2.3 percent, despite their plans to increase spending for defense and homeland security.

The IT increases are distributed almost evenly across federal agencies. Within seven of 15 Cabinet departments slated for overall cuts or for an increase less than inflation, only the Labor and Housing and Urban Development departments also have projected IT cuts.

"IT is a strategic investment," said Dan Chenok, former OMB branch chief for information policy and technology and now an SRA International vice president.

OMB's budget numbers show the gap between agency money spent on infrastructure and mission support, and it is widening in favor of the latter.

Agency officials were told to add to their agency budgets the infrastructure savings achieved through cross-agency IT projects, said Karen Evans, administrator of e-government and IT at OMB.

Costs for mission support and infrastructure are set to rise in fiscal 2006. That increase "is a reflection of the progress of e-government," Evans said. "Transferring from one system to another system requires both systems to be operational."

Spending money to cut redundancy is a paradox the government will have to live with for many years, said Mark Forman, Evans' predecessor and now a vice president at Cassatt.

The creaky foundation of today's federal back office is a product of the 1940s and 1950s. "Absent any major restructuring that would accelerate the transformation, you're left to do virtual reorganizations with IT," Forman said.

Some streamlining and savings are already apparent, OMB officials say. A governmentwide effort to consolidate the human resources line of business will cost $40 million next fiscal year, $6 million less than fiscal 2005 spending, although both numbers exclude the Defense Department and HUD.

But another consolidation effort, the creation of common financial management services centers, is on track to spend $52 million more than in fiscal 2005, for a total of $666 million.

The funding increase occurs because agency officials are setting up common services centers while also preparing to shut off their in-house financial management systems, Evans said.

"Quite frankly, it's going to be years" before federal IT budgets start going down, Forman said. Finishing consolidation within the Homeland Security Department, for example, may take another three to four years, he added.

Although agencies generate incremental savings through e-government, taxpayers may never see those savings, Forman said. Many aging members of the federal workforce will be retiring during the next three to five years, taking with them vast amounts of knowledge.

The government cannot afford to go on a hiring spree, he said. "They're just trying to keep their heads above water, trying to replace people," he said.

Running a government requires either massive amounts of IT or a huge workforce, Forman said. After adding counterterrorism programs to the federal to-do list, government officials clearly have little choice but to opt for the former.

As a result, "there's an awful lot of re-engineering and automation going on in the federal government, much more than people realize," he said.

The marginal-at-best savings made through newly automated processes and consolidated back offices will likely be channeled straight back into agency program budgets, Forman said.

"You'll clearly see resources being shifted to the next highest priority," he said, adding, "Agencies don't like to turn money back to Congress.'"

And the winners are...

Here are the big winners in the Bush administration's fiscal 2006 budget proposal.

Defense Department: President Bush requested $30.1 billion, a 4.9 percent increase in the military's information technology spending for next year.

Homeland Security Department: Bush's proposed fiscal 2006 budget for the Homeland Security Department includes a heavy reliance on IT. Overall, the proposed DHS budget calls for $41.1 billion in fiscal 2006, a 6.6 percent increase over the fiscal 2005 amount.

Department of Veterans Affairs: The Department of Veterans Affairs is one of this year's winners in the IT budget derby with a request that is nearly 30 percent more than the fiscal 2005 budget appropriation. Bush administration officials are seeking $2.1 billion for IT in 2006, up from $1.6 billion. One of the biggest increases would go to the department's HealtheVet and Veterans Health Information Systems and Technology Architecture programs, which will modernize the health record system for about 5 million veterans.

Justice Department: According to President Bush's budget request, the Justice Department would get a 20 percent increase for IT spending to $2.7 billion for fiscal 2006. Justice officials plan to spend $181 million in appropriated money on a centrally controlled information-sharing technology fund controlled by the department's chief information officer.

— FCW staff

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