Report predicts slower growth in IT spending

The IT budgets of civilian agencies will continue to rise during the next five years, while military IT spending remains relatively flat, according to a study by GEIA.

Federal information technology spending will continue to grow over the next five years, but at a much lower rate than during the past five, according to an industry study.

The study, released this week by the Government Electronics and Information Technology Association (GEIA), predicts that federal IT budgets will increase by an average of 1.4 percent per year from fiscal 2008 through fiscal 2013 -- down from a compound annual growth rate of 5.7 percent during the last five years.

Growth will be slowed by changes in spending priorities and Iraq policy following the 2008 presidential election, according to the study, which is based on interviews with government officials, procurement data, agency reports and GEIA’s forecast database.

Other complicating factors include more continuing resolutions, which generally keep down spending, plus increased oversight from Congress and the Office of Management and Budget, the study states.

“We are looking at a kind of a shift in the patterns of IT spending which was very much related to what was going to happen with the war in Iraq and supplemental appropriations,” said Payton Smith, an associate at Booz Allen Hamilton, who worked on the report and presented its findings at the GEIA conference on Wednesday. “As we change administrations we will see the current administration trying to wrap up its legacy, the efforts in Iraq, and we’ll see the new administration come in and the actions that they are going to take.”

Growth will come from civilian agencies, as the new administration will likely increase domestic spending while decreasing funding for operations in Iraq. GEIA predicts that civilian agency IT spending will increase by a compound annual growth rate of 3 percent -- which is in line with the projected increase in overall discretionary spending.

In contrast, military IT spending will remain relatively constant, with a slight decrease through FY 2013, according to the study.

However, since a good deal of the military IT spending boost in recent years has come in the form of supplemental funding beyond what was originally requested, civilian agencies will not necessarily benefit from changes in the Defense Department’s IT budget.

Furthermore, the amount of money spent on developing, modernizing or enhancing IT projects is predicted to continue sliding during the coming years, as agencies continue to direct money toward steady-state projects and work to fund the Bush administration’s priorities through 2011.

Agencies will be focused on the success of the programs that they already have in place, said Meredith Luttner, an associate at Booz Allen Hamilton, who worked on the report and also presented the findings at the conference.

Agency officials also said that continuing resolutions also have negative effects and that interviewees said they hoped the resolutions would last for less time than previous years, Smith said.

“Continuing resolutions mean that the agencies can only spend at their previously public levels,” he said. “So that means that there isn’t any money available for new project starts.”

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