Fed spending to jump 8% a year

Real growth in federal information technology spending will clip along at a rate of 8 percent a year jumping from just less than $30 billion in 1998 to $40 billion in 2002 according to an annual forecast released last week by Federal Sources Inc. McLean Va.

This dramatically outpaces the modest 2 percent growth estimated by the Office of Management and Budget which bases its figures on high-level agency submissions. Bob Dornan senior vice president of Federal Sources said the spending in program budgets not captured by OMB accounts for the difference.

"There's far more spending at the program level than OMB accounts for " Dornan said. Federal Sources based its forecast on a survey of large companies doing business in the federal IT arena whose sales outdistance the OMB figures. "They're reporting revenue growth in the 20 to 50 percent range that is inconsistent with the OMB numbers " Dornan said.

The OMB figures for IT spending show relatively flat growth edging up from $28.6 billion in 1997 to $29.1 billion in 1998 Dornan said. Defense Department IT spending remained flat at $11.6 billion in both years while the civilian agency aggregate inched ahead to $17.5 billion from $17.1 billion.The Air Force the Navy and the Department of Health and Human Services led the pack with the largest IT budgets in 1998 with the Air Force budget slightly more than $2.5 billion and the Navy and HHS just above $2 billion Federal Sources reported. This mirrors their budgets in 1997 when they also topped the charts.

Hardware budgets totaled $5 billion in 1998 marginally above 1997 budgets when hardware expenditures came in just less than the $5 billion level. Software budgets declined marginally in the 1998 budget to $1.4 billion from just less than $1.5 billion in 1997. Commercial-services budgets continued their sharp growth jumping almost $2 billion from $14 billion in 1996 to $16 billion in 1998.

Procurements in the pre-award stage show that the federal government continues to pursue new IT solutions aggressively. Federal Sources valued the procurements on the street awaiting award at $569.8 billion with DOD accounting for $22.4 billion of the total. NASA topped the civilian agency list with some $8.4 billion in procurements either in development or out for bid.

While it may not be good news for the agencies that have to come up with the money Federal Sources president Tom Hewitt forecast that the federal government will have to spend $5.6 billion to fix software unable to handle Year 2000 dates or more than double the $2.3 projected by OMB.

Hewitt predicted the Y2K "storm will hit in October 1997.... It will be bigger than [Hurricane] Hugo" as agencies scramble to recode their software.

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