Shortchanged?

Fiscal 2002 budget

President Bush, in his fiscal 2002 budget request released last week, sent a clear message that his administration plans to keep a tight grip on federal agencies' information technology spending, federal IT experts say.

Bush proposed the smallest increase in IT spending in recent years — a less than 1 percent hike to $44.8 billion — and outlined the administration's intention to use performance plans and measurements as a way to allocate IT dollars in future years.

President Clinton routinely requested IT budget increases in the 3 percent to 8 percent range, in part to drive his administration's efforts to reinvent government and modernize decades-old information systems. For fiscal 2001, for example, the federal government's IT budget increased 7.7 percent, according to Bush budget documents.

Still, Bush's $400 million increase — 0.9 percent — in the federal IT spending budget did not surprise many federal IT experts. Many top federal IT executives, including financial executives, have yet to be named, and without advocates for IT programs, the administration has taken a wait-and-see approach to IT spending. The fiscal 2002 budget just carries over projects from the previous administration, said Joseph Leo, former chief information officer at the Agriculture Department who now leads e-government issues for Science Applications International Corp. "They basically said that they are going to hold the status quo until they get their policy people in place," he said.

"We didn't know who the president was going to be until December," said Ray Bjorklund, vice president of consulting services for Federal Sources Inc., McLean, Va. "In many cases, we're dealing with the legacy of the Clinton budgets."

At the Office of Management and Budget, they are still waiting for the nomination of a deputy director for management — the leader for federal IT policy decisions — and many agencies are without their CIOs, chief financial officers and other major program leaders.

"At this point while they're still trying to get people in place to honcho this stuff, [the administration] is still being pretty general," said Allan Burman, president of the government consulting group Jefferson Solutions and head of OMB's Office of Federal Procurement Policy under the last Republican administration. "One of the issues is not so much a lack of attention but a lack of people who can really take the ball and run with it."

In November, the Government Electronics and Information Technology Association (GEIA) warned that the presidential election could slow IT spending while the new leadership moves into power. The group projected that a new administration would increase IT spending only 1.7 percent in fiscal 2002.

Mary Freeman, manager of market research for Verizon Federal and a member of the GEIA committee that conducts an annual forecast of federal IT spending, said the small increase is not a surprise because IT is not the first focus of a new president. "With the president so strongly pushing his tax cut, I just don't think the focus has been there for IT," she said.

The Bush administration may loosen the IT purse strings in the future. The budget summary includes a 27.4 percent increase in IT spending for "all other reporting agencies," but provides no additional details, according to Input, a government market research firm in Vienna, Va. "This suggests that, despite the appearance of relatively flat overall [year-over-year] spending, subsequent announcements may include some significant surprises regarding reallocations between agencies," according to Input.

"We don't know what the other IT spending is going to be," Bjorklund said. Federal Sources is analyzing the budget in preparation for its May 10 Federal Outlook 2002 conference, which attempts to forecast IT spending. "The question is whether there really is not going to be any significant new IT spending."

The only area Bush has targeted for new spending is a fund to support e-government initiatives such the FirstGov Web portal and governmentwide security and privacy initiatives. His administration plans to increase the fund to $100 million by fiscal 2004. Bush doubled the first-year funding to $20 million just one month after the initial budget proposal, released Feb. 28, because the president wants to move more quickly on privacy and security, according to Chris Ullman, an OMB spokesman.

"In the previous administration, they realized the priority of e-gov and its advantage, but we've never had a single line item before and this will really help," said John Sindelar, deputy associate administrator of the General Services Administration's Office of Governmentwide Policy, which will manage the fund for OMB's disbursement.

Performance Wanted

The Bush administration may have held spending flat because it plans to use performance measures to decide funding levels, said Alan Balutis, executive director of the Federation of Government Information Processing Councils and former director of the National Institute of Standards and Technology's Advanced Technology Program.

"It's a very fair budget for a new administration," he said. "Anyone that came in [to the federal government] new, you'd have a response of "Jesus, we spend a lot on this [IT] already and what are we getting for it?'"

In his budget, Bush makes it clear he is interested in holding agencies accountable for the performance of their programs. Notably, this means focusing on the Government Performance and Results Act of 1993.

Under the act, agencies are required to submit annual performance plans that include program goals, develop ways to measure the results and link their budgets to those results. Agencies did not have to submit their first performance reports until 2000, and according to the administration, "a systematic integration of budgeting with program performance has yet to occur, and GPRA has not been fully harnessed to improve management and managerial accountability."

The Bush administration will lead these efforts by asking agencies to submit performance-based budgets for a selected set of programs this September. Those chosen will be "advised of specific performance targets that are compatible with funding levels, and program managers will be held directly accountable for managing to the targets," according to the budget.

As officials are named, this year's priority for agencies should be to get ready to make their case to the new leadership, Leo said. "You get your shot for the fiscal 2003 budget request. Make your case. Don't be lazy. Be as visionary as you can."

Agency IT Spending

The tougher budget affected a number of agencies. Bush cut the Justice Department's IT budget by about 2 percent, but the agency has seen an increase in funding for several key projects. The FBI's Trilogy program — a three-year plan to upgrade the bureau's IT infrastructure to support faster data transmission and greater network reliability — would get a $75 million increase to $95 million.

Bush wants the Commerce Department's IT budget to drop to $950 million from $1.03 billion. Funding for the Advanced Technology Program, which provides matching grants to help fund innovative and risky technology programs, would be suspended.

And IT funding for NASA would be slashed 6 percent to $2.1 billion to downsize or phase out programs to pay for computational, information and communication technology; 21st-century aircraft technology; and a more robust Earth science program. And the Social Security Administration's budget would be cut to $702 million from $741 million.

Even the Defense Department, which at $21.5 billion nets the largest single agency IT budget overall, took a 0.9 percent cut. But the Army Corps of Engineers — whose IT budget is not included in the DOD totals — lost the most ground. The Corps' IT budget dropped from $225 million this year to $179 million in 2002 — a 20 percent cut.

For DOD, Bush's IT budget means funding for some priority programs — such as the public-key infrastructure and Common Access Card program for building and network access — will stay flat at $209 million in 2002. And DOD's e-commerce and electronic data interchange program saw its budget get slashed from $109 million to $96 million in 2002.

Some programs, however, received substantial increases. The Global Command and Control System, which is currently spending $425 million, is bolstered to $470 million in 2002. And despite the problems that the Army has found in implementing the Global Combat Support System, the program would receive $361 million in 2002, up from $328 million this year.

Efforts to consolidate the Defense Enterprise Computing Centers — reducing 71 military mainframe processing centers to five with one legacy site — will receive $824 million in the 2002 budget.

Other agencies' overall IT budgets received boosts. The Treasury Department would get an 8.6 percent increase to $3 billion from $2.8 billion. The Bush administration has proposed $398 million for IRS modernization, a request that is less than the $450 million the IRS Oversight Board has said is necessary.

The administration has requested $228 million for software development for the Customs Service's Automated Commercial Environment, an Internet-based system that can handle a greater volume of imports than the 17-year-old Automated Commercial System.

The State Department, which has outmoded technology, would receive an 8.9 percent increase, including $332 million to improve its information technology infrastructure in the foreign affairs community. Bush wants a 7.1 percent increase in the Transportation Department's IT budget, which includes $338 million for the Coast Guard's Deepwater program, which would replace the service's aging fleet and the sensors used to communicate with it. The funding signals the Bush administration's support for the Coast Guard's acquisition strategy. Congress has questioned the strategy because it could allow the contract to go to one systems integrator for up to 30 years, said Adm. James Loy, Coast Guard commandant.

The Environmental Protection Agency received a 5.1 percent increase in IT spending, including $25 million for its National Environmental Information Exchange Network, which will help the EPA, states and other parties share environmental data.

"That's a very, very important project for the agency," said Mark Day, director of the EPA's Office of Technology, Operations and Planning.

Dan Caterinicchia, Christopher J. Doro-bek, Greg Langlois, Bill Murray, Colleen O'Hara, Dibya Sarkar and Paula Shaki Trimble contributed to this story.

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