Bush seeks small increase for IT

President Bush last week requested one of the smallest annual increases in information technology spending in recent memory, reflecting the administration's get-tough policy on reining in agency IT budgets.

Bush's $59.3 billion request for IT across government in his fiscal 2004 budget is just a 2 percent increase from fiscal 2003.

Spending in fiscal 2003 — $58.1 billion, which has yet to win congressional approval — increased nearly 17 percent from fiscal 2002 as the government ramped up homeland security IT spending and the Bush administration uncovered billions in IT spending that had not been identified as such in previous budgets, according to market research firm Federal Sources Inc. and the Office of Management and Budget. Still, in previous years, percentage increases typically were double-digit or close to it.

The nearly flat budget request is part of OMB's intention to hold agencies accountable for how money is spent.

At a briefing Feb. 4 for industry officials, Mark Forman, OMB's associate director of IT and e-government, said every IT spending proposal must have a persuasive business case showing how the spending would support government programs and operations. In addition, the budget is aimed at requiring every agency to show progress in at least two areas of the President's Management Agenda.

"We are able to get more out of IT spending," Forman said. "We are able to get more modernization accomplished."

In a year of tight budgets, looking at how money is spent is as important as spending it, many in industry say. "If an agency makes a good, strong business case for its IT project, the OMB will help look for the funding," said James Kane, FSI's president and chief executive officer. "But if the business case isn't solid — even if Congress appropriates the funds — no money will be made available. It has never been more true in the federal IT marketplace that making the business case is good for business."

The chance that Congress will add to Bush's request, as it has done in previous years, is slim because it is difficult for lawmakers to show their constituents how IT spending creates jobs in their home districts or states, according to Norman Ornstein, congressional scholar at the American Enterprise Institute.

"You don't get the same kind of cachet with IT spending as with health care, defense, the environment, and you don't have the same organized constituencies," he said. "Members of Congress are going to be facing truly cruel choices.... IT is not near the top of the list, even though it should be."

The tight spending will be disappointing to contractors, too.

"The fiscal 2004 budget request is good for taxpayers, but it's going to have severe impacts on technology companies," said George Molaski, former chief information officer at the Transportation Department and now president and CEO of E-Associates, a consulting company. "What will happen and what should be happening in the government is that the moneys are being directed more toward mission-critical types of applications than being wasted in administrative back offices."

All of which adds up to an IT budget with few features that previous budgets had: grand new programs and large increases in spending. "This year's budget is boring," said Ray Bjorklund, vice president of consulting services at FSI. "There is not a lot of new growth."

Some of the highlights from the budget follow.

Homeland Security

Bush requested $3.8 billion for IT at the Homeland Security Department, up from the $3 billion request in 2003. It includes $800 million in new IT money, much of it in start-up costs.

"In just a week since this department was created, we have begun to lay the foundation [to] mobilize the nation in the mission to protect the homeland," Secretary Tom Ridge said. "Everything we have done is an effort to organize to work more efficiently and more effectively as a department."

The new department's proposal includes $134 million to further develop a maritime 911 program for the Coast Guard, a $44 million increase from fiscal 2003. Funding for the massive Deepwater modernization program — which will replace an aging fleet of cutters, aircraft, sensors and supporting command, control, communications and surveillance systems — stayed unchanged at $500 million.

The Federal Emergency Management Agency, with its direct ties to cities and states, will likely be involved with the administration's first-responder initiative — $500 million in grants to provide firefighters, law enforcement personnel and other emergency workers with such resources as preparedness equipment and technical assistance. The request also includes $200 million for the agency's flood map modernization program.

The Transportation Security Administration comes away with less next year under the proposal. The administration is asking for $4.8 billion for TSA — a $500 million decrease. The request includes money for such IT programs as an intelligence system to perform background checks and risk assessments on airline passengers.

Health and Human Services

At the Department of Health and Human Services, the Bush budget asks for $4.8 billion in IT spending, up 2 percent from $4.7 billion in 2003. The budget request includes $114 million for the Centers for Disease Control and Prevention's public health initiatives. This funding includes $5.6 million for the National Electronic Disease Surveillance System, which is part of an information network that will integrate public health activities at all government levels while meeting confidentiality and security requirements.

Treasury

One of the biggest IT spenders in government, the Treasury Department has requested nearly no change in its 2004 IT budget, coming in at $2.61 billion, up slightly from $2.56 billion in 2003.

One of the significant changes in the IT request is an increase of $200,000 to enhance and expand Treasury's Web-based HR Connect human resources management system.

The Internal Revenue Service requested $429 million for its Business Systems Modernization program, up slightly from $380 million in 2003.

The budget also proposes to restore $49 million that the administration shifted in January from the agency's modernization program to help start another Treasury program.

Justice

With a focus on enforcement programs, the department's $1.9 billion IT budget — up just 1 percent from 2003 — would give the FBI's IT projects $82.2 million, with most of that — $61.7 million — dedicated to its troubled Trilogy modernization program, which is intended to update the agency's underling technology infrastructure.

A big winner in the budget battle is the Justice Consolidated Network, which would receive $126.9 million in 2004, up from $73.7 million in 2003. However, the Justice/Treasury Wireless Network program would receive $131.7 million, down from $149.4 million in 2003.

Veterans Affairs

One of the bigger winners in the IT budget is the Department of Veterans Affairs, which requested a $1.48 billion IT budget, up 4 percent from 2003. In restructuring its IT budget, VA chief information officer John Gauss said the department found extra money to apply to new electronic initiatives that will give veterans better service.

"We better understand where the money is going, better understand where the 'gold' is to be mined as we go forward," he said. n

Megan Lisagor, Sara Michael, Diane Frank and Michael Hardy contributed to this report.

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