Input forecasts 40 percent growth in federal e-gov spending

Input forecasts 40 percent growth in federal e-gov spending

Even with the administration’s efforts to consolidate software purchases and severely limit agency’s IT budgets, e-government spending will grow by $2 billion over the next five years, according to the latest report by Input.

The Reston, Va., market research firm released its Federal E-Government Marketview report today and predicted agencies would spend $6 billion on e-government systems in fiscal 2009, up from $4 billion in 2004.

“In the near term, it makes sense for e-government spending to grow based on [the Office of Management and Budget’s] budget numbers,” said Chris Campbell, a senior analyst for Input’s federal market analysis group. “The e-government initiatives have been slow to reach their goals and agencies will be spending to meet those goals.”

Campbell pointed to OMB’s latest e-government progress report as an example of where spending may increase. For instance, he said, one of the goals agencies have for 2005 is to secure 90 percent of their systems, although they were supposed to have met that goal by December 2003. As a result, departments will incur new costs this year to meet OMB’s security objectives.

Input also estimated that spending on government-to-business projects would increase by 260 percent over the next five years. Campbell said this prediction is based on the agency increases in spending on the six Quicksilver projects that fall under the government-to-business segment. Campbell said agencies requested $51.6 million for these projects in 2005, which is up from $14.3 million in 2004. And of that $51.6 million, agencies spent $48.5 million for development, enhancement and modernization of these projects as opposed to maintenance expenses.

Agency software spending will grow by nearly $300 million over the next five years, the report said. This comes on the heels of the General Services Administration’s announcement that it is negotiating with the three largest federal software vendors on enterprise deals that would drive down the cost of the software by as much as 82 percent.

“Due to the nature of e-government programs, much of the work is targeted at specific areas of operations, such as Web development,” Campbell said.

Input said the President’s Management Agenda, with its increased OMB oversight of agency projects, and the continued influence of the Government Paperwork Elimination Act and the E-Government Act of 2002 are driving these spending increases.

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