Piling Up

Deficits, budget cuts. No matter what, technology spending keeps on growing.

Federal deficits and Office of Management and Budget tightfistedness threaten to diminish the information technology market boom that lately has made Northern Virginia such a happy place. But there's little reason to worry.

Congress, for all its huffing and puffing, generally allows IT spending to grow faster than inflation. Many of the market drivers that helped sustain the boom past the spike days of Y2K remain in place-military and homeland security demand principal among them. New ones have arisen, too, cybersecurity in particular. In fact, market analysis firm INPUT in Reston, Va., predicts a compound annual growth rate of 4.4 percent through fiscal 2011, topping out at $93.4 billion. Admittedly, that's less than the firm's projection last year of 5.5 percent through fiscal 2010. But nobody expects actual reductions in IT spending, just a little less exuberant growth.

Of course, what's really fun about the federal IT budget is that nobody really knows how big it is. Supplemental spending manages to boost it, most people can only guess what the intelligence community spends on it (INPUT estimates $10.4 billion this fiscal year), and the Defense Department doesn't break out IT embedded in weapons systems. Earlier this year, a Defense spokesman said it would be virtually impossible to extract that information, given the degree to which IT has become a basic component of weapon design.

Indeed, everywhere in the federal government, IT is deeply entrenched in daily operations. "Simple old IT, down in the bowels of the agency-that's not the case anymore," says Robert McFarland, until recently the chief information officer of the Veterans Affairs Department. Including estimates of all the known unknowns, INPUT pegs total fiscal 2006 IT spending at $75.4 billion.

The extent to which ubiquity now makes software, hardware and IT services a simple commodity is an ongoing debate, thanks largely to OMB's lines of business initiatives. Three more lines of business task forces (studying geospatial systems, IT infrastructure, and budget formulation and execution) are due to report recommendations in late August. If true to their predecessors, they'll likely recommend some degree of centralization, consolidation and standardization of those IT areas.

IT infrastructure consolidation in particular could become a penny-pincher's dream come true if OMB projections of 10-year savings of between $18 billion and $29 billion come to pass. Skeptics note the initiatives still have unanswered governance and operations issues. Plus, "Washington lives on the fear that if I become a client of [other] agencies, and if there's a crunch, those agencies that I'm dependent on will take care of their needs before they take care of my needs," says a federal IT manager speaking on condition of anonymity.

Still, lines of business efforts fit into a larger trend of purchasing IT as a service managed using performance metrics. Rather than buy its own human resources management system, for example, the Transportation Security Administration signed in 2002 a contract with consulting firm Accenture to handle routine HR tasks.

That brings up the question of whether such a contract should be debited against the IT or human resources budget, notes Mark Forman, former OMB administrator for e-government and IT and now a KPMG LLP principal. If the government ends up owning no new hardware or software and hiring no IT personnel to manage the contract, is it still really information technology? Says Forman: "The jury's out on that."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.