Bush official defends technology procurement consolidation

Officials and technology experts say that the government's strategy to consolidate the way it procures information technology products and services should not be viewed as reduced opportunities for IT vendors to sell their wares to federal agencies.

As he unveiled the Bush administration's proposed spending figures on IT for fiscal 2004, Mark Forman, associate director of information technology and e-government at the Office of Management and Budget (OMB), touted the agency's approach to leveraging technology systems to make government operations more cost effective.

"[T]here's an awful lot of redundancy" in the government as a result of multiple agencies performing the same functions, including human resource services," Forman told industry executives at a briefing last week. "We have to fix the lines of the business if we really are going to get the productivity out of IT investments."

The Bush administration proposed spending $59.3 billion for IT in 2004, up nearly 14 percent from the fiscal 2003 spending request.

Consequently, OMB, which is coordinating a variety of governmentwide technology initiatives, said it would require agencies to make a "business case" for the dollars they propose spending on new projects.

Forman emphasized that OMB aims to reduce to the cost of IT equipment by consolidating procurement and leveraging the size of government to buy in bulk. "Rather than buy 50 different department software, licenses ... can we leverage the 'buy once use many concept'" for licensing software and other IT products, he said.

Forman acknowledged that such a consolidation strategy could mean fewer IT contracts. But he argued that it would not reduce the number of opportunities for IT vendors to sell goods and services to the government.

"What we are focusing on this year in terms of the [2004] budget is developing a governance structure literally to redesign the lines of business of the federal government, where we need to. That's going to take a lot of work" and require a lot of industry participation, Forman said. "The opportunities for vendors are always going to be associated with innovation and business-process improvement."

Harris Miller, president of the Information Technology Association of America, agreed.

"If the customer wants to consolidate and simplify its own operations and at the same time save the taxpayers dollars, the IT industry is not going to object at all," he said. "That's a trend that you are seeing in a lot of corporations," he added, and called the OMB's proposed 2004 e-government budget "extremely positive."

"I do think probably we will see fewer, but larger individual contracts. We've seen a little bit of that trend occurring already," said Payton Smith, manager of federal market analysis at INPUT, a government IT research firm.

Every move for consolidation itself is an opportunity ... It just means that it's going to place more emphasis on strategic partnerships for companies. They're going to have to be more adaptable to working in the subcontracting environment."

Smith cautioned, however, that he expects the rate of growth for IT products likely will slow during the next few years.