Study projects healthy increase in federal computer spending

The consolidation of information technology systems and the purchase of new computer technologies will push federal spending on computer systems to $23 billion in fiscal 2009, according to a new report from an information technology consulting firm.

INPUT, a Reston-based government-market consulting firm, said in a report released Wednesday that computer system procurements, driven by investments in large-scale and midrange servers, wireless networks, voice-over-IP and improved supercomputers, will grow 35 percent from 2004 to 2009. That amounts to an annual growth rate of 6.3 percent.

By 2009, the study projects, civilian agencies will spend $10.3 billion per year on computers, and defense agencies $7.8 billion. Spending by the legislative and judicial branches, the Postal Service and intelligence agencies is expected to total $4.9 billion. Civilian agencies now spend $7.7 billion per year on computer systems, defined by INPUT as hardware and associated software and maintenance services. Defense spends $5.7 billion and the intelligence community $2.3 billion.

Computer system spending by Defense agencies other than the military service branches and the defense intelligence community is estimated to grow at the highest rate-13 percent-to more than $3 billion in 2009, according to the report. Defense agencies now spend $2.2 billion for computer systems.

The study predicts that the Air Force will spend $2.06 billion in 2009, an 8 percent increase over this year's level, followed by the Army at $1.8 billion, an 8 percent increase. The Homeland Security Department is expected to boost its purchases by 7 percent, to $1.7 billion.

Civilian agency investment in computer systems is greater than ever, because of the agencies' attempts to consolidate IT systems by using large-scale mainframes and supercomputers, said Chris Campbell, an INPUT senior analyst.

The report states that the increasing demand for federal workers to telework will drive computer purchases, and predicts that an upswing in hiring of white-collar workers accompanying a wave of baby-boom retirements will increase agencies' need for new computer systems.

The INPUT report notes that agencies are using the General Service Administration's purchasing schedule for information technology at an increasing rate. Nearly half of computer equipment purchases were made using the schedule in fiscal 2004, up from 43 percent last year.

"Clearly the GSA IT schedule has become a contract vehicle of great importance for the computer systems vendors serving federal agencies," the report states.

Ray Bjorklund, the senior vice president at Federal Sources Inc., an INPUT competitor, questioned whether spending would increase as much as the report predicted. The projections are "probably a little exaggerated and maybe a little optimistic," Bjorklund said.