Spending in federal technology booms, report says
Agencies spent $155 billion on information technology-related contracts in fiscal 2004, according to report.
Driven by the defense and national security agencies, spending on federal technology contracts rose sharply in fiscal 2004, according to a private study released last week.
Contracts for federal information technology rose from about $95 billion in fiscal 2003 to $155 billion in fiscal 2004, according to the report, "FY2004: Where Did the Money Go?" The study was developed by IT consulting firm INPUT, which is based in Reston, Va.
The report noted that technology spending was top-heavy and focused on a few, extremely large IT projects. In fact, more than $118 billion-76 percent of all IT contract spending-went to the top five agencies.
"The large increase in awarded dollars can be attributed to a handful of defense-related programs, as well as the emergence of the Department of Homeland Security as a major player with its $10 billion US VISIT award," said Michael Boland, a senior analyst at INPUT. US VISIT is an immigration tracking system that was launched earlier this year.
The Navy spent the most on IT contractors, more than $36 billion in fiscal 2004. The Army was next, with more than $34 billion in spending. Overall Defense Department contracts were third, accounting for $18.3 billion in IT contracts. The Air Force was fourth-with $16.5 billion-and the Homeland Security Department was fifth, with $12.2 billion.
Boland also identified a $19.5 billion Navy contract for engineering, technical and support services, the Air Force's $9 billion Network Centric Solutions program and the Army's $7 billion Warfighter Information Network as key parts of the IT services spending increase.
Technology research and development also increased sharply in fiscal 2004, according to the report. Federal agencies spent $5.5 billion on technology R&D contracts in fiscal 2003, and $10.4 billion in fiscal 2004. The largest increases in that category were again attributable to the Defense Department. The Kinetic Energy Interceptor Capabilities program, part of the nascent national missile defense program, cost $4.6 billion.
INPUT researchers project the fiscal 2005 IT spending to fall below $155 billion, but still remain above fiscal 2003 levels.