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3/3/2011
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Federal IT Budget Cuts Will Hit HUD Hardest

Some 14 departments and agencies expect cuts in technology spending in fiscal 2012, while 12 expect to increase the amount of money they spend on IT, a preliminary analysis by IDC indicates.

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The Department of Housing and Urban Development (HUD) could feel the brunt of federal IT budget cuts next year, with the department planning a 41% cut in IT spending for fiscal year 2012, according to a new report by IDC.

It's still unclear how the spending cuts proposed by agencies and departments will play out. Though they recently released their 2012 budget projections, Congress has yet to approve the fiscal-year 2011 budgets, let alone consider the budget for 2012. Congress recently granted a two-week extension to the 2011 budget resolution process.

However, the proposed budgets show program and investment cuts that affect IT spending, and several agencies will see a decrease in their IT dollars next year, according to IDC Government Insights' report on 2012 budgets.

Fourteen government departments or agencies will experience cutbacks in IT spending between 2011 and 2012, according to IDC. Of them, HUD shows the biggest percentage drop. Last year the agency proposed to spend $549.2 million on IT, while in 2012 the department plans to spend $227.5 million less, or $321.7 million, according to IDC.

Other agencies with significant decreases in IT spending in their 2012 budget proposals include the Department of Education, with a 38.2% drop from $1.1 billion last year to $655.4 million in 2012; the Office of Personal Management, with a 30% decrease from $94.7 million last year to $66.3 million in 2012; the National Archives, with a 25.4% drop from $157.1 million last year to $117.2 million in 2012; and the Small Business Administration, with an 18.6% drop in IT spending, from $130.2 million last year to $106 million in 2012.

That said, the Department of Education might not see so substantial a reduction in IT spending, as IDC analysts expect the cut to be re-evaluated by the Obama administration this month, according to the report.

Overall, potential budget cuts in 2012 could reach $54 billion, a number that includes the termination or cutting back of "discretionary programs deemed of minor importance to the agencies' missions," according to IDC. Those include 110 program investments 14 agencies have made in science, technology, engineering, and mathematics, according to IDC. Additionally, more than 100 youth-related programs could be cut across 13 agencies, the research firm said.

Even amid cuts, the federal government's estimated proposed IT spending for FY 2012 should grow a modest 0.2% -- or $79.8 billion -- over its estimated FY 2011 spending, according to IDC.

Some agencies hope to increase their IT investment. The State Department, the National Science Foundation (NSF), and the Department of Transportation (DoT) all propose double-digit growth in IT investment in fiscal 2012.

The State Department proposes to increase its investment in IT by 13.3% to $1.4 billion in 2012 from $1.25 billion in last year's budget; the NSF expects to boost its IT investment 12% to 100.6 million in 2012 from $89.8 million last year; and the DoT is seeking an 11.1% increase in IT spending to $3.72 billion in 2012 from $3.35 billion last year.

Nine other agencies that expect to grow their IT investment in fiscal 2012 include the Army Corps of Engineers, the Department of Labor, Department of Agriculture, and the Department of Health and Human Services. One agency, the Office of Management and Budget, expects no change to its IT investment in 2012.

There was some other good news for IT investment in the report. The fiscal 2012 budget includes $18 billion in federal funds to connect 98% of the U.S. population to broadband Internet through the use of smartphones and tablet devices over the next five years.

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