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3/28/2006
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Slowdown Seen On Federal IT Spending: Report

The exception to the near-term growth figure is the Department of Homeland Security, which will receive renewed interest because of an increase in focus for funding for natural disaster relief and preparation, Input says.

Federal government IT spending will slowdown a little, increasing just one half of one percent from Fiscal Year 2006 to FY07, according to a forecast released Tuesday by government business market research firm Input.

Looking farther out into the future, Input said government IT spending will grow from $75 billion this fiscal year to $93 billion in FY 2011.

The exception to the near-term growth figure is the Department of Homeland Security, which will receive renewed interest, because of an increase in focus for funding for natural disaster relief and preparation. Input noted that DHS focus on interoperable communications will boost spending in the communications market. The market research firm observed that IT spending on health issues also will likely receive steady increases in spending over the next five years.

But overall, federal IT spending will be contained, said Input, as federal agencies adhere more closely to performance and measurement guidelines set by the Office of Management and Budget (OMB).

"The introduction of several programs designed to review systems and program performance has resulted in efficiencies and cost-saving efforts," said Input's James Krouse, acting director, federal market analysis, in a statement.

"The federal government is acting more and more like a private sector business," he said adding that federal agency IT units are "cutting costs, reviewing opportunities closely, and conducting cost-benefit analysis for their IT investments. This is a new era in government spending practices and these cost-saving measures will affect federal IT budgets and, therefore, vendor opportunities."

Input noted that IT spending in the federal government has been undergoing a slowing trend since 1999.

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