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Defense IT Spending To Slow Down: Study

Military services will cut overall IT growth by about 2.7 percent, mostly by eliminating systems, developing enterprise systems, and using off-the-shelf commercial products, the study says.
So much for war boosting defense contracts in the IT sector.

After an initial increase from the war in Iraq, defense spending for information technology has leveled off, and a new report predicts it will slowdown from 2006 through 2011.

The Government Electronics and Information Technology Association released its annual forecast Monday. The group states that military services will cut overall IT growth by about 2.7 percent, mostly by eliminating systems, developing enterprise systems and using off-the-shelf commercial products.

That's in line with statements Department of Defense Information Officer Linton Wells said at an executive gathering in June, when he heralded "the end of the fat years" for the department's budget and potential contractors.

The forecast report, "Finding Opportunities Amid Uncertainty," states that National Security System programs, including Command and Control, Information Assurance and Protection will be more secure than other aspects of the Defense IT budget.

Operations and maintenance account for 40 percent of the 2006 IT budget proposal. Procurement and research and development comprise about 15 percent of funding requests. GEIA President Dan Heinemeier said in a prepared statement that he expects spending to remain at those levels during the next five years, while healthcare IT costs grow by 4 percent, compounded annually. That's no surprise, considering the Congressional Budget Office predicted two years ago that DoD healthcare costs would boom.

The U.S. Air Force receives about 24 percent of the IT budget and spends about 40 percent of its share on communications and infrastructure. The Army and Navy each get about 21 percent. The Navy/Marine Corp Internet drives the Navy's IT budget and accounts for about 25 percent of the total.

Heinemeier said spending on logistics, information assurance and network defense connected with the Global Information Grid, will continue to grow. Information assurance will experience a 4.6 percent compound annual growth rate over the five-year forecast period, according to Heinemeier.

"The IT budget growth for the forecast period is 3 percent in current dollars, but if we adjust this forecast for inflation, we would be looking at a fairly flat IT budget throughout the five-year forecast period," Heinemeier said.

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