Impending change of administration expected to slow federal IT spending

Federal spending for information technology (IT) will grow moderately—most of it after 2011, say analysts at the Government Electronics and Information Technology Association (GEIA) in Arlington, Va.

By John Keller

ARLINGTON, Va.—Federal spending for information technology (IT) will grow moderately—most of it after 2011, say analysts at the Government Electronics and Information Technology Association (GEIA) in Arlington, Va.

Spending will be on hold in the near term in anticipation of a change in administration in January 2009, GEIA reported in its annual 10-year Vision forecast of federal technology spending. Total Federal IT spending will be flat from 2008 to 2018, GEIA says.

Total Federal IT spending will grow at a 1.4 percent compound annual growth rate (CAGR) over the next five years, from $74.1 billion in 2008 to $79.6 billion in 2013, which is striking, considering a nearly 6 percent CAGR for the preceding five years, GEIA says, adding that few, if any, new IT projects will be launched over the next 10 years.

“Civilian agencies will drive growth in IT in the out-years of the forecast—that is, 2011 and beyond,” says GEIA president Dan Heinemeier. “DOD IT spending has generally outpaced civil spending in recent history and while our study teams expect DOD-heavy spending to continue in the immediate future, the draw down in Iraq and a new administration are expected to place an increased emphasis on domestic programs.”

As such, higher growth in civil IT (3 percent CAGR over the next 5 years) than DOD IT (-0.2 percent CAGR over the next 5 years) is expected.

Agencies with the highest anticipated growth over the forecast period are Health and Human Services, Department of Homeland Security, the Treasury Department, and the Veterans Administration.

GEIA study teams also report that the decrease in defense IT spending over the forecast period is mostly due to decreasing supplemental appropriations. From 2003 to 2008, Defense IT spending has grown at 7 percent-plus, largely fueled by supplemental spending.

These increases to DOD’s budget are not sustainable and will not be built into the base going forward. As the war effort draws down, Defense IT spending will decrease. In addition, IT could be strained by the need for DOD to re-capitalize its equipment in the wake of the global war on terror.

For more information, contact the GEIA online at www.geia.org.

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