Analysts forecast dip in federal IT spending

ARLINGTON, Va., 26 Oct. 2005. Government spending on information technology will grow slower than expected from 2006 to 2011, according to analysts with the Government Electronics and Information Technology Association (GEIA).

Oct 26th, 2005

ARLINGTON, Va., 26 Oct. 2005. Government spending on information technology will grow slower than expected from 2006 to 2011, according to analysts with the Government Electronics and Information Technology Association (GEIA).

The total federal IT budget for FY06 is expected to be $64.7 billion. By FY11, GEIA projects the IT budget to be $74.4 billion in current dollars. This translates into an average annual 2.9 percent increase during the five-year forecast period ¿ lower than last year's predicted annual growth of 3.6 percent.

This lower growth is the result of the need to cut costs as the growing deficit, funding the war in Iraq, and reconstruction following Hurricane Katrina put downward pressure on discretionary and information technology budgets.

The FY06 DOD IT budget is expected to be $30.1 billion, and will grow three percent during the forecast period to $34.8 billion by FY11. This is about seven percent of the total Department of Defense budget. Much of the growth in the DOD IT budget is being driven by the war on terror, security, and infrastructure upgrade requirements.

The civil portion of the FY06 budget is $34.6 billion and will have an annual average growth rate of 2.8 percent. By FY11, GEIA projects the IT budget to be $39.6 billion in current dollars. The civil agencies showing the most growth are Homeland Security, Commerce, and the Department of Veterans Affairs.

Lower discretionary budgets in a number of the civil agencies have translated to lower IT growth rates then GEIA has previously forecast for several civil agencies. These agencies include Transportation, Interior, and Agriculture.

"The squeeze on information technology budgets is forcing agencies to make some difficult choices," said Mary Freeman, GEIA's budget chair and director of business development for Verizon Federal Markets.

"Throughout the study process we heard repeatedly about the need to be efficient, to cut costs and to eliminate legacy systems, said Freeman, "however, the amount of the discretionary budget allocated to information technology shows how important these products and services are to agencies as they serve citizens, work to accomplish their mission and fight the war on terror."

The complete findings of the GEIA Study Teams will be presented at the 2005 Vision Conference to be held October 26-27, 2005 at the Fairview Park Marriott, Falls Church, Va.

GEIA is a trade association representing the "high-tech" industry doing business with government. Our member companies are active in serving the electronics and information technology-related needs of their government customers. For more information, see www.geia.org.

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