Tight on IT

Two wars, a plunging deficit and a slow economy have made fiscal 2008 a historic year-for all the wrong reasons.

Agencies and information technology contractors can't say goodbye to fiscal 2008 soon enough.

For the second consecutive year, federal IT spending did not keep pace with inflation. The government's fiscal 2008 IT budget hardly budged from fiscal 2007, dropping slightly to $68.1 billion in fiscal 2008 from $68.2 billion in fiscal 2007, according to the Office of Management and Budget. That followed a 2 percent drop in the federal IT budget from fiscal 2006 to fiscal 2007.

While fiscal 2009 might look better (President Bush has proposed a 4 percent increase in IT spending), negative trends are conspiring against an across-the-board increase. Driving down spending is the expanding budget deficit, which the Congressional Budget Office says could hit an all-time record high of $500 billion by the end of the year. The cost of the conflicts in Iraq and Afghanistan also are keeping a lid on IT spending, as is the moribund state of the economy, which has been hard hit by spiraling fuel costs and a decline in consumer and business spending. And with the Bush administration in its final months, the Democratic-controlled Congress is less inclined to give the president's budget initiatives a priority.

Any spending increase most likely will follow what happened in fiscal 2008: an emphasis on military spending and a freeze or cut in domestic spending. Congress gave the biggest IT spending increases to agencies and programs working with military health care, homeland security and law enforcement. The Veterans Affairs Department had a fiscal 2008 IT budget that skyrocketed 23 percent to $2.2 billion, thanks mostly to a public outcry over the poor health care that wounded soldiers receive at Walter Reed Army Medical Center. The Homeland Security Department's IT budget also jumped, increasing 19 percent to $5.3 billion, and the State Department's IT budget climbed more than 5 percent to $859 million, according to OMB. Not stopping there, Congress padded the Justice Department's fiscal 2008 IT budget 8 percent, to $2.6 billion.

Most other agencies didn't fare nearly as well. Of the remaining 21 major agencies tracked by OMB, only seven had fiscal 2008 IT budgets that increased faster than the rate of inflation, while seven agencies received a cut in IT spending.

One of those agencies was NASA, whose fiscal 2008 IT budget dropped 4 percent to just under $2 billion. (Bush proposed to shrink the space agency's IT budget another 5 percent in fiscal 2009.) Michael Interbartolo, a technical assistant for integration at NASA, said the agency has found inventive ways to cut costs. "By spending our IT dollars to buy the monitors, docking stations and keyboards for a one-time purchase ourselves, we have saved significant money over paying the IT contractor over three years to rent the equipment," he says. "If the equipment fails, we will have to spend out of pocket, but the overall savings will cover the failures."

Despite a new president, expect the same IT spending trends to continue, with a heavy emphasis on national security spending, including a renewed initiative pegged at $30 billion over 10 years to bolster defense of government networks and databases against intrusions. That could be the biggest bright spot in what is shaping up to be an overall flat year.

Martin Bosworth is a technology writer who lives in Washington.