Tech spending projected to jump 65 percent in five years

The federal government will ratchet up spending on information technology products and services by 65 percent in the next five years, according to a report released Wednesday by INPUT, an IT analysis and marketing services firm in Chantilly, Va. The report predicted that the government's total IT budget for products and services would rise from $36.4 billion in fiscal 2001 to $60.3 billion in fiscal 2006. That forecast represents a significant increase over the firm's predictions last year, which said that spending would rise to $40.3 billion in 2005. There has been a "distinct impact" on government IT spending as a result of the terrorist attacks of Sept. 11, said Payton Smith, INPUT's lead analyst for strategic market research. The actual amount spent by agencies in fiscal 2001 will not be known until figures are released next year. But based on INPUT's assessment of current and future procurements, as well as interviews with agency officials and government contractors, Smith said agencies are clearly ramping up their efforts to buy technology. "Security really seems to be the priority for agencies in the federal government right now," Smith said. He said agency spending would move beyond cybersecurity--protecting government Web sites and online data from would-be hackers--to the much broader challenge of protecting the infrastructure that carries information and allows agencies to communicate with one another. Agencies must back up data on remote servers so that, in the event of a disaster, the data isn't permanently lost, Smith said. Many offices destroyed in the attacks on the Pentagon and the World Trade Center hadn't stored their electronic data off-site. IT market analysis firm Federal Sources Inc. (FSI), headquartered in McLean, Va., predicted earlier this month that spending on information assurance, which involves securing access to data and ensuring that it hasn't been altered, would increase at a compound annual growth rate of 19 percent from now until fiscal 2004, besting the overall IT market growth rate of 5 percent. The services sector will feel the biggest boom, FSI predicted, with spending of more than $2 billon in fiscal 2004. Smith added that agencies recognize they must share their information databases with one another. Law enforcement and intelligence agencies, in particular, will link up their information repositories and ultimately turn them into a tangible product through the use of knowledge management software. Such software can aggregate reams of seemingly unintelligible data and distribute it across a network. James Kane, president of FSI, said technology companies with established government relationships would reap the whirlwind of new spending, likely in exclusive deals. "At least in the near term," Kane said, "the business is going to go to the companies regarded as a trusted partner and with whom the government already has contract vehicles in place." Kane said such contracts would likely be "sole-sourced," meaning that agencies will look to one vendor upon whom they can trust to do a job rather than spread the work among a number of companies, as is often the case on large government-wide contracts. Integic, a federal IT contractor based in Chantilly, exemplified Kane's prediction when it received a request this month from the Defense Department to expand work on the Composite Health Care System, an electronic medical records system for tracking service personnel. Defense asked Integic to include a version of the system that can be deployed at all Defense hospitals throughout the world. The company is the prime vendor on the health care system contract. Kane said he believes current IT purchases aren't just being made from IT budgets. The Defense Department is probably using funds allotted for command, control and communications, he said, or out of research and development budgets.