Report: Federal IT spending has doubled in five years

Federal spending on information technology doubled between 1997 and 2001, with the bulk of those funds going to larger businesses, according to a study released Tuesday by the General Accounting Office (GAO-03-384R).

Federal agencies in 2001 purchased 62 percent of their IT services and supplies from large companies. Twenty-one percent of IT services were purchased from medium-sized businesses and 14 percent from smaller entities, the GAO report said.

GAO defined small businesses as those with less than $21 million in annual receipts. Medium-sized businesses were defined as those with $21 million to $500 million in revenues, and all companies with more than $500 million revenues were defined as large.

While the Defense Department remains the largest buyer of IT products and services, GAO found that agencies have been increasing spending of IT through the General Services Administration's Federal Technology Service. IT purchases made through GSA supply schedule contracts grew from $405 million in 1997 to $4.3 billion from in 2001, the report said.

Under the supply schedule program, GSA negotiates contracts with a wide variety of vendors and allows agencies to place orders under the contracts directly with the firms. In fiscal 2001, medium-sized businesses got almost 40 percent of their contract dollars through schedule sales. Small businesses got 35 percent of their contract dollars through the schedules, and large firms 18 percent.

According to GAO's analysis, American Management Systems obtained the largest percentage of federal IT dollars in 2001, followed by Lockheed Martin and SAIC.