Federal technology spending expected to grow 4 percent a year

Information technology spending by the federal government will continue to rise over the next five years, according to the 15th annual forecast released Tuesday by the Government Electronics and Information Technology Association (GEIA).

The group predicts that the total federal IT budget for fiscal 2004 will be $59.3 billion, with $31.4 billion to be spent on civilian agencies. For the next five years, GEIA predicted that total federal IT spending will rise 4.1 percent annually, to $72.5 billion, by fiscal 2009.

GEIA had estimated a higher growth rate of 4.8 percent last year but lowered it after considering a trend toward greater efficiency and consolidation by federal agencies, as well as the negative impact of the federal budget deficit on discretionary funding.

Spending on non-defense IT projects is being driven largely by the needs of the Homeland Security Department, GEIA wrote. The civilian portion of the federal IT budget is expected to grow 3.7 percent annually, reaching $37.6 billion in fiscal 2004.

Defense Department IT spending will be $27.9 billion in fiscal 2004 and grow 4.6 percent annually, to $34.9 billion, by fiscal 2009. GEIA said the U.S. military continues to rely more on technology, a trend that it said is increasing throughout the federal government.

Homeland Security IT spending, meanwhile, should rise from $10.6 billion in fiscal 2004 to $12.7 billion in fiscal 2008, provided there are no other major national security incidents. GEIA noted that many of the department's special projects are headed to the investment review board for approval, so more procurement opportunities should arise next year.

"The words we heard repeatedly during interviews were 'efficiency' and 'consolidation,'" Mary Freeman, director of business development for Verizon Communications' federal markets and GEIA's budget co-chairwoman, said in a statement. "The fact that IT is more than 7 percent of the federal government's total discretionary budget highlights how important these products and services are to agencies as they serve citizens and work to accomplish their missions."

GEIA also predicted that spending on defense electronics would be $76.8 billion for the next fiscal year, growing 1.8 percent per year over the next decade, to $91.9 billion in fiscal 2014. The study predicted that electronics spending by the defense agencies would grow the most.

Modernization of the Air Force and Navy spending on ships and airplanes will drive the spending, with the Army modernizing and transforming its forces through Future Combat Systems acquisitions, GEIA predicted.