Editor's note: This story was updated at 10:35 a.m. April 6, 2007. Please go to Corrections & Clarifications to see what has changed.
Proposed new administrative rules and reporting requirements for federal contracting would dampen information technology sales, according to market research firm Input. Company analysts say those accountability measures could slow an already slow-growing federal IT market.
Federal IT spending will maintain its modest growth rate for the next two years because the political climate will make agencies wary of beginning major new projects, according to Input’s new market report. President Bush’s fiscal 2008 budget proposal would increase civilian agency IT spending to $65.5 billion, a 2.6 percent increase compared with budgeted spending for fiscal 2007.
Kevin Plexico, executive vice president of operations at Input, said the new Democratic-led Congress is sparring with Bush over the budget and the 2007 continuing resolution, which is discouraging large agency investments and hindering robust market growth.
However, the federal IT market is stable, despite sputtering growth, according to Input. The firm expects a 5 percent increase in federal IT spending through 2012, when it will reach about $80 billion.
Recent federal IT budget figures show a 2.9 percent increase from 2003 to 2008. That followed an 11.9 percent spike in spending from 1998 to 2003 caused by Year 2000 date code remediation efforts and the government’s response to the 2001 terrorist attacks, Plexico said.
Agencies’ IT investments Another factor slowing the market’s growth is agencies’ lack of confidence in capitalizing on new IT investments, Plexico said. However, several chief information officers at Input’s 2007 Market View conference last week said they disagree.
Lisa Schlosser, CIO at the Department of Housing and Urban Development, said CIOs are doing their jobs. “We’re always looking at our business needs and prioritizing what we’re spending on,” Schlosser said. “That’s what we do.”
Darren Ash, associate CIO at the Transportation Department, said the Office of Management and Budget wants agencies to use their IT equipment to the maximum extent possible before spending more on IT equipment. Karen Evans, OMB’s administrator for e-government and IT, has instructed federal CIOs to “do it right, fix security and make sure it’s functional before you think about new stuff,” Ash said.
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