Federal spending on information technology will maintain its modest growth rate over the next two years, as the political climate keeps agencies wary of major new projects, according to a new market report.
IT spending will increase by 2.9 percent across the three branches of government, according to Input, a market research firm. President Bush's fiscal 2008 budget proposal increases total civilian agency IT spending to $65.5 billion, or 2.6 percent over fiscal 2007.
Kevin Plexico, executive vice president of operations at Input, said the new Democratic-led Congress is sparring already with the president over the budget and the 2007 continuing resolution, which is discouraging large agency large investments and hindering robust market growth.
Moreover, congressional efforts to reform contracting and procurement law and adding oversight to the buying process will inhibit the market by slowing it, Plexico said.
The market, however, is stable despite the sputtering growth, according to Input. The firm expects a 5 percent increase in spending through 2012, reaching to about $80 billion in IT spending.
Recently, budget figures have been low, with a 2.9 percent increase between 2003 and 2008. That followed a 11.9 percent boost in spending from 1998 to 2003, which had been fueled by Year 2000 remediation efforts and, after the 2001 terrorist attacks, new initiatives in homeland security and defense, Plexico said.
Today, agencies lack confidence in capitalizing on new IT investments. The Office of Management and Budget’s Program Assessment Rating Tool found that about 25 percent of the programs could show no progress in meeting their goals.
“How can you make a decision to invest in something if you don’t know the effectiveness of the program,” Plexico said.
Still, the market will continue to grow, because of a steady expansion of government programs, OMB’s interest in improving efficiency through the lines of business, which will make funds available for other projects, and the fast pace of innovative technologies, Plexico said.
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