Federal IT Spending Spikes in Wake of Attacks

With government spending expected to increase following the Sept. 11 terrorist attacks, the Government Electronics and Information Technology Association is predicting federal spending on IT will jump 15 percent in fiscal 2002, growing to $49 billion from $42.7 billion in 2001.Federal government IT spending is expected to reach $65 billion in fiscal 2007, an average annual growth of 5.6 percent, according to GEIA. GEIA, an industry group that is part of the Electronics Industry Alliance, bases its annual forecast on budget documents and interviews with government, finance and industry officials. The group was wrapping up the forecast when terrorists attacked the World Trade Center and Pentagon. GEIA has re-interviewed many of the government officials to gauge the attack's impact and the government's response.An early estimate was that the government would need to spend $100 billion on rebuilding efforts, military action, economic stimulus and other activities. But that figure is growing, said Mary Freeman, chairwoman of GEIA's budget forecast. She also is a market research manager for Verizon Communications Inc., New York.IT areas of growing importance will be redundant systems, security and telecommunications via multiple channels, she said.GEIA's complete IT spending forecast will be released at the group's annual conference Oct. 23 in Alexandria, Va.The newly formed Office of Homeland Security, headed by former Pennsylvania Gov. Tom Ridge, is still a wild card, with little concrete information available yet on how its coordination role will affect spending, GEIA officials said.The civilian portion of the federal IT budget is expected to be $24.2 billion in fiscal 2002, compared to $22.2 billion in 2001. Defense should reach $25 billion, up from $20.5 billion in 2001.The post-Sept. 11 interviews with government officials also revealed some pressure to move dollars from programs so the money can be used to combat terrorism. However, government officials did not provide GEIA with details on what programs might be put on the back burner, Freeman said.One program winning stellar reviews in the crisis is the Navy-Marine Corps Intranet program, said Michael Kush, who headed the Defense Department forecast for GEIA. He also is a senior systems engineer for Vector Research Inc. of Annandale, Va.In the attack on the Pentagon, the Navy lost about 70 percent of its communications capabilities, but all of it was restored within three days using the NMCI contract, held by Electronic Data Systems Corp. of Plano, Texas.In interviews before the attack, Army and Air Force officials said they were looking at NMCI outsourcing contract as a model for updating and managing their IT infrastructures, Kush said."Everyone we talked to sees NMCI as an unmitigated success," Kush said.Civilian agencies expected to see their budgets increase in the wake of the attack include the State, Justice, Treasury and Transportation departments as well as the Federal Emergency Management Administration, said Jeanmarie Klitzner, who headed GEIA's civilian agency forecast team. She also is director of business development for federal sector, civil group for Computer Sciences Corp. of El Segundo, Calif.Because of the large role these agencies will play in combating and responding to terrorism, spending will have to increase, not just be moved from other IT programs, Klitzner said.Another trend identified during GEIA's research was the Bush administration's strong support for using best business practices to manage the government. This likely will be seen in an emphasis on financial management systems and capital planning, GEIA officials said."This is an administration that is run much more like a business, so agencies will have to know how much they are spending and where those dollars are going," Freeman said.