Fed IT spending to grow 11 percent annually through 2007

U.S. federal government spending on information systems and services will increase 11 percent annually to $63.3 billion by fiscal 2007, up from $37.1 billion in 2002, according to a new report by Input Inc.

The report, "Federal Information Systems and Service Market: Fiscal Year 2002 to Fiscal Year 2007," also said five agencies will account for nearly 70 percent of federal spending on information systems and services by 2007: the departments of Defense, Treasury, Transportation and Justice; and the National Aeronautics and Space Administration.

"Homeland security and e-government initiatives are the highest information technology priorities for federal agencies today," said Payton Smith, manager of public-sector market analysis services at Input, an IT research and marketing firm in Chantilly, Va.

"These two areas will drive significant near-term increases in spending even while the Office of Management and Budget looks to eliminate redundant programs and spending," he said.

Mark Forman, associate director for IT and e-government in OMB, has estimated that federal IT spending will hit $48 billion for 2002, much higher than Input's estimate of $37.1 billion.

But Smith said Input's numbers focus on IT opportunities for IT companies, and so do not include internal agency spending on manpower. Input's figures do, however, incorporate outsourced work, a significant opportunity for IT companies, according to the report.