Input: Federal IT spending growth near historic low

A number of factors are converging to create a federal information technology spending environment described by the market research firm Input as tempered momentum.

In its new five-year federal IT market forecast, the firm said the current economic downturn, increasing Congressional scrutiny of budgets and performance, effect of war funding on overall discretionary spending and uncertainty about the next administration have all contributed to the situation.

Those factors combined will slow the growth of federal IT contract spending to 4.1 percent annually, from $71.9 billion in 2008 to $87.8 billion by 2013, the analysis firm said.

"After a sustained period of relatively unbridled increases in federal IT expenditures, the market has entered a period fettered with uncertainty and complexity that has slowed the growth in IT spending to near historical lows," the report said.

Information sharing, the need for better IT management techniques and relatively flat employment levels are major drivers affecting federal IT spending. For cost savings, agencies will move forward with IT infrastructure optimization and virtualization in addition to consolidation, Input said.

"Although the anticipated growth rates are below the historical average, government's increasing reliance on technology sustains momentum in IT spending, especially as it relates to increasing efficiency and reducing operational costs," said Richard Colven, vice president of industry analysis at Input.

"The spending environment may seem gloomy, but in light of fiscal and economic conditions, IT spending growth remains healthy," added principal analyst John Slye.

"The government's ability to face its challenges in the coming years will hinge on its ability to develop, manage, share and secure a solid technology environment," Slye said. "We expect federal agencies will be paying a lot of attention to their technology, even if only to figure out how to drive costs out of steady-state operations to free up funding for new work."

The report analyzed trends in the federal IT market using the fiscal 2009 IT budget request recently released by the Office of Management and Budget.

Input's annual assessments of the federal market for IT products and services includes spending by organizations in the three branches of government, quasi-government agencies and the intelligence community.