Outlook 2003: Record opportunities, uncertainties

Tom Ridge

Jack London

Record opportunities in the federal IT market are matched only by the uncertainties of budget, war

Uncertainty and opportunity. The yin and yang for 2003.

The opportunities are huge in the $ 53.3 billion federal information technology market. Whether it is the creation of the Department of Homeland Security, more outsourcing or the increasing emphasis on e-government, IT will play a central role.

The new department starts off with an annual IT budget of $2.1 billion. And that doesn't count the billions that are slated to flow to state and local governments, or new initiatives that may arise in areas such as intelligence analysis, data fusion and information sharing.

E-gov spending and outsourcing also are expected to account for billions in contract opportunities in the coming years.

But with war looming and a major terrorist attack constantly a threat, the government's plans and priorities can be ripped up and rewritten overnight.

"That's the wild card. It can accelerate certain parts of our business, but it may slow down other parts," said J.P. "Jack" London, chairman and chief executive officer of CACI International Inc., Arlington, Va.

War and terrorism aren't the only uncertainties. The creation of the Department of Homeland Security, with an overall $37.7 billion annual budget, opens up numerous opportunities for technology companies, but no one knows when the spending will begin.

At the same time, the lackluster economy is creating enormous budget problems, especially for state and local governments, setting the stage for acrimonious budget battles and casting doubts on many planned IT projects.

Adding to this uncertainty is a new Congress, in which both the Senate and House are controlled by Republicans. Will this result in smoother sailing for the president's budget initiatives, or will congressional fights escalate as Republicans attempt to push traditional party issues, such as outsourcing and higher defense spending?

For all the uncertainty and hoped-for opportunities in the market, a truism remains: Success relies on flexibility and customer service.

"Our customers are going to continue to buy and do and make happen, and the vendor community is going to continue to respond to that," said Dendy Young, president and CEO of GTSI Corp., Chantilly, Va.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

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