Forecast Sets Fed Info Assurance Spending at $6.7 B by 2005

Forecast Sets Fed Info Assurance Spending at $6.7 B by 2005

By Patience Wait, Staff Writer

Federal government spending on information assurance products and services will grow at an average rate of 20 percent annually during the next five years, rising from an estimated $2.7 billion in 2000 to $6.7 billion by 2005, according to a new industry report.

The Defense Department will account for about 60 percent of this spending, the report concluded.

The Government Electronics and Information Technology Association, which released the report Nov. 1, also projected dramatic increases in private-sector spending on information assurance, saying it would grow from $24.6 billion in 2000 to more than $64 billion in 2005.

The GEIA is part of the Electronic Industries Alliance, a trade organization in Arlington, Va., representing more than 2,100 companies in telecommunications, electronics and IT systems.

For the past 12 years, the association has provided five-year forecasts for the federal government information technologies market, but this is the first time that GEIA has prepared a forecast for the information assurance market. The projection is based on a survey and interviews conducted with more than 100 companies, both public and private, that sell information assurance products and services.

"This market is probably bigger than this, because we only used 112 companies [in our survey] and there are more than 112 companies [in information assurance]," said Dennis McCallam, an engineer with Logicon Inc. of Herndon, Va., a subsidiary of Northrop Grumman Corp. and co-chair of the GEIA team that prepared the report.

The forecast for information assurance also should be considered a conservative estimate, because a successful attack on government or commercial information systems could spur significant additional investment in this area, McCallam said.

GEIA released a separate report Nov. 2 estimating the total federal IT budget at $39 billion in 2001, growing just 1.7 percent per year over the next five years to $42.4 billion. Civilian agencies' spending on IT was projected to grow about 2.2 percent annually, twice the 1.1 percent annual increase in defense spending in this category.

Information assurance encompasses more than security, according to the GEIA report. It defined information assurance as operations that "protect and defend information and information systems by ensuring their availability, integrity, authentication, confidentiality and non-repudiation, [including] providing for restoration of information systems by incorporating protection, detection, and reaction capabilities."

While federal agencies generally do not issue contracts specifically dedicated to information assurance, it is an important element of many projects, the committee reported.

Among the large programs that include information assurance work are the Defense Information Systems Agency's upcoming request for proposals for the Defense Enterprise Integration Services III contract, a $3 billion systems integration program, and the General Services Administration's $1.5 billion smart-card contract.

The GEIA committee also concluded that the spending increases for information assurance are coming "out of hide," that is, out of funds allocated for other kinds of programs, including IT purchases.

Despite that, the projections for federal spending on information assurance and information technologies, when considered together, should not be interpreted to mean that the IT market is shrinking, according to Mary Freeman, manager of market research for Verizon Federal, part of New York -based Verizon Communications and a member of the GEIA work group that prepared the IT forecast.

"My sense is that a number of the [information assurance] dollars may be outside of what the definition of information technology is," Freeman said.

The information technologies forecast, on the other hand, is based on federal agencies' own budget projections, which include line items for purchase of IT products and services, she said.

"We assumed there would be good budget information on information assurance," said Barry Watts of Northrop Grumman of Los Angeles, and the conference and committee chairman. "It was a good theory, but it didn't work out that way. IA simply isn't a standard line item."

Based on the interviews GEIA conducted, there is a fair amount of "hidden" spending on information assurance, Watts said.

While spending on IT is projected to grow slowly over the next five years, the GEIA committee identified numerous business opportunities that will present themselves in the near future.

The Transportation Department, for instance, is planning to award a $1 billion contract in 2001 for Nexcom, the Next Generation Air/Ground Communications System, which will replace the air-to-ground system now used for voice communications between pilots and air traffic controllers.

Veterans Affairs is expected to issue a request for proposals worth up to $1 billion for continuing hardware and software procurement, a project known as PCHS II.

The Justice Department has numerous programs planned for 2001, including the Justice Management Division's $750 million project to acquire ongoing automated litigation services to support the civil, criminal and civil rights divisions.

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