China gives NASA a boost

"Two words we heard over and over this summer were consolidation and efficiency." ?Mary Freeman, Verizon Communications

Henrik G. de Gyor

In the Defense Department, the effects of "transformation" were on display in Operation Iraqi Freedom, said Jim Wrightson of Lockheed Martin Corp.

Henrik G. de Gyor

GEIA predicts strong IT spending for homeland security, defense, space

For NASA, it could be Sputnik all over again. China's successful launch of a manned spacecraft in October will help boost NASA's information technology budget during the next five years, according to a new report released by the Government Electronics & Information Technology Association.

In its annual forecast of federal IT spending, GEIA predicted that NASA's overall spending on IT products and services will grow from $2.2 billion in fiscal 2004 to $2.5 billion in 2009.

The 3.1 percent annual growth rate, while modest, reverses cuts the space agency's IT budget has suffered in recent years. GEIA estimated that NASA's overall budget will grow at an annual rate of 3.5 percent, more than double its 1.5 percent average annual growth rate since 1976.

China's achievement isn't creating the profound national unease that was generated by the Soviet Union's 1957 launch of the Sputnik satellite. But the space launch will make it unlikely that NASA will stop using astronauts, despite the space shuttle Columbia tragedy, GEIA said. And the agency likely will accelerate funding for the Orbital Space Plane, the successor to the space shuttle.

"If China is successful in orbiting humans, it will not be politically possible for the United States to step back from manned spaceflight," said one anonymous government official interviewed by GEIA.

Overall, GEIA projects that government spending on IT will increase from $59.3 billion in fiscal 2004 to $72.5 billion in fiscal 2009, a 4 percent compound annual growth rate. Defense Department agencies' IT spending will increase from $27.9 billion to $34.9 billion over that five year period, a 4.6 percent per year increase, while civilian agency spending will continue to represent more than 50 percent of the pie, increasing from $31.4 billion to $37.6 billion over that time span, or 3.7 percent growth per year.

Depending on the agency or the mission, there are bright spots in federal IT spending, but many agencies are facing constraints as the government incorporates the Homeland Security Department, according to speakers at the group's conference Oct. 28-30.

GEIA, based in Arlington, Va., is a government IT market subset of the Electronic Industries Alliance. Its members include companies in the electronics, communications and IT industries that do business with the federal government.

The GEIA forecast is calculated differently than most budget projections. Volunteers from the association's member companies scour traditional sources of information, such as the president's budget request, documents that agencies file with the Office of Management and Budget, Defense Department reports and contract data. But they also conduct hundreds of interviews with officials in all the profiled agencies to refine GEIA estimates.

Tom Davis, director of strategic planning with General Dynamics Corp., Falls Church, Va., and leader of the committee assessing the overall economic environment, said that looming budget deficits are likely to lead to cuts in future defense spending, and cautioned that new government debt in the second quarter of 2003 was 90 percent foreign-owned, particularly by China. "If they withhold [purchasing new debt], we'd have to finance it, probably at a higher interest rate," he said.

[IMGCAP(2)]In the Defense Department, the effects of "transformation," as being promoted by Defense Secretary Donald Rumsfeld, were on display in Operation Iraqi Freedom, said Jim Wrightson, vice president of strategic planning at Lockheed Martin Corp., Bethesda, Md. The military is pushing for improved, real-time battlefield intelligence, enhancing the capabilities of small, agile forces, providing the logistics and maintenance for those forces and strengthening C4ISR -- command, control, computers, communications, intelligence, surveillance and reconnaissance.

Operations and maintenance, already comprising $117 billion, or 30 percent, of the Defense Department budget, could soak up spending slated for procurement and research, development, testing and evaluation if transformation does not produce real financial savings, said George Shaw, vice president of strategic planning at Raytheon Co., Lexington, Mass., especially as the military services move to replenish their supplies after the Iraq war.

Many of the civilian agency officials interviewed said repeatedly that OMB's business-case requirements are beginning to become institutionalized, said Mary Freeman, director of business development at Verizon Communications Inc., New York.

"Two words we heard over and over this summer were consolidation and efficiency," she said.

But the agencies also wish that OMB would slow its implementation of its initiatives and maintain some consistency in reporting requirements from year to year, said Cheval Force Opp, manager of the federal command center at IBM Corp., Armonk, N.Y. They also are concerned that next year's presidential campaign may affect their budgets, she said.

The IT budget for DHS will exceed $3.7 billion in fiscal 2004, growing to more than $4.6 billion in 2009, according to the team which interviewed federal employees in the department. The Border and Transportation Security directorate will take up 80 percent of the IT budget, said Tom Hudson, director of homeland security at Raytheon.

Major contract opportunities at DHS in the near term include:

*U.S. Visit, the national border and immigration control program;

*The Transportation Worker Identification Credential program;

*The Monitoring and Warning Systems initiative to set up networks of remote surveillance, smart sensors and other technologies to guard the country's borders;

*The Infrastructure and Data Center Consolidation program, focusing on the integration and consolidation of DHS' networks and related IT infrastructure components.

Many civilian agencies are feeling the pinch of DHS' addition to the mix of federal programs, said Verizon's Freeman.

"When we compared the president's budget request from February 2002 with the budget that came out last February, we saw immediately that a number of civil agencies had much lower budget requests than we had seen a year ago," Freeman said.

It appears that the administration is diverting IT funding from key agencies such as the departments of Health and Human Services and Agriculture to fund the Homeland Security Department, she said.

Staff Writer Patience Wait can be reached at pwait@postnewsweek

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