Federal IT spending slows down

Don't spend your federal IT dollars like you've got all the money in the world. You don't, and federal IT budgets are predicted to grow more slowly over the next several years, according to a new report by TechAmerica, the association for 1,500 tech companies.

The $75 billion that currently is available for federal IT is expected to grow at less than 4 percent for civilian agencies over the next five years--about half of what it grew from 2005 to 2010 when it clocked in at more than 8 percent each year. The reason for the slowdown? The federal deficit is expected to keep things in check through 2020, forcing Congress to look for tougher ways to control spending.

"The primary driver of the federal marketplace and discretionary budgets for the next decade is going to be the magnitude of the federal deficits," Cecil Black, chair of TechAmerica's defense forecast, told InformationWeek.

There was some good news and some bad in this report. The Departments of Health and Human Services, Justice, and Treasury will see the greatest increases in IT budgets among large federal agencies. The Department of Commerce is expected to see the biggest decline, largely because it will no longer be spending half its budget on broadband grants.

The Obama Administration has said it wants to increase the amount of IT work done by federal employees, rather than outsourcing the work, but the overall impact of insourcing on IT budgets is expected to be minimal. "It's unclear if they can hire the workers they need as quickly as they need,"  Madeline Andre, co-chair of TechAmerica's IT forecast committee, told the magazine.

Even the budget for that sacred cow--military spending--is expected to drop from $184 billion in 2009 to $110 billion in 2020, a 5 percent decline.

For more on federal IT spending:
- check out this InformationWeek article

Related Articles:
End of fiscal year IT spending to spike
It stinks to be the CIO
Obama's budget shifts IT spending