Despite the economic downturn, spending in the federal sector continues to grow, spurred by homeland security initiatives and e-government, according to a recent research report.
Input Inc., a Chantilly, Va.-based market research firm that specializes in the public sector, said federal spending on IT products and services will grow to $68.2 billion in 2008, up from $45.4 billion for fiscal 2003.
The five top-spending agencies, according to Input, are the Department of Defense, the Department of Homeland Security, the Department of Transportation, the Department of Energy and the Department of the Treasury. And these five agencies will account for up to 70 percent of federal IT spending in 2008, Input said.
In a statement, Payton Smith, manager of federal market analysis at Input, said, "Homeland security and e-government initiatives remain the highest information technology priorities for federal agencies today."
Outsourcing will represent the bulk of the federal governments IT spending, rather than buying software, hardware and telecommunications and implementing them itself, Smith said.
Indeed, the Input study said the governments reorganization to focus on homeland security opens up vast opportunities for contractors to do work across the government.
"The consolidation of agencies to form the Department of Homeland Security is helping to drive an increase in IT demand across the federal government," said Steve Perkins, senior vice president of Oracle Federal and Oracle Homeland Security Solutions, a Reston, Va.-based division of Oracle Corp. "E-government initiatives have been prompting agencies to look to consolidate their data in secure, reliable, scalable systems for several years, and the governments homeland security mission is accelerating this effort, with the aim of also running integrated enterprise applications across these agencies to help them run more efficiently."
A spokesman for Hewlett-Packard Co.s Services organization based in Gaithersburg, Md., said: "The HP Services group has noted an increase in the need for IT services in the federal sector, particularly among agencies involved in homeland security initiatives. HP has been involved in discussions with officials at the Department of Homeland Security, the Department of Defense and other agencies. We hope to work closely with them to provide the IT services they need to help protect the United States and its citizens from future threats. We take this very seriously."
"We see four major trends driving demand for IT solutions and services in the federal market: security and information sharing, value-based procurement, transformation, and agencies increasing their focus on their core missions," said Jon Korin, executive director of strategic development at Northrop Grumman Information Technology, the Herndon, Va.-based division of Northrop Grumman Corp.
"As government outsources IT, networking and related services, this trend enables agencies to focus on their core mission," he added. "Clear focus is critical to success in these times of rapid government transformation. These requirements are driving federal IT spending today. We anticipate that they will continue to fuel market growth into the future."
According to Input, the federal market will grow at a compound annual growth rate of 8.5 percent between 2003 and 2008.
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