FY 2004 Federal IT Spending Request Increases Nearly 14%2 Sep, 2003
FY 2004 Federal IT Spending Request Increases Nearly 14%
The Office of Management and Budget (OMB) recently released the President’s FY 2004 request for federal Information technology spending. At $59.3 billion, the proposed FY 2004 IT budget is a significant increase, nearly 14%, over last year’s FY 2003 IT budget request of $52.1 billion. According to the FY 2004 budget, the rapid growth in IT spending will be most dramatic during FY 2003, increasing more than $8 billion (17%) over reported actual IT spending of $49.8 billion in FY 2002. Several factors contribute to this increase in FY 2003:
1. OMB is including in the FY 2003 IT spending estimate $1.6 billion of previously unreported IT spending.
2. IT spending for the new Department of Homeland Security is expected to increase from $1.8 billion in FY 2002 to $3.0 billion in FY 2003.
3. IT spending for the Department of Defense is expected to increase from $23.4 billion in FY 2002 to $27.7 billion in FY 2003.
The three factors listed above account for a $7.1 billion increase in reported federal IT spending and more than 85% of the total increase in spending from FY 2002 to FY 2003. Comparatively, the FY 2004 IT budget is only a modest increase of $1.3 billion (2%) over the estimate for FY 2003. With the dramatic increase in the federal government’s budget deficit, market research firm INPUT believes this indicates a potential slow-down in FY 2005 and beyond of the nearly double-digit growth rates that have characterized federal IT spending over the past three fiscal years.
Considering the two-year interval from FY 2002 to FY 2004, the average annual increase in federal IT spending, according to OMB’s data, is 9.1% per year. Two clear “winners” stand out in the FY 2004 IT budget request – the Department of Homeland Security in terms of percent increase from FY 2002 to FY 2004, -- and the Department of Defense in terms of total increase from FY 2002 to FY 2004. IT spending at the newly created Department of Homeland Security is increasing from $1.8 billion in FY 2002 to nearly $3.8 billion in FY 2004 – more than a 100% increase.
IT spending at the Department of Defense is requested to increase from $23.4 billion in FY 2002 to $27.9 billion in FY 2004 – a $4.5 billion increase, which by itself is more than the FY 2002 IT budget of any single civilian department. The homeland security mission of the DoD and the potential war with Iraq are two of the primary factors contributing to the increase in DoD IT spending.