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Presidential transition could put a damper on federal IT spending

With a new president who will have limited influence over the federal budget until fiscal 2011 and uncertainty over the economy, spending on federal information technology projects will be constrained in fiscal 2009, according to an industry report.

Comment on this article in The Forum.Due to the timing of the budget cycle, the new administration will have little flexibility with the fiscal 2010 budget, according to a study from INPUT, a Reston, Va.-based market research firm. The deadline for the president to submit a budget request to Congress is just two weeks after the inauguration in January.

Growth in IT spending will average 4 percent per year over the next five years, the report said, with smaller increases in the first two years until the budget process shakes out.

"The net of all this is that it makes certainty in funding and IT spending hard to fathom," said Richard Colven, vice president for industry analysis at INPUT and one of the report's co-authors. "No one in government is going to start an ambitious new IT program until they get confirmation that the funding will be there." He noted extra budgetary constraints brought on by the war in Iraq and the downturn in the economy.

"This happens with every new administration," said Colven, noting that the first year in office, a new president usually must go along with the budget request prepared by his predecessor. For the next administration, the situation is complicated by the budget showdowns between President Bush and the Democratic-controlled Congress.

On June 5, Congress passed a joint budget resolution for fiscal 2009 that called for $3 trillion in spending, about 1 percent more than Bush's February request. He promised to veto any discretionary spending exceeding his request.

If the two sides are unable to reach an agreement on a spending bill, then Congress likely will pass a continuing resolution directing agencies to spend at the previous year's levels. The government operated on a continuing resolution throughout 2007; for fiscal 2008, spending bills were passed only for the Homeland Security and Defense departments. Continuing resolutions are the status quo, Colven said.

Uncertainty over funding is having an impact on spending priorities, the report said. Agencies "have not been putting out a whole lot of new programmatic spending. …There's no bold new direction," said Colven. A few major programs that already have funding such as the Federal Aviation Administration's next generation air traffic control system likely will move forward, he said, but agencies are unlikely to propose any large programs before learning who will lead the next administration and what the IT priorities will be.

If Democrats have a strong showing in the November elections, as many political analysts are forecasting, Colven anticipates that Congress could get more done. "Eventually, war spending will start to wane and that constraint on spending will ease up, allowing more discretionary spending for agencies," he said. Agencies are focusing on health care and various IT modernization programs, Colven added. He said he was most interested to see what the new administration will do with initiatives such as e-government, which often are eliminated or rebranded during a presidential transition.

Technology is so embedded in the government, Colven said, that regardless of who is the new president, it's unlikely that IT spending will be cut dramatically. "We're past the point of no return," he said.

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