Federal IT security spending slows

Federal IT security spending will increase just 2 percent in fiscal year 2005, according to recent analysis of government data.

In its Federal IT Security Market View report, INPUT, a Reston, Va.-based government market services firm, found that compliance to an Office of Management and Budget (OMB) mandate to fix IT security weaknesses is limiting funds available for new security investments. Spending for fiscal year 2005 is down markedly from previous years. According to INPUT, for fiscal year 2004, IT security spending increased 10 percent over 2003, and 2003 spending numbers were 50 percent higher than 2002 numbers.

The OMB has directed 18 agencies to correct security deficiencies for 2004-05. Chris Campbell, senior analyst, federal market analysis at INPUT, says that as a result of weaknesses in their security systems, these agencies will have to seek approval to re-appropriate funds to fix their problems.

Meanwhile, for fiscal year 2004, INPUT expects the government to spend roughly US$5.6 billion on IT security. The bulk of that ($3.4 billion) will come as professional services (defined by INPUT as software development, design and consulting, education and training, and the professional services associated with systems integration). Another $560 million will be spent on software and another $1.7 billion will pay for equipment. By 2009, INPUT forecasts, government IT security spending will eclipse $7 billion.

INPUT predicts that over the next five years, spending will remain relatively proportional among civilian, defense and intelligence agencies. For example, in fiscal year 2004, defense agencies will spend $2.4 billion on IT security while civilian agencies will spend $2.3 billion on IT security. In 2009, defense agencies will spend $3 billion compared to civilian agencies' total of $2.9 billion. Intelligence agencies will spend $800 million in 2004, rising to only $900 million by 2009. Another category that combines the U.S. Postal Service with the judicial and legislative agencies will see IT security spending triple from $100 million in 2004 to $300 million in 2005. Campbell says the main driver behind spending is the cost of professional services.

Campbell says that other factors, including the war in Iraq, are forcing slower growth in security spending. "We believe these will wrinkle themselves out," Campbell says, "and allow more money to be put back in to the budget."

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