Despite being a rather unexciting budget for businesses overall, the proposed FY06 budget has some good news for the Information Technology( IT) industry. IT Budget of $65.2 billion for the Federal government, appears to represent a more than 7% growth rate. A four year view shows the IT budget represents a compound annual growth rate (CAGR) of 5.5% over four years (FY03 through FY06). (Related article: Does IT matter?)
"This is not unexpected, and represents healthy growth for IT, considering that the top line budgets of many agencies are dropping or funded below requested," said Karen Wilson, vice president, consulting for FSI. "The IT portions of this budget are growing, which is good news for the industry."
Some examples of major new projects include:
- Department of Veterans Affairs (VA): Health eVet - funded at $311 million for FY06. The project replaces the existing VistA-Legacy system. VistA is the technical infrastructure that supports the VHA provision of health care to veterans.
- Department of Homeland Security (DHS): Border & Transportation Security's (BTS) Consolidated Enforcement Environment is funded at $31.6 million for 2006. This is a DHS system designed to support the intelligence, interdiction, law enforcement and investigative efforts of the Department. (Related article: New business opportunities in homeland security)
- DHS: Homeland Security operations center - which is a consolidated emphasis on developing the capability for HSOC, and is budgeted for $38 million of new funding.
- DHS will receive $11.6 million for tools for infrastructure protection to manage cyber-security
- Transportation Security Administration's (TSA) Freight Assessment Program is funded at $10 million in 2006. This provides a supporting system to government's databases on shippers and air carriers, with the intent to analyze data for effective intelligence and protection of citizens and freight.
There are also several programs that are not new, but appear to have sizeable increases from FY05 to 06. Overall, the ten largest program increases from GFY05 to 06 represent an increase of $1.9 billion. Some examples include the following:
- TSA will receive $382.5 million for electronic baggage screening technology.
- TSA will also receive $215.7 million for the combined credentialing investment.
- Department of Justice (DoJ) will receive long-needed funds for consolidated enterprise infrastructure totaling some $154 million.
There is much emphasis in the government on "information sharing" stemming in part from the Intelligence Reform Bill passed in late 2004. While the budget does contain several examples of information-sharing projects (such as the consolidated law enforcement project in DHS noted above), the bulk of the funding at this point appears to be interwoven among many projects such as existing data sets to be consolidated and shared, infrastructure and communications network improvements, and other similar projects.
Another area of emphasis is healthcare. This general area will grow 13.4% increase from 2004 to 2006. However, from 2005 to 2006, there is not much increase, which may signal re-alignment of existing funds.
There is noticeable growth in new projects of healthcare-related IT. As opposed to information sharing, healthcare IT is called out in several areas in the budget - most notably in the VA and the Department of Health and Human Services. Some examples include Health eVet program noted above. Also, the Centers for Medicare and Medicaid Services will provide $457 million in development/modernization/enhancement grant funds to the states for the federal share of State Medicaid Management Information System systems costs. While the president has talked about electronic medical records, there is no provision in this budget. (Related article: Application opportunities for IT in healthcare)
One area noticeably missing from the budget are funds for the Social Security Administration (SSA), given the President's focus on social security reform. The SSA budget takes a big hit in IT. This could indicate that the Administration does not know what shape the IT investments will take in case president's Social Security privatization efforts are successful.
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