State and Local Govts. Increase Technology Funding

Investments in technology to support public safety and social services are credited for upping the ante, market research shows. Last year, the 2 govt. functions accounted for slightly more than 1/2 the total technology investment by state and local leaders, analysts said. Policy-makers are sinking money into high-tech in response to public and media attention to emergency situations and community protection, the study’s author Kate McCurdy said.

Analysts expect state & local govts. to increase investment in services and software at a faster rate than investment in hardware and networking equipment. IT services is the fastest growing segment of state & local govt. technology budgets, McCurdy noted. Organizations are turning to services such as support, consulting, systems integration and outsourcing to compensate for retiring staff, reduce administrative costs and keep pace with technology trends, she said. Software is also a quickly growing area of spending as state & local govts. look to streamline back-office systems like financial management and human resources.

Many govts. are consolidating their IT management and operations into a central hub under the direction of a CIO. The benefits appear to be a reduction in overall IT operating costs, eliminating redundancies and increased productivity, Datamonitor said. While it’s not a new trend, IT consolidation is entering a new stage that isolates high-tech management from political agendas and makes IT operations part of a larger institutional change instead of a priority that shifts depending on who occupies the mayor’s office or the governor’s mansion. For example, Cal. is undergoing its 2nd technology consolidation plan in a decade. After dismantling its IT department in 2002, the state is establishing a new office that will integrate and manage all statewide IT applications, systems and projects. Gov. Arnold Schwarzenegger (R) has pledged to make the state bureaucracy more responsive to constituent needs, McCurdy said.

$250 Billion for IT Contracts

On the federal govt. end, 20 IT contracts will be awarded in fiscal year 2006 worth a combined potential value of $250 billion, according to a report released Mon. by Input. The General Services Administration (GSA) will account for the highest value of award dollars due to Alliant and Networx Government-Wide Acquisition Contracts (GWACs). The coming year will be a banner one for small business awards with nearly all acquisitions setting aside a significant amount of contracting dollars for the little guys, Input’s Subcontract Opportunities Mgr. Darren Bezdek said. GSA’s $50 billion Alliant deal may represent the largest IT contract ever awarded exclusively to small business, he noted.

The Dept. of Homeland Security (DHS) plans to award 3 major contracts during the year, carrying a combined maximum value of $50 billion, Input said. The awards include Enterprise Acquisition Gateway for Leading Edge solutions (EAGLE), First Source and American Shield Initiative (ASI). The EAGLE acquisition accounts for most of the money pot with a ceiling value set at $45 billion. The contract will provide DHS its own way to buy IT services and consolidates most agency IT needs under a single contract. DHS wants to award the contracts to small and large businesses, analysts said.

Some technology standards folded into new govt. contracts could weigh heavily on future acquisitions, Input said. Most notable is the Justice Dept.’s Integrated Wireless Network (IWN) contract, which could set standards for how state, local and tribal public safety and homeland security entities communicate, Bezdek said. In addition, DHS’s ASI contract will use cutting-edge technology to monitor the nation’s borders and could be a proving ground for the application of monitoring technology across govt. agencies in various applications, he said. This contract season may also affect vendor market share, Bezdek added, warning the IT sector to keep close tabs on how the market moves.