Report: Katrina Blows Federal IT BudgetsReport: Katrina Blows Federal IT Budgets

Federal IT budgets, already in great flux because of tightened spending pressures and the Iraq war, are experiencing another blow from the after effects of Hurricane Katrina, according to a new report from Input.

Particularly hard hit, according to Input's director of public sector market analysis Payton Smith, are some segments of the Department of Homeland Security (DHS). "While there's not much of a direct impact from Katrina, it still adds to the problems created by Iraq and growing deficits," said Smith in an interview Tuesday.

Smith has been analyzing the recent impact of Katrina on DHS in particular and on the overall federal IT budget situation in general. He doesn't find much the IT world can cheer about, particularly as the federal deficit looms larger and larger.

Spending for Katrina is negatively impacting many other federal IT budgets, because the emergency funds allocated to the Federal Emergency Management Agency (FEMA) and DHS for Katrina threaten to impact funding for other IT programs.

"With the war in Iraq, the national deficit has grown exponentially," Smith said. "With the billions of dollars now needed to rebuild the devastated regions caused by Hurricane Katrina, deficit reduction will become even more important in the coming years."

Smith cited another more subtle challenge confronting IT budgets: during the 1990s, federal IT spending was increased to automate and trim other spending. "But now we're nearing the end of that," said Smith who added that it will be difficult to squeeze more savings out of federal IT allocations, which range between $65 billion and $70 billion annually.

He noted that the Office of Management and Budget has been encouraging IT work that is more "performance-based" and collaborative among agencies; he expects to see more "collaborative solutions" among federal agencies going forward.

In spite of looming budget cuts for DHS IT operations in future years, Smith believes the DHS IT budget will increase in fiscal year 2006. "Information sharing using IT will continue to be crucial to the DHS mission," said Smith. "For this reason, technology vendors need to keep their eyes open for future interagency contracts. Vendors should also remain patient as DHS restructures their procurement operations over the next three to four years."

Observing that promoting information sharing among 22 federal agencies is a key DHS goal, Smith said technology will still be an important part of DHS' ability to meet its goals.