Obama Budget Targets U.S. Technology Spending Growth

Government spending on information technology would rise to $79.5 billion next fiscal year under a budget proposal from President Barack Obama that seeks to balance technology priorities with federal deficit reduction.

The technology budget released today is a 1.3 percent increase from the $78.5 billion federal agencies plan to spend in the current fiscal year under a continuing resolution that has kept spending at about 2010 levels.

The fiscal 2012 budget shows “success in flattening the growth in federal IT spending,” the administration said in its proposal. After an average increase in technology spending of 6.8 percent from 2001 to 2008, the growth rate fell to an estimated average of 3.5 percent a year during Obama’s first two years in office, according to the Office of Management and Budget.

The proposed increase is “just a starting point” in the administration’s policy that has to be taken “in the context of the whole budget dance this year,” said Alan Balutis, director of the Internet Business Solutions Group for Cisco Systems Inc.

“There are a lot of policy issues swirling beneath” just what the numbers are, and “any increase at all in technology” shows how important it is to the White House since the administration is trying to reduce overall spending, said Balutis, a former chief information officer at the Commerce Department during the Clinton administration.

The IT dashboard was developed by the administration's chief information officer Vivek Kundra to track project performance. Rich Clement/Bloomberg Close

The IT dashboard was developed by the administration's chief information officer Vivek... Read More


The IT dashboard was developed by the administration's chief information officer Vivek Kundra to track project performance. Rich Clement/Bloomberg

More Cloud Computing

To reduce spending growth, the administration proposed cutting the time it takes to develop IT projects, improving management of technology programs, increasing industry and government cooperation, and sharing technologies among agencies.

Part of the plan includes moving government applications from government-owned networks to those operated by contractors, a practice known as cloud computing. The General Services Administration awarded on Dec. 1 a five-year, $6.7 million contract for e-mail services to Unisys Corp. in Blue Bell, Pennsylvania, which partnered with Mountain View, California- based Google Inc., Tempus Nova Inc. and Acumen Solutions Inc. to win the deal.

GSA says it will save 50 percent in costs associated with maintaining the system, according to the budget.

“The real key to the savings to the reduction in the IT budget is to shut down those legacy systems,” said Karen Evans, a partner with technology consulting firm KE&T Partners LLC in Washington and a former administrator for e-government and IT at OMB in the President George W. Bush administration. “If you allow them to keep going, you’re going to end up paying for the new stuff and the old stuff, and you’re just going to jack up your costs.”

Consolidate Data Centers

The White House also plans to hold down IT spending growth by consolidating federal data centers, places where agencies store large amounts of information on computers. Agencies operated 2,094 centers in August, almost five times the 432 that existed in 1998, according to the budget.

Obama proposed reducing the number of data centers by 39 percent to 1,284 by 2015 by relying on cloud computing and virtualization, which requires agencies to consolidate and share servers. The administration also plans to get rid of outdated equipment and close buildings that are no longer needed.

Republicans in Congress have said Obama’s $3.7 trillion overall budget, which the administration said will cut deficits by $1.1 trillion in 10 years, won’t reduce the federal deficit enough. The plan would halve the deficit by the end of 2012 through targeted spending cuts and tax increases, the administration said.

To contact the reporter on this story: Juliann Neher in Washington at jfrancis31@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net

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