[ISN] Feds' IT Security Spending Growth Set For Slowdown

From: InfoSec News (isn@private)
Date: Wed Jun 16 2004 - 05:47:22 PDT

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    By Eric Chabrow 
    June 15, 2004 
    The rapid growth in the federal government's IT security spending is
    coming to a screeching halt. In fiscal 2005, which begins Oct. 1, the
    U.S. government will increase spending on IT security products and
    services by a mere 2% to $5.6 billion, according to the government
    market-intelligence firm Input.
    Since the Sept. 11, 2001, terrorist attacks, the government has spent
    heavily on IT security, although the increases have been declining
    each year. But next year's increase is significantly smaller than
    those in previous years. Annual IT security spending rose 10% this
    year, 50% in 2003, and 100% in 2002, Input reports. Single-digit
    increases in IT security spending will be the rule through the
    remainder of the decade, it says.
    One reason IT security spending has slowed is that agencies have
    failed to comply with White House requirements to fix existing IT
    security weaknesses before the Office of Management and Budget
    releases additional money for new initiatives. Last year, according to
    Input, more than a quarter of federal IT systems didn't have
    up-to-date security plans. Input senior analyst Chris Campbell says
    yearly reviews by OMB and Congress have uncovered a number of security
    lapses unresolved from previous years, leaving many legacy systems
    vulnerable to attacks. This means agencies must seek OMB approval to
    re-appropriate funds to fix security lapses in existing systems,
    rather than get new money for new IT security projects. Campbell says
    vendors that help agencies implement security solutions at reasonable
    costs could benefit.
    Still, Input sees IT security spending will pick up a bit in the
    second half of the decade, reaching an annual growth rate of about 5%
    through 2009--when IT security spending should surpass $7 billion.
    By 2009, Input projects, IT security spending by Defense Department
    agencies and the military will rise to $3 billion, up from $2.4
    billion this year, a 5% annual growth rate. Similarly, civilian
    agencies' IT security spending will grow at a 5.2% yearly growth rate
    over the next five years to $2.9 billion, from $2.3 billion.  
    Intelligence agencies' growth rate is projected to be lower--2.5%, as
    spending will rise to $900 million from $800 million.
    Two-thirds of federal IT security spending comes from just 10
    agencies: the Office of the Secretary of Defense--which represents
    nearly one-quarter of all IT security spending--the three military
    branches, the departments of Homeland Security, Health and Human
    Services, Energy, Transportation, and Treasury, and the space agency,
    according to Input's analysis of government numbers.
    The biggest IT security contracts awarded by the government are both
    for $1.5 billion. A Defense contract deals with information assurance
    and a General Services Administration contract focuses on developing
    common identification smart cards.
    The government awards the biggest federal IT security contracts to
    systems integrators. In fiscal year 2003, according to Input, Northrop
    Grumman held 9% of the estimated federal government market share in IT
    security, followed by EDS at 8%, Science Applications International
    Corp., 5%, and General Dynamics, 4%.
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