The President's budget for the Federal government for
FY 1998 was the first budget prepared since the
passage of the Information Technology Management
Reform Act of 1997 (ITMRA), Public Law 104106
(the ClingerCohen Act). The budget reflected the
extensive information technology(1) (IT) activities of the
Federal agencies since the Act's passage, and included
a discussion of specific ways in which Federal
agencies are adopting the best private sector practices
in using technology. In particular, six of these
practices were highlighted: reengineering before
automating; acquiring systems in phases; buying off
the shelf technology; consolidating and outsourcing;
monitoring progress with performance-based
management systems; and integrating information
across agencies. Also included was a listing of the
program performance benefits from proposed major
information technology investments.(2) This chapter
supplements that report by analyzing in detail the
components of the Federal government's $27 billion
information technology budget.
The analysis consolidates data supplied by Executive
Branch agencies in response to OMB Circular No.
A11, Preparation and Submission of Budget
Estimates, Section 43, Data on Acquisition, Operation,
and Use of Information Technology. The agency
responses reported spending and personnel resources
allocated to IT activities for FY 1996 through FY
1998.(3) Agencies that obligated more than $50 million
in any of the years PY, CY, or BY (past year, current
year, or budget year, respectively) for IT activities are
required to submit a report on obligations for
information technology for the agency as a whole.
Information technology expenditures make up a small
but meaningful portion of the Federal(4) budget. The IT
portion of the budget rose from 1.2% in FY 1982 to
1.77% in 1993. After a drop to 1.61% in FY 1994, the
percentage peaked at 1.81% of the Federal budget in
FY 96. From 1.81% in FY 96, the percentage is
expected to fall to 1.76% in FY 97 and 1.71% in FY
Obligations for IT activities grew in nominal dollars from $14.3 billion in FY 1986 to $24.97 billion in FY 1993. After a downturn in 1994 to $23.50 billion, IT obligations rose in FY 95 to $26.16 billion and again in FY 96 to $28.27 billion. Projected levels for 1997 and 1998 show a leveling in nominal dollars at $28.70 and $28.97 billion, respectively. In constant dollars there recently has been a downward trend in IT obligations, and the 1998 level is expected to be the lowest since 1992. The FY 1998 numbers represent the President's request and are subject to the enactment of appropriations by Congress.
In real terms, total IT obligations grew an average of
2.47% annually between FY 1988 and 1998. Exhibit
1 displays the Federal IT obligations from Fiscal Years
1982 through 1998 in nominal dollars and constant
(1992) dollars. Appendix 3 provides a summary of the
changes in reporting basis between this year's and
previous years' data.
As shown in Exhibit 2, IT obligations as a proportion
of total Federal budget outlays have fluctuated
between 1.6% and 1.7% since 1991. The total
Federal Budget includes all discretionary spending,
mandatory programs (e.g., deposit insurance, Social
Security, and Medicaid/Medicare), and net interest
payments on Federal debt.
Similarly, as shown in Exhibit 2, IT expenditures, as
a percentage of the Federal operating budget,(5) have
grown from 4.37% in FY 1988 to 6.2% in FY 1996.
It is projected to grow slightly to 6.42% in FY 1998.
The operating budget estimates are based on total
expenditures for purchases of goods and services by
the Federal sector, as published in the Federal
Transactions in the National Income and Product
Accounts (NIPA) or as promulgated by OMB's Budget
Analysis and Systems Division.(6)
Exhibit 3 presents the relationship of the Department
of Defense (DoD) portion to the nonDoD portion of
the Federal IT spending. The relatively constant DoD
spending since FY 1989 is attributable to several
factors, including controlled spending under the
Corporate Information Management (CIM) initiative
and streamlining and downsizing by the DoD. On the
other hand, the growth in nonDefense spending has
been a result of civilian agencies incorporating new
technologies into their business processes.
Detailed tables showing the agencies' IT obligations in each of the Fiscal Years 19961998 appear at the end of this chapter. Table 1 summarizes the total Federal IT budget for these three years.
Table 1 shows that support services make up the
largest part of the Federal government's IT budget.(7)
This is in keeping with the Federal government's
emphasis on use of the private sector to perform those
functions not purely Governmental in nature. Support
Services is the only category with expected significant
increases in expenditures.(8) Federal employee
workyears decrease 4.01 percent during the period.
Equipment (noncapital) leases and purchases and
(capital) software purchase are also expected to
decline substantially. For the other categories, the
distribution of the IT budget remains fairly consistent
from year to year.
This section highlights the seven agencies which comprised the bulk of the increases in IT spending from FY 1997 to FY 1998 (see Table 2).(9) The Joint Logistics System Center and the Department of Energy are the only new organizations on the list; the other five were on the Top 6 Net Gainers list in FY 96. The total IT budget growth for agencies experiencing funding increases in this period is just over $646 million, down from the $2.02 billion increase in the previous year. A total of 16 agencies anticipate gains, while 11 agencies expected to see reductions in their IT expenditures totaling $320.8 million, resulting in a net increase (total agency increases minus total agency decreases) in Governmentwide funding of $325.6 million. Together, the total IT budgets of the seven agencies with the largest increases account for approximately 32% of the Government-wide IT budget in FY 1998. Collectively, these agencies received $500.3 million in increases, representing 77.4% of the $646.4 million total increase for all agencies experiencing funding growth between FY 1997 and FY 1998.
Department of Defense: Joint Logistics System Center.
The $85 million FY 1998 increase in the Joint
Logistics Systems Center IT budget primarily funds
currently operational Military Service and Defense
Logistics Agency legacy logistics automated
information systems (AISs) that support the depot
maintenance and supply management business areas.
The FY 1998 funding will be used to begin
modernization of these systems with the ultimate goal
of converting them to a seamless logistics system in a
shared data environment as directed by the Deputy
Under Secretary of Defense for Logistics (DUSD/L).
The DUSD/L corporate strategy is to enable
interoperability by bringing existing legacy systems
into a shared data environment based on the DoD Joint
Technical Architecture. This is a one year increase --
after FY 1998, the responsibility to fund the legacy
systems will transition to the Services.
Department of Transportation. DOT is requesting an
increase of $83 million in FY 1998 to a total of $1,801
million compared to FY 1997 which had a total of
$1,718 million. Key increases are for planned
purchases of equipment ($41 million) and software
($24 million), services ($7 million), and commercial
support services ($7 million).
In order to maintain and enhance transportation safety,
budget increases will fund purchases of hardware and
software. Most of the increases will support the
Federal Aviation Administration's National Airspace
System (NAS) initiatives -- e.g., the transition to a
satellitebased communication, navigation, and
surveillance system and implementation of free flight
concepts of operation. These initiatives are designed
to meet the domestic aviation industry's demands for
more responsive and cost effective operation of NAS.
Department of Defense: Air Force. The Air Force is
targeting future readiness by implementing
revolutionary longrange IT planning that addresses
process improvement and systematic modernization.
This modernization directly leads to capabilities
necessary to support all mission requirements and
ensures that Air Force IT systems will be secure,
interoperable, reliable, and available. Although IT
funding in the FY 1998 budget increases only 3.14%
over FY 1997 (less than 1% over expected inflation),
there are notable increases in a few specific areas.
The Air Force will dedicate increased resources to
supporting and enhancing their core communications
and computing information infrastructure. Spending
in this area will increase about $54 million between
FY 1997 and FY 1998. In addition, funding for
procurement and contract administration systems will
grow by nearly $22 million, as the Air Force begins to
field the Standard Procurement System and continues
upgrades for base contracting systems.
Department of Commerce. The increase in the
Department of Commerce's IT obligations from 1997
to 1998 is attributed to major systems initiatives within
the National Oceanic and Atmospheric Administration
(NOAA) and the Bureau of the Census. NOAA will
be making additional investments associated with the
national deployment of the Advanced Weather
Interactive Processing System that is central to the
modernization of the National Weather Service, and
will be acquiring equipment and related support
services for the ground systems for new geostationary
satellites. The Bureau of the Census will be acquiring
increased IT resources in preparation for the 2000
Department of Energy. At $1.53 billion, the
Department of Energy's FY 1997 estimate for IT
remained roughly constant over the prior year's
submission, with an increase of less than 5% ($67
million). It is approximately 9% of the Department's
total budget. The increase is mostly attributable to
planned equipment purchases. These purchases are
for major scientific programs, namely, the Accelerated
Strategic Computing Initiative (ASCI) and High
Performance Computing and Communications. In
addition, some of the increase is for servers to support
Internet and clientserver computing activities.
Department of Agriculture. The increase in IT related
spending of 5.25% over FY 1997 for USDA reflects
the increased reliance on IT to facilitate program
delivery, even as USDA continues to downsize. New
and integrated systems, to support field service
activities in three major agencies, are being designed
in response to programmatic changes contained in the
1996 Field Automation's Information Management
Initiative Act. The Department also plans to address
the new millennium problem. Some of the major IT
efforts going forward in the 1998 budget are: The
Rural Developments Dedicated Loan Origination and
Servicing System, the Food Safety Inspection
Service's FAIM initiative, the National Agricultural
Statistics Service's National Census of Agriculture, the
Food and Consumer Services Food Stamp Program
modernization through electronic transfer, the Forest
Service's upgrade of its technology infrastructure, and
the upgrade of the USDA's core financial system.
Department of Education. In the President's budget request for the Department of Education, total obligations for IT projects show a net increase of $50 million over the current fiscal year. Of that total increase, $42.9 billion is in support services, primarily for student financial aid management. Increased loan servicing costs for Federal Direct Student Loans account for an overwhelmingly large part of the increase in ADP support services. The Direct Loan program has grown steadily over the past several years; large numbers of loans are now beginning to enter repayment, resulting in increased servicing costs. Additionally, a small portion of the increase in the IT budget is attributable to the Department's Year 2000 and ledger account reconciliation initiatives.
Return to Table of Contents Continue on to Chapter 2
1. The term "information technology" as used here is defined in ITMRA, Division E, Section 5002. It means any equipment or interconnected system or subsystem of equipment, that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by an executive agency. This includes computers, ancillary equipment, software, firmware and similar procedures, services (including support services), and related resources.
2. Budget of the United States Government, Fiscal Year 1998, pages 4146.
3. For definitions of cost categories reported under Section 43 of OMB Circular No. A11, Preparation and Submission of Budget Estimates (1996), see Appendix 1.
4. Appendix 2 provides a glossary of reporting Federal agencies, their abbreviations and common names as used in this report.
5. The operating budget is the total Federal Budget excluding transfer payments, mandatory spending programs and debt service.
6. National Income and Product Account Presentation, table 14.1, pages 254256, Budget of the United States Government: Fiscal Year 1998 -- Historical Tables.
7. See Appendix 1 for definition of support services.
8. Governmentwide totals do not include intragovernmental transfers (payments and collections), which in theory should net to zero. In practice, many agencies currently have difficulty properly accounting for and reporting on intragovernmental transfers. These difficulties, along with differences in how agencies classify IT costs, result in a gap between reporting intragovernmental IT payments and intragovernmental IT collections. In FY 1997, reported intragovernmental IT collections were $2,042,084 in excess of $5,641,716 in reported intragovernmental IT payments.
9. The increases in Table 2 use the agency IT obligation levels including intragovernmental transfers. Intragovernmental transfers are included in these individual agency totals because each individual agency may have intragovernmental transfers not netting to zero within that agency.