Study: U.S. federal IT contracts down in 2005

The U.S. government awarded more than $123 billion in IT-related prime contracts in its 2005 fiscal year, a 20% decrease from 2004, according to a study released Wednesday.

But Input, a Virginia analysis firm that assists private companies with federal contracts, also expects IT-related prime contracts to go up about 65% in the U.S. government’s 2006 fiscal year, the firm said. Input expects more than $200 billion in prime contracts during 2006, although the firm had predicted about $250 billion earlier this year. Some expected contracts have been delayed or canceled, said Marcus Fedeli, Input’s manager of federal technology opportunities.

Input also expects an increase of 5% or more in U.S. government IT spending during fiscal year 2006, which started in October, on top of a 1% increase from 2004 to 2005. The U.S. government’s IT spending, not including contract awards, was about $59.1 billion in 2005.

The 20% decrease from 2004 to 2005, and the increase for 2006, can be largely attributed to the cyclical nature of government IT contracts, as well as new contracts folded into existing contracts, Fedeli said. “In various years, you have big contracts awarded,” he said.

For example, the U.S. Navy in 2005 awarded a $54 billion contract for a variety of IT services, called the Seaport II Rolling Admissions program, with 503 vendors getting a piece of the action over a period of 15 years, Fedeli said. The Navy’s total IT prime contracts in 2005 totaled $63 billion.

Among the IT contracts scheduled to be awarded in fiscal year 2006 is a government-wide contract as part of the Alliant project administered by the U.S. General Services Administration (GSA), worth up to an estimated $50 billion over 10 years, for a wide range of IT services including biometrics, communications, distance learning, security and Web development. A second Alliant government- wide acquisition contract, a 10-year contract worth up to $15 billion, is targeted at small-business vendors. This contract focuses on information systems engineering and systems operations and maintenance.

Another contract expected to be awarded in 2006 is the Department of Homeland Security’s Enterprise Acquisition Gateway for Leading Edge Solutions project, or EAGLE, which would provide the agency with a range of IT services. The contract would incorporate the majority of DHS IT services under one contract. Input expects that contract to be about $45 billion.

Input’s assessment of prime contracts include only openly bid new contracts, not IT services or equipment purchased through other means, such as equipment purchased through a GSA schedule, the GSA’s volume discount purchasing plan.