$33 Billion Technology Account Bolsters Industry Prospects

Article excerpt

Industry experts predict that much of the growth in defense technology spending will focus on information-based systems. They also agreed that the largest increase in the Pentagon@s budget in seven years offers a reason for the industry to be optimistic about future business with the U.S. Defense Department.

The United States currently accounts for a third of the total global expenditures on defense, noted Richard Wieland, a Raytheon Systems Company executive who chairs the Electronic Industries Alliance's Government Electronics and Information Technology Association (GEIA) 10-year forecast committee. This long-term spending forecast was released last month by GEIA, based in Arlington, Va.

The association also released a five-year forecast for information technology spending. Sara DeCarlo, assistant vice president at AT&T, stressed that many companies had been distracted by the possible Y2K computer glitch that acted like "a sea anchor" dragging on the industry ... [And] the anchor isn't back in the boat yet."

GEIA forecasts expenditures on information technology for fiscal 2000 will reach about $33 billion. That is a $3.3 billion over last years forecast. By fiscal 2004, spending will grow to $34.6 billion, said GEIA. Information technology accounts, thus, are expected to reach about 6 percent of the total government discretionary budget.

Mary Freeman, of Bell Atlantic, asserted that command and control will be a growth area in the future. Approximately $29 billion will be spent in this arena in fiscal 2000. Because of this trend, she predicted increasing expenditures on information technologies. "Defense agencies are the drivers in this growth," Freeman said. "Mainly the Army."

"It's our future," said Michael Kush, vice president of marketing and strategy for Electronic Data Systems Inc. He predicted information technology demand will grow as more weapons systems are upgraded. The Army, particularly, will be a prime customer because "the Army is the oldest branch of the armed service," he said.

He explained that several Army systems are becoming obsolete before they get to the field. Using information technology, Kush is confident this problem can be solved. "The Army still needs to modernize and standardize," Kush said. …