Government IT contractors remain optimistic about future

Published 12 January 2011

Government services and information technology (IT) contractors remain optimistic about future growth; the defense industry still remains as “an $800 billion marketplace,” despite budget cuts and an increasing move by the federal government to insource contracts; IT firms are particularly positive about growth in key areas like cyber security, intelligence, and simulation; federal spending on cyber security is projected to reach $13.3 billion annually by 2015

Government services and information technology (IT) contractors remain optimistic about the future, despite budget cuts to the Department of Defense (DoD) and the growing trend to replace contractors with government employees.

As the Washington Post reports, last week, IT contractors met for a Raymond James sponsored conference in Washington, D.C. to discuss their concerns and future trends.

John Hillen, chief executive of Global Defense Technology & Systems, rejected concerns over declining budgets stating that the industry is still “an $800 billion marketplace.”

Contractors were particularly optimistic about future growth in key areas like cybersecurity, intelligence, and simulation.

Camber, an Alabama based IT firm, is actively seeking to acquire companies focus on cyber security and intelligence.

Market research firm Input projects annual federal spending on cyber security to reach $13.3 billion, a 9 percent increase year over year, by 2015. According to their recently released report on cyber security spending, since 2006 there has been a 445 percent increase in the number of cyber attacks on the government. In the last year alone, federal agencies saw a 78 percent increase in cyber incidents.

“The bottom line is cyber security is a major concern for the federal government within their network. They are concerned about private critical infrastructure, it doesn’t fall under the realm of protection and is still critical to the nation’s operations,” said John Slye, a principal analyst at Input.

In a more sobering assessment on the industry as a whole, Joseph Kampf, founder of CoVant, does not “believe that we’ll recover from this cycle as we have from others in the same kind of time frame and the same way.”

He went on to say, “I think everyone is going to have to sit down and rethink” their business.