Private-sector chief information officers will turn green with envy, especially as the economic climate forces them to hold the line—if not cut—their own technology spending budgets. The federal government plans to spend $37.1 billion on information services and systems in the current fiscal year, and a new report shows that number will rise at a compound annual growth rate of 11% to $63.3 billion in FY2007.

The government "is the single largest enterprise in the world," says Payton Smith, manager of Public Sector Market Analysis Services for INPUT, a marketing research company that studies tech spending in the public sector. Five agencies within the government—NASA and the Departments of Defense, Treasury, Transportation and Justice—spend the most on information technology, and by 2007 will claim nearly 70% of the $63.3 billion figure, according to the report.

"Homeland security and e-government initiatives are the highest information technology priorities for federal agencies today," Smith says, and the huge growth in budget will come even as the Office of Management and Budget looks to eliminate redundant programs and spending. That may be good news for some vendors. Spending on commercial services—including outsourcing, professional services, systems integration and processing services—is expected to grow faster than spending on brand new equipment or software.