New York state officials likely will cut back spending on electronic government initiatives in the new fiscal year, redirecting millions of dollars to disaster recovery and emergency response in the aftermath of the Sept. 11 attacks on the World Trade Center, according to industry analysts.
In a move that is symptomatic of the state’s changing technology circumstances, the New York State Office for Technology notified bidders in December that a public key infrastructure project budgeted in fiscal 2001-02 has been suspended pending additional funding.
Thomas Duffy, executive deputy director for the technology office, wrote to contractors that funding for a statewide e-commerce initiative was included in the governor’s budget recommendation but not in the “baseline budget” the legislature enacted in August 2001.
“We were hopeful that the legislature would provide funds in subsequent budget bills, but the events of Sept. 11 have since altered the state’s fiscal financial plan and require agencies to reduce spending. Therefore, it is necessary to suspend the selection of a vendor and the preliminary award of a contract at this time,” Duffy said in the Dec. 7 letter.
The PKI project would enhance security of the state’s ongoing electronic commerce initiatives. More than one-third of the nearly 600 services state officials want to make available electronically to citizens are now online, according to analysts and state officials.
Carol Kelly of the Meta Group said the change in plans for New York, which suffered both physical and biological attacks last year, is to be expected.
“Putting PKI on hold and taking a breather is a good idea,” said Kelly, vice president and service director of electronic government strategies for the Stamford, Conn., consulting firm.
Bids on the PKI project, which Input Inc. estimated to be worth at least $5 million, will remain valid for one year from Aug. 17, 2001, the proposal due date, state officials said.
The five companies that submitted bids on the PKI project are Commerce Group Inc., Webster, Mass.; Digital Signature Trust, Salt Lake City; Unisys Corp., Blue Bell, Pa.; TRW Inc., Cleveland; and VeriSign Inc., Mountain View, Calif.
New York officials declined to discuss specific details of their spending plans until they are announced early this year as part of Gov. George Pataki’s 2002-03 budget. However, Will Pelgrin, director of the New York State Office for Technology, said information security will be the office’s top priority in the new fiscal year.
The state’s other technology priorities, in order of importance, are geographic information system resources, e-commerce applications and Health Insurance Portability and Accountability Act compliance, Pelgrin said. These were established before Sept. 11, he said.
The state government also faces lower-than-expected tax revenue because of the declining economy and the Sept. 11 attack. New York revenue losses attributable to the attack are estimated at $1.63 billion and may reach $3 billion for fiscal 2001-02, according to Input.
The government’s revenue loss for fiscal 2002-03 could reach $6 billion, Input said.
Consequently, the state will take a frugal approach to technology investment, Pelgrin said. “We’re going through our fiscal process right now. Everybody will have to tighten their belts.”
Meredith Luttner, manager of state and local database services for Input, a Chantilly, Va.-based market research firm, said she expects New York to pursue many of the same kinds of technology projects and initiatives other states will pursue in response to Sept. 11.
Some technologies that will be in high demand by both the state government and local jurisdictions in New York are geographic information system software, smart cards, virus protection software and wireless networks, Luttner said.
Pelgrin’s office already had several important security initiatives under way before Sept. 11. One of those was the hiring in March 2000 of a statewide information security officer coordinating information security across 60 states agencies.
That person, Laura Iwan, makes sure agencies have policies in place for basic security measures, such as user identifications and passwords, according to Meta Group’s Kelly.
If Iwan has access to the governor, she can help ensure that IT security gets the resources and attention it requires, said Michael Vatis, director of the Institute for Security Technology Studies at Dartmouth College, Hanover, N.H.
Another initiative under way before Sept. 11 is a plan to coordinate efforts by the State Office for Technology and New York State Police to protect critical information systems and prevent cybercrimes. The plan will be implemented next year if funding is available, Pelgrin said.
Finally, the State Office for Technology is participating in a national security initiative to protect information systems and critical IT infrastructure with the National Association of State Information Officers, he said.
Staff Writer William Welsh may be reached at wwelsh@postnewsweektech.com
