Spending fell 2 percent in fiscal 2005 to US$16.5 billion, down from $16.8 billion in fiscal 2004, according to Input.
The declined followed a five-year period of increases averaging more than 15 percent a year, Input said.
'It's consistent with what we have seen across all levels of government, which is a general downturn in the purchase of hardware,' said James Krouse, acting director of public sector market analysis at Input.
'Governments are continuing to look more strategically at technology as an investment and the business models don't favor purchasing equipment and eating depreciation. So in some cases it shifts even more emphasis toward outsourcing non-core competencies.'
The decrease in equipment spending through 'Schedule 70' contracts may have also been caused by a shift in purchasing to other federal contract vehicles, the report said. Or it may indicate that demand for IT equipment by U.S. government agencies may be dropping due to capacity issues or infrastructure consolidation,.
Krouse said the decrease was not dramatic in terms of overall Schedule 70 sales, which still account for 8 percent to 10 percent of total federal IT spending. While overall federal IT spending is increasing, Krouse expects the rate of growth will be lower than it has been in the last few years.
Input also believes that more significant growth could come from cooperative purchasing agreements with state and local government agencies, Krouse said. State and local purchasing through GSA Schedule 70 is already increasing significantly, with $192 million spent in fiscal 2005, approximately twice what was spent in the year before, he said.
'If state and local spending follows a trend similar to that of federal agencies over the past 10 years, GSA Schedule 70 could become a significant centralizing force for the public sector IT market,' Krouse said.