The creation of the Homeland Security Department may be the most radical makeover of security agencies in 50 years, but experts say any increase in technology spending on the new agency will be tepid, at least for now.

President Bush signed legislation last week to combine 22 federal agencies, including the Immigration and Naturalization Service, Secret Service, Customs Service, the Federal Emergency Management Agency and the Transportation Security Administration into one department. Along with the challenge of combining a variety of cultures and mandates, the new agency's challenges include integrating computer networks and e-mail systems.

Though a momentous task, it will not necessarily require a flood of new funding, said Jim Kane, president of market research firm Federal Sources Inc. It does represent a good opportunity, especially for established contractors, "but companies should not expect the creation of the department to create a bonanza for them," Kane said.

"Over the long run, it will definitely mean more funding," said Chris Penny, analyst with Friedman, Billings, Ramsey & Co. "What I am telling my clients is, while certainly it's created a lot of buzz, we won't see a lot of the funding opportunities until well into next year."

The component agencies start moving to the new department on March 1, and the administration wants to fund much of the integration costs within existing budgets, industry officials said. The new agency "doesn't mean a great deal in the short term; you're not going to see a lot of funding in the next six months," said Bruce Aitken, president of the Homeland Securities Industries Association, an industry group.

The cost of creating the department and employing new technology may not be as high as some expect, said Mark Forman, the Office of Management and Budget's associate director of information technology and e-government. "The one thing I would keep in mind here is that compared to the [technology] of the 1980s, now you can do a lot more quicker and at less cost with a higher probability of success because of e-business and Web-based approaches," he said.

Dampening expectations, the administration has been cautious about spending on the new agency even before it was approved by Congress. The OMB sent jitters through the industry this summer when it ordered seven of the component agencies to temporarily halt spending on more than $1 billion in information technology projects while it looked for savings and compatible technology. It is unclear how much of that funding is still pending.

And just the wait to create the new department -- which was stalled in the Senate for months -- caused angst for the region's many government technology consulting companies, many of which established homeland security task forces to go after business more than a year ago.

"The delay in standing up the department has had an adverse impact on business to date. That, combined with the federal budget, depressed the market overall," said Alfred Mockett, chief executive of American Management Systems Inc., which has also faced a decline in technology spending in the private sector.

The agency's mission -- including analysis of terrorism intelligence to match it against the nation's vulnerabilities and developing new technologies to detect threats -- will require a technology upgrade that government contractors say could translate into an increase in business for firms that specialize in such technology. That may include sharing databases among agencies, even on the state and local levels, they said.

"That aspect will come after the organizational issues are completed and everybody knows the structure" of the agency, said William R. Loomis, an analyst with Legg Mason. "It will be at least a year before we see major IT projects department-wide."

Industry research firms remain optimistic about the money-making potential. Input, a local market research firm, predicts that technology spending by the new department will reach at least $2.1 billion in fiscal 2003, up from $1.5 billion last year. Federal Sources Inc. is even more hopeful, forecasting that spending could reach $2.6 billion.

Even if technology spending in the agency reaches projected heights, that still would not be comparable to the $5 billion the three military services are expected to spend on information technology next year, according to Federal Sources data.

For companies such as Lockheed Martin Corp. and Northrop Grumman Corp., which already have large business units in information technology, the increase will likely not be enough to make a significant impact, analysts said. But it wouldn't take much to improve the bottom line of smaller firms such as AMS. "It is a very big budget. It only takes a small piece of market share to make a difference to AMS," Mockett said.

OMB's Mark Forman said the costs of creating a new department won't be as high as some expect.