President George Bush signed the US E-Government Act of 2002 into law on Tuesday, potentially helping unlock Federal spending that could amount to $5bn a year by 2007.

In a statement, Bush said the act is designed to set "strong leadership" of the government's information technology activities, including a comprehensive framework for security and uniform standards to protect the confidentiality of information provided by the public.

The act will also assist in expanding the delivery of government services, in line with a "citizen-centered, results-oriented, and market-based government".

More controversially, perhaps, the act authorizes "share-in-savings" contracts, under which suppliers to the government share in "savings achieved by agencies through the provision of technologies that improve or accelerate their work."

Input, a research firm that tracks government procurement, predicts that Federal spending on electronic government systems and services will increase at a compound annual rate of 12%, from $2.9bn this year to more than $5bn by 2007.

The firm forecasts that most of the spending will go into back office systems, and will focus on improving the federal government's internal efficiency rather than services for businesses or citizens. As consolidation and collaboration occurs between agencies, however, this will free up resources for customer facing initiatives.

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