Will “Green” Mean Greenbacks for Government Contractors?

A report released yesterday by the United Nations Environment Program (at the G20 Summit) shows the U.S. lagging behind other key countries in the percentage of stimulus dollars spent on green initiatives.  The report examines the various economic stimulus plans of key nations and the percentage of dollars spent for green programs. 

According to the findings, the U.S. has allocated 12% of total stimulus dollars to “greening the economy.”  This compares to 79% for the Republic of Korea and 34% for China (the green market for China has recently been estimated to be $1 trillion).  Mexico has allocated 10%. 

Even with the allocation, criticism is rising regarding the pace of green spending.  A post on ProPublica’s site points out that most of the 16 states surveyed by the General Accounting Office have not yet started on their Weatherization Assistance Programs (WAP), a $5 billion program for assisting low-income families in lowering utility bills by making their homes more energy efficient.  Similar delays have been reported for public housing according to the article. 

The U.N. report also concludes that only 3% of global green funds have actually been spent.  The bulk of these expenditures will occur in 2010 and 2011.

IMPLICATIONS

For certain government contractors, green initiatives are likely to provide attractive market potential in the areas of clean technologies, renewable energies, water services, green transportation, waste management, green buildings (both new and retrofit) and sustainable agriculture.  Don’t let the U.S.’s smaller relative percentage allocation fool you–substantial dollars are coming for this. 

The challenge from a contractor’s perspective will be in achieving differentiation as flowing money will bring “green contractors” out of the woodwork.  Much of this will go to mega-projects such as high-speed rail, but there should also be substantial opportunity at the SMB level for the right vendors. 

It appears to us that “green” is moving from a passing social fad to a significant global business opportunity.

-Lorin

$94 Billion Now Spent from ARRA, But Where are the Jobs?

According to a post by Propublica, the Federal Government has now spent $94 billion of the $581 billion non-tax related ARRA funds.  However, the percentage of budgets spent or committed by department continues to vary widely.  For example, the departments of State, Agriculture and Energy have committed less than 25% of their total funds.  This contrasts with the Department of Justice that has committed 91% of its funds.

Although reports from the Whitehouse have tossed around figures ranging from 600,000 to 1.1 million new jobs created from the stimulus bill, unemployment nevertheless climbed 0.3% in August to a total unemployment rate of 9.7%.

-LBB

FCC Public Safety Broadband Workshop Highlights Industry Concerns

Yesterday, Galain Solutions participated in a Federal Communications Commission (FCC) workshop on broadband in public safety and homeland security.  The goal of the workshop was to enlist feedback from various industry sources with regards to the developing National Broadband Plan.  A variety of interesting perspectives were offered we will highlight in upcoming blogs.  Particularly,  we found comments made by Charles Brennan, Deputy Secretary for Public Safety Radio from Pennsylvania to be enlightening.  Here are some key points:

The need for situational broadband.
While most of his state is covered at the consumer level for broadband, what is missing is the ability to establish mobile and situational broadband capabilities for responding to critical events.

Grants weighted toward states, not local.
Mr. Brennan argued that local agencies can not realistically act in a consistent manner with a bigger picture vision.  He believes grants should be given to states for funding of strategic initiatives.  He also urged for more block grants as opposed to competitive grants.

It’s more than the network.
While much emphasis is being placed on developing infrastructure, Mr. Brennan suggested applications are equally as important.  He further said many in public safety do not know exactly how they would utilize broadband, pointing to a need for industry education around broadband applications.

Data interoperability is key.
Mr. Brennan stated while there is much discussion related to interoperability in communications (radios specifically), data interoperability is also key.  It is imperative disparate databases can be accessed and shared across multiple applications and regions.

Data interoperability and an application focus  are “sermons” we’ve been preaching for a while.  We hope the NTIA, in its decisions related to grant funding for the BTOP, will give these issues appropriate weight and merit relative to infrastructure enhancements.
-LBB

 

Reports Unveils State Spending Plans

If you’re interested in the public safety space, you’ll likely be interested in a new report.  It shows that 26 states have decided to spend discretionary money from the economic stimulus law on public safety.  The total amount:  2.56-billion-dollars.  (Yes, billion with a “b”.)

The money comes from what’s called the State Fiscal Stabilization Fund (SFSF).  SFSF is managed by the U.S. Department of Education (ED), not what you would think would be a likely source for public safety money.  The writers of the American Recovery and Reinvestment Act (ARRA) included a discreet clause that allowed governors to spend a portion of their stabilization funds on “public safety or other government services”.  The portion was only 18.2%, but the total amounted to 9.8-billion-dollars.  (Yes, another “b”.)

States have been trying to decide how to spend their stabilization funds.  Some have made their decisions quite awkwardly.  Others have yet to decide.  Of those who’ve made their plans known, 26 say they’ll spend at least a portion of their 18.2% on public safety.  The largest public safety spenders are California, Georgia, North Carolina, Washington, and Alabama.

The report is being published this week by Galain Solutions.  You can get a copy, including numbers for all 26 states, here.

It may not be too late to influence the other states, and certainly not too late to get in front of opportunities that will be funded by the stabilization funds.  Keep us informed how it works for you.

ARRA Grant Recipient Registration Site Open

Recipients of ARRA funds are now able to register with the government.  Starting yesterday, state and local governments, contractors, etc. receiving a grant of $25,000 or more through the Recovery Act can register at www.FederalReporting.gov.   This registration process is the first step to fulfilling reporting requirements, a process that begins officially October 1.  Recipients will have until October 10 to submit reports outlining things such as the amount of money received and spent, project scope, and jobs created.

Officials are reminding registering organizations they must have DUNS numbers (obtainable at www.fedgovdnb.com/webform) and be a part of the federal government’s Central Contracting Registry (CCR) database (at www.ccr.gov) prior to registering for federal reporting.

It is expected between 150,000 and 200,000 recipients will file reports by October 10 according to a RAT Board press release.

-LBB

Broadband Grant App Deadline Tomorrow

The Broadband Technology Opportunities Program (BTOP) and Broadband Initiatives Program (BIP) grant application deadline is tomorrow.  And, according to an article on the Urgent Communicationswebsite, the volume of applicants may not be as high as originally thought.  According to the advisory arm of Alcatel-Lucent (a group geared toward helping companies apply for broadband grants), rules surrounding grants and short time frames may have inhibited potential applicants from moving forward.

Alcatel-Lucent expected 40% of the proposals it received would ultimately be submitted for grant funding.  Now it appears only 15% of these will actually result in applications.  According to Rich Wonders (great name) VP of Strategic Marketing for Alcatel-Lucent, narrow definitions and difficulty in estimating required network capacity may have deterred some companies and organizations from responding.

First round funding recipients are slated to be notified around November 7 (expect this to push out despite the reduced volume of applicants).  There are two additional rounds of funding over the next six months, though according to the article, there are rumors the remaining two could be combined into one.

-LBB

APCO Says Broadband Eligibility Rules Unfair to Public Safety

In a post today on www.govtech.com, the article covers statements made by the Association for Public Safety Communications Officials (APCO)regarding eligibility rules for public safety agencies applying for broadband stimulus funds.  According to Richard Mirgon, the association’s president-elect, eligibility requirements for stimulus grants will exclude many public safety agencies since the law mandates network partnering with community institutions such as universities or health-care providers.  Mr. Mirgon argues that while certain partnerships may be appropriate, many will not work when sensitive or secure data is involved.  APCO will send a letter to the NTIA in the next few days requesting a rule change.

-LBB

How Far Does the U.S. Really Lag Behind Other Countries in Broadband?

America’s movement toward greater broadband capabilities is a hot issue currently.  The American Recovery and Reinvestment Act (ARRA) included a $7.2 billion allocation for the Broadband Technology Opportunities Program (BTOP) with a goal of bringing broadband to “unserved” and “underserved” communities and “improving access to broadband by public safety” (watch for our upcoming blogs about the public safety part).  Commonly cited as the reason we need major investments in broadband is the United States’ ranking of 15th in the world with regards to broadband penetration–a fact that disturbs many in the country.

However, a recent report by the Technology Policy Institutes takes issue with this analysis to a degree.  It says penetration numbers should not be derived on a per-capita basis, but instead on a per-household basis.  Doing this provides a more accurate comparison across countries, and raises our ranking to somewhere around 8th in the world.  For comparison, consider telephone penetration.  Currently 95% of homes have telephones, but applying the same per-capita measures and comparing across countries, the U.S. ranks 45th in the world.  Per household is clearly the more accurate measure.

And, penetration rates are growing so rapidly, it is likely they will reach saturation points in the next few years.  So does this mean all of the excitement (and money) surrounding BTOP is for naught?

IMPLICATIONS

Not necessarily.  It does help guide where money should be spent, however.  While certainly infrastructure investments are needed in communities where this is lacking, generally speed, applications and other collaborative initiatives that foster greater internet adoption should receive the greatest amount of attention. 

For example, this same study showed the U.S. lagging behind most wealthy nations–not in penetration–but in speed.  At a roughly estimated average of just over 4 kbps, the U.S. ranks between 12th and 15th in speed depending on the source used. 

Development of IP-based applications (which inherently drive greater broadband adoption) is also a needed area of focus.  Software as a Service (SaaS) (delivering software applications on-demand over the internet) is still in its infancy, yet has tremendous potential for growth and adoption.  So are possibilities for connecting public agencies with private commercial entities within community “anchor institutions” such as libraries, schools, etc..  This also increases adoption–possibly from population segments who do not currently value it.

Overall, the U.S. may be in somewhat better position than some claim, but we clearly do not lead the world in broadband.  Policymakers should take into account the real barriers and gaps in the market, creating incentives for right approaches, while not erecting barriers for factors that are working well.

-LBB

 

 

 

 

 

 

 

 

 

 

 

 

10% Unemployment?: Stimulus Total Failure or Not Enough?

A number of articles have been written over the past week relating to the effects (or lack thereof) of the stimulus on the American economy.  At the heart of the debate is the unemployment rate–a staggering 9.5% for June.  And, today the Federal Reserve said unemployment could hit 10% later this year.  The Obama Administration is taking particular heat over their unemployment projections released prior to passing the stimulus law. 

The graph below illustrates their projected unemployment rate with no stimulus package compared to the unemployment rate with a stimulus package.  These data are overlaid with the actual unemployment figures through June.  As you can see, actual unemployment is higher than anyone imagined.  Consider the 10% rate postulated by the Fed, and we’re not even on the same planet with the projections.

 

As a New York Times blog points out, some economist take a position that the original stimulus was simply not enough (add to this a slower-than-anticipated release of the money, and you get no positive economic impact).  Other economist argue the stimulus simply didn’t work, suggesting another stimulus would be a waste of money (and an economic drain on the future). 

IMPLICATIONS

Whether or not another stimulus package will be passed is yet to be seen.  What is clear from a vendor perspective is funding already committed in the current package has not yet made its way to American business.  Even the construction industry, one of the first sectors to actually see money flow, projects three-quarters of stimulus spending for 2009 will actually slip into next year. 

As such, contractors need to be patient and dilligent.  Alliances and partnering opportunities are more important than ever as in this environment.  Don’t wait to begin solidifying these relationships.  Focus on value creation, and pay particular attention to how your piece fits into solving the larger problem.

The rough ride is unfortunately far from over.  But times like these can help “sharpen the saw” for better days ahead.

Pace of Stimulus Spending Picks Up

The pace of stimulus spending is picking up according to an article on www.govexec.com and comments from Mike Pickett, CEO of Onvia.  Onvia is a company offering paid subscriptions for accessing consolidated government bid/RFP information.  It is also tracking recovery spending.  According to its analysis, federal, state, and local stimulus contract obligations have grown by more than 50% during the last month.

Pickett told the House Oversight and Government Reform Committee it was following $59 billion in spending contracts at the beginning of June.  It is now tracking $90.7 billion.  This includes some 22,000 projects.

IMPLICATIONS

While this is good news for many contractors wondering when the money would start flowing, it is not entirely representative of the actual dollars making their way into the economy.  The article points out these figures represent projects that have been publicly reported, though checks may not have actually been cut to vendors.  Approximately 20% of the $90 billion is still in the RFP stage.  Much of the reported total is still within the construction/transportation industry for road building or improvements so expenditures are still within a fairly narrow sector.

As such, vendors should be actively scouring various grant sources such as www.grants.gov looking for projects that fit their business offerings.  New projects appear daily, so active monitoring is crucial.  The money is beginning to move, and eventually a greater range of industries will benefit from these government expenditures.  Keeping an eye on the ever-changing stimulus landscape will possibly (hopefully) unlock the promised opportunity.

-LBB