Contractors prepare to tap into stimulus' billions for tech projects
IT companies gear up for new opportunities
- By Richard W. Walker
- Mar 27, 2009
Technology companies are poised to tap into the billions of dollars that will flow from the American Recovery and Reinvestment Act into new federal, state and local initiatives.
“If you’re in this market and you’re not looking at the [billions of dollars in the economic stimulus package], you’re missing a very logical opportunity, aren’t you?” asked Scott Friedlander, president and chief operating officer of GTSI Corp.
The $789 billion stimulus package, which President Barack Obama signed Feb. 19, is intended to create and save jobs, jump-start the economy, and build a foundation for long-term economic growth. It provides billions of dollars for public infrastructure modernization, including highway and energy projects, new electrical grid programs, environmental restoration, repair and upgrades to federal facilities, and many other initiatives that encompass IT spending in one way or another.
To be sure, the massive stimulus package appears to be a veritable cornucopia of technology-related programs. In a recently released study, research firm IDC estimates that the stimulus will generate more than $100.1 billion in technology spending during the next five years. IDC’s estimate includes traditional IT spending in addition to technologies related to sectors such as energy management systems and renewable energy technologies.
Match skills to dollars
Meanwhile, contractors are systematically gearing up for the coming flood of stimulus money. Cisco Systems Inc., for example, has established a program management office dedicated to the stimulus package, said Bruce Klein, the company’s senior vice president for the U.S. public sector.
The office is developing programs around the stimulus and exploring “where Cisco can play a role and what value we can bring,” he said.
Cisco officials believe that network technologies — one of their principal markets — will play a major part in many of the stimulus initiatives.
“We have solution sets around smart buildings, smart transit and smart airports, where you can use the intelligence of the network and build out new models and new ways of doing business that can gain some stimulus money,” Klein said. “If you’re building a highway, why not build a smart highway?”
Cisco’s program management office is divided into tiger teams, whose task is to design sets of programs to match stimulus priority areas and formulate ways to pitch the programs to potential customers, he said. Program management officials also have contracted grants writers, who are ready to swing into action when stimulus money becomes available.
At GTSI, officials have beefed up the company’s bids and proposals office. “We’ve been hiring for the better part of four months in preparation for the economic stimulus,” Friedlander said. “Because infrastructure is a core capability of ours, it all makes sense.”
GTSI sees potential stimulus money in cybersecurity and physical security systems, not only in the federal arena but also in the state and local markets, he added.
Microsoft Corp. officials have been laying the groundwork for new government business since the election, and as a result, the company is set to robustly seek stimulus funds, said Carolyn Brubaker, the company’s chief transition officer.
“We started analyzing opportunities right after the election, prior to the stimulus, trying to figure out what key priorities and initiatives were going to be put into place by the new administration and how Microsoft could align to those,” she said. “So it feels like we’ve been at this for a while.”
A focus on partners
Microsoft is building a Web site devoted to its stimulus-related programs, said Vince Menzione, general manager of public-sector partner strategy at Microsoft. The site is a centralized repository of stimulus information for its business partners and potential customers, and the information will be continually updated, he said.
Microsoft plans to work extensively with its business partners to develop cross-boundary products that intersect with stimulus priorities, concentrating in particular on the energy economy and energy conservation programs, Brubaker said. For example, Microsoft is targeting electrical grid projects, or smart grids, for which the stimulus package provides $11 billion.
“Smart grids really offer an opportunity to leverage the work of our partners and our partner ecosystem,” she said. “Microsoft isn’t really selling a smart-grid solution, [but we’re] looking at an interwoven capability of solutions with partners that will help support the smart-grid initiative.”
IBM Corp. also is focusing stimulus efforts on smart-infrastructure programs, including products that support smart grids and smart-transportation systems, said Todd Ramsey, manager director of federal business at IBM. The company is involved in about 50 smart-grid projects around the world, according IBM officials.
“Smart infrastructure starts with IT that [centers on] putting things in a greener format,” Ramsey said. “We have tons of IT out there that is very low utilization. Power grids are overtaxed in many cities. So making a greener footprint is an area where I think there is a lot of short-term opportunity.”
Follow the priorities
Both IBM and Microsoft said they see prospects for business in health IT, which is slated to receive $19 billion in stimulus spending. IBM recently launched an electronic health records exchange project with MedVirginia and the Social Security Administration, and Microsoft has developed health IT tools such as HealthVault, an electronic health record system.
By all accounts, contractors will need to react quickly when agencies issue requests for proposals. According to a white paper on the stimulus package by the Professional Services Council, companies will have an unusually short period of time to submit well-constructed proposals. For instance, Pennsylvania officials say contractors bidding for work will have 30 days to respond to RFPs instead of the typical 90 days.
Friedlander said he expects an average turnaround time of about 90 days from RFP to award. “That’s a relatively short window to make sure that solutions are defined,” he said.
“No one company is going to be able to do all things,” he added. “Companies that are flexible and can move with speed with other companies and work in good strategic partnerships will be the ones that really serve the [stimulus] customer best.”