Emerging Grants Management Market About to Open Up

By Patience Wait, Staff WriterA new market is looming as companies gear up to help agencies develop systems for managing the $300 billion in grants that the government hands out each year.Agencies have until May 2001 to develop their plans to implement the Federal Financial Assistance Management Improvement Act of 1999. The law directs agencies to streamline and standardize grants procedures and cut down on duplicative and unnecessary reporting requirements."The goal of the law is to create a standard, so when universities, state and local governments apply [for grants], there's one common way to apply, one standard for federal agencies to evaluate, score and distribute monies," said Wayne Bobby, national director for solutions for finance and administration of Oracle Corp. of Redwood Shores, Calif.The drive for grants management systems arises in part because federal agencies are delegating more authority for their programs to state and local governments, said Ken Uffelman, business development manager for electronic government at Cleveland-based TRW Inc., another company looking forward to helping build the new systems.But Congress, which has been pushing for this decentralization of federal programs, also wants more accountability. Although federal agencies have less direct control over the programs, they have greater responsibility for monitoring them and reporting whether they are meeting their public policy goals, Uffelman said.This is no easy task. For example, 11 agencies administer more than 100 community and regional development programs that pay out more than $11 billion a year, according to the Senate Governmental Affairs Committee report on the new law. Ninety early childhood programs are administered through 11 agencies and 20 offices.Consequently, federal agencies are seeking information technology systems that can help them administer, track and evaluate their grants programs from start to finish.While the size of the market to build grants management systems for the federal government is not clear, some company officials estimate it to between $500 million and $3 billion.One company that already has developed a grants management solution is FreeBalance Inc. of Ottawa. In November, the company introduced FreeBalance eGrants, a Web-based application for life-cycle management of government grants and contributions programs. FreeBalance eGrants is being implemented at the Canadian Economic Development Agency, a federal department in Canada responsible for administering grants, loans and contributions to businesses. The U.S. introduction of the software is planned for Dec. 12.Gordon Graham, vice president of marketing for FreeBalance, estimated the market for grants management systems at $3 billion or more, calculating that his company's product could realize at least a 1 percent cost savings on $300 billion in grants.TRW also anticipates working with federal agencies to create grants management systems. Through its work on EDGAR, the Securities and Exchange Commission's electronic financial reports system, the Defense Travel Service, and with the Centers for Disease Control and Prevention, among other projects, the company has ex-pertise in complex information systems developed for federal agencies.Uffelman said that existing grants programs share perhaps 80 percent of their elements, not in what they do but in how they are structured. He estimated that systems to do this kind of work cost between $5 million and $20 million. If between 30 and 50 agencies decide to buy systems, the market might be $500 million to $1 billion.Oracle, which already provides recipients with products that help them keep track of grant funds, is a third company that hopes to earn a piece of the federal grants management effort.Bobby said grants management systems are not difficult to implement, provided they account for very real differences between agencies in the evaluation process. "I don't think there's any real tough nut here to crack. I think the sheer volume does make it more complex, and the give and take makes it like managing a contract," he said. He noted that the government and the grantee community negotiate grant requirements, at least in competitive grants, the way bidders negotiate on major projects such as the space shuttle. One sign of the federal government's commitment to streamlining the grants process can be found at Federal Commons (www.fedcommons.gov), a Web portal set up as an entry point for grant applicants. The site is the brainchild of the Inter-Agency Electronic Grants Committee, a group originally comprised of volunteers from several agencies that were looking for ways to coordinate grants information.The purpose of Federal Commons is to set some standards and provide interoperability among different agencies' grants systems, according to Brad Stanford, co-chair of the IAEGC. The committee is designing specifications for an outside developer to improve the site's usefulness for applicants and functional links for federal agencies. Stanford could not say when a request for proposal might be issued.Health and Human Services handles about 60,000 grants each year, said Charles Gale, director of the department's Office of Grants Management and a member of IAEGC. Different agencies within the department have their own grants management systems ? the Centers for Disease Control and Prevention, National Institutes of Health, and National Science Foundation, to name just a few ? but the goal is to make sure they all work with Federal Commons."One of the reasons we have Federal Commons is because we can't have agencies just developing their own systems," Gale said. "The whole idea is to do it together, to make sure we don't get so enamored of [our own systems]."Gale said this is becoming a very popular topic among software companies and systems integrators, but he was cautious about how the market will develop."An awful lot of people are out there trying to garner business, and an awful lot of companies have come up with symposiums, for instance, on the subject," Gale said. "But some of the costs [they're proposing] seem pretty high to me."XXXSPLITXXX-By Patience WaitMany steps are required to set up a unified grants management system, according to TRW Inc.'s Ken Uffelman.