Special Report: E-Gov under construction

When the Office of Management and Budget two years ago unveiled its e-government program, "e-gov" became a buzzword, and OMB's 25 high-profile projects requiring extensive collaboration among agencies became synonymous with e-government.But industry and government officials are discovering, is much more than 25 initiatives. "Because the initiatives are so much in the headlines, we tend to think of e-gov as only cross-agency and cross-functional projects. But it applies to almost everything the government does online," said Dave McClure, vice president for e-government at the nonprofit Council for Excellence in Government in Washington.McClure and others see e-government as applying technology to the mission of government. Initial efforts that began by getting information and services to the Web have grown to integrating back-office systems, so that multiple agencies can collaborate and share information. Much of e-gov focuses on streamlining operations across government to improve efficiency and customer service, whether the customers are citizens, businesses or government entities.For government contractors, this translates into an expanding range of opportunities. Although many e-gov projects carry relatively little value -- perhaps in the low millions -- their potential for follow-on business can be significant. Taking on an agency's e-gov project can raise a company's profile and give it a chance to introduce new services and technologies."If an initiative is going very well, we are finding the agency is being approached by OMB to expand it, or in some cases that's happening at their own initiative," said Brien Lorenze, director of federal e-government for BearingPoint Inc. of McLean, Va. For example, he said, OMB saw the success of the Defense Department's enterprise software initiative and created "SmartBuy," the government's new enterprise software licensing program. Equally significant, e-gov projects can give companies visibility across multiple agencies and levels of government. PureEdge Solutions Inc., a company that provided its technology to OMB's Grants.gov initiative, found the project was "a foot in the door with dozens of government agencies for similar requirements," said Greg O'Connell, director of government sales for the Canadian company.THE DRIVING FORCEIn many ways, state and local governments have forged ahead of the feds in e-government implementation. That's partly because state and local governments are smaller and less complex. They also have more direct transactions with citizens than the federal government, and as citizens became comfortable using the Web, they demanded online transactions with their state and local agencies sooner. "The feds don't have as many direct citizen interactions, but where they do have them, they have been working hard to create the same sort of citizen-friendly transactions and Web sites," said Thom Rubel, vice president of Meta Group Inc., a Stamford, Conn., IT research firm. The smaller governments have also been driven by budgetary constraints, more so than the feds, analysts said."We're starting to see [state] CIOs under a lot of pressure because of the budget crunch. A couple of years ago, it was very hard to get centralized systems in place, because there wasn't an economic need to. Now it is hard not to play," said Amy Santenello, senior research analyst in the Government Strategies Division of Meta Group. At the federal level, new laws, as well as executive attention to government management and technology spending, have helped spur e-gov investment. A case in point is the development of Grants.gov, which will consolidate the grants application process for 26 agencies at a single Web site. This effort was stimulated by the Federal Financial Assistance Management Improvement Act, passed in 1999, which calls for a common application system for federal financial assistance, including electronic processes, through which applications could be submitted. The President's Management Agenda, published in 2001, calls for agencies to allow applicants for federal grants to apply for and manage grant funds online through a common Web site. The Government Paperwork Elimination Act, passed by Congress in 1998, also has provided agencies with incentive to move to electronic processes.However, the project merely chugged along, largely as a volunteer effort. It wasn't until 2002 that the effort to develop one governmentwide grants management system finally got a full-time manager with a dedicated staff.Ken Forstmeier, director of the Office of Research Information Systems at Penn State University, credits the President's Management Agenda, which agencies are graded on, with providing needed incentive for agencies to get Grants.gov under way."For all its stark simplicity, with its green, red and yellow scores, it seems to be working," he said. EXPANDING OPPORTUNITIES Government efforts to reduce redundant IT spending through cross-agency systems does not mean there are fewer e-gov opportunities for contractors. However, contractors can no longer look at their IT projects as isolated, agency-specific endeavors, Lorenze said. The federal IT budget actually has increased significantly in recent years, rising from about $52 billion in 2002 to an expected $58 billion this year. But while agencies are spending more on IT, they now want more bang for the buck."That forces industry to think about how to offer a more innovative value proposition to the government," Lorenze said. "We are still making money. We just do more with it."For example, BearingPoint is developing the Department of Health and Human Services' Unified Financial Management System. Rather than replacing systems agency by agency, HHS ordered a single, Web-accessible system that will enable uniform financial management across its agencies. The estimated value of BearingPoint's contract is $92.4 million if all options and award fees are exercised.The project exemplifies the best of e-gov, Lorenze said. "Instead of building something many times over, you build it once and you share the system," he said.E-gov also is giving contractors opportunities to expand existing work rather than building new systems, IT executives said. NIC Inc. received a multimillion-dollar contract extension last year for work on a suite of Web services for Indianapolis and Marion County. NIC's repeatable templates for government portal applications have allowed the Overland Park, Kan., company to roll out 27 services to citizens so far. Many future opportunities will be in integrating existing systems, said John Kost, managing vice president of worldwide public-sector research at IT research firm Gartner Inc. in Stamford, Conn. "We call it fewer toys, more glue," Kost said. Increasingly, federal, state and local systems will be linked so citizens don't have to search for the services they need. For example, a citizen who has been laid off should be able to find government aid at every level of government without having to know which agency to go to, he said. Mark Forman, OMB's administrator of e-government and IT, said July 15 that agencies have begun developing plans to consolidate government operations in criminal investigation, public health information, financial management and human resources. Plans for these new cross-agency IT initiatives should be complete by September, he said. The benefits will be about $4 billion in savings through fiscal 2008 and improved government operations, Forman said. For example, federal officials realized that when anthrax was being sent through the mail in 2001, the plethora of public health information systems weren't effectively linking medical facilities to the information they needed. "We probably need two systems, not 18," he said. [IMGCAP(2)]Integrator opportunities will lie in the use of Web services and XML for the integration of back-office systems -- the systems that conduct government operations -- making data "available to anybody, anywhere, anytime," said Gene Zapfel, a principal at Booz Allen Hamilton Inc. in McLean, Va. Zapfel is responsible for the firm's e-gov projects. "I am more encouraged now than ever that people really understand how to leverage the technology. I see great bounds in the next 10 to 15 years," he said. Budget pressures and upcoming waves of government staff retirements also continue to spur e-gov investments. In addition, the creation of the Department of Homeland Security, a merger of 22 federal entities that need to share information and business functions, is driving demand, said Larry Den, senior vice president of information technology at Reston, Va.-based Vredenburg. Market research firm Input Inc. of Reston, Va., predicts that federal spending on e-government will rise 12 percent annually, from $3.2 billion in fiscal 2003 to $5.1 billion in 2007. But many systems modernization efforts include significant e-gov elements, so in fact e-gov spending is likely larger than this estimate. "The future is bright," Den said.THE NEXT HURDLEBut all this investment could be for naught if agencies don't push adoption of e-government systems, IT executives said. "The idea of pushing stuff out there is finished. The government needs to focus on what is required to get citizens and businesses to use it," said Lisa Mascolo, managing partner of the USA Federal Client Group at Accenture Ltd. of Hamilton, Bermuda. For example, Accenture revamped the IRS Web site so that it's organized around user intentions. It had been a plethora of Web pages that lacked a good search engine. The same holds true for Grants.gov, said John Druitt, a Booz Allen Hamilton program manager who works on the project. The new portal, which will allow organizations to find and apply for federal grants on the Internet, goes live in October, "but the extent to which it will be adopted remains to be seen," he said. "You have to show the agencies it is a step forward, not a step back [from their existing systems]."Nevertheless, contractors remain optimistic about their prospects in the e-gov arena, even if the work often doesn't translate into megamillion-dollar contracts, because of the emphasis on improving business processes and integrating existing systems rather than implementing lots of new technology.At $7 million, Northrop Grumman's contract to provide systems integration for Grants.gov "is not up to the value of building a submarine," said Mike Atassi, a program manager for Northrop Grumman Information Technology in Herndon, Va.Still, the company views the contract as "a highly visible and critical win," he said. "We feel very committed to the e-government initiatives in the federal government." *Staff Writer Gail Repsher Emery can be reached at gemery@postnewsweektech.com.