Analysis: Stimulus package ripe with IT opportunities

Government contractors are anxiously watching the economic stimulus package as it makes its way through Congress.

The package could include as much as $100 billion for technology intiatives and infrastructure spending in areas such as health care, energy, broadband access and even the government’s shadowy cybersecurity initiative.

However, some lawmakers are questioning whether the money earmarked for information technology will create the jobs the stimulus package is supposedly designed to create. Late last week, senators proposed about $100 billion in cuts, including some from cybersecurity, green IT and energy. Congressional leaders have promised to send a bill to the president's desk by Feb. 13. 

Click here for a breakdown of the IT in the stimulus package.

The IT-related spending, while substantial, is dwarfed by the nearly $1 trillion size of the total package — most of which would pay for highway work, more conventional energy initiatives, federal building and school construction, and other bricks-and-mortar projects.

Even so, the rush of dollars to IT and related research and development is unprecedented — about $75 billion in the House bill and $94 billion in the Senate version. The federal government spent a total of $70 billion on IT in fiscal 2008.

This is one of the first times Congress has debated the immediate economic benefits of a major investment in digital infrastructure. Given President Barack Obama’s reputation as an avid promoter of new technology, the IT community is feeling doubly favored by the economic recovery package he has set in motion.

“There is a lot of excitement about this infusion of funding for government IT,” said Deniece Peterson, principal analyst at Input, a market research firm. “It creates a special opportunity.”

The House easily passed its version of the bill, However, Senate Republicans are opposing many provisions, and some lawmakers, such as Sen. Susan Collins (R-Maine), have pledged to shrink the total package. Critics say it might not provide enough short-term stimulus and could create unacceptably large deficits, while supporters say the current economic crisis demands that the government take action.

The IT community is working hard to counter perceptions that the technology initiatives would not spur economic growth. The Information Technology and Innovation Foundation recently evaluated a hypothetical $10 billion investment in each of three technologies — broadband access, health IT and smart electrical grids — and predicted that they would create or retain about 949,000 jobs in one year. That is more jobs than the same investment in roads and bridges would create, said Robert Atkinson, one of the study’s authors.

“Anyone who says this is a waste — that is nonsense,” Atkinson said. “It is completely logical to include digital infrastructure investments in the stimulus proposal. They will have a greater stimulative effect than other spending.”

The leading opportunities for industry and government contractors would be in health care, energy efficiency, broadband and cybersecurity. Lobbyists are already making their pitches for how to target the IT spending. Privacy advocates and health insurers are debating changes in privacy provisions, public safety organizations are pressing for inclusion in the broadband investment, and large corporations are fighting “buy American” provisions in the Senate bill.


Health care

Health IT is the technology receiving the most support, with approximately $20 billion in the House bill and $23 billion in the Senate measure dedicated to expanding the use of electronic health records and building a national health information exchange. The Office of the National Coordinator for Health IT would get $2 billion in the House bill and $5 billion in the Senate legislation to help build that exchange. The rest of the money would go to help physicians and hospitals adopt electronic information systems for patient records.


However, privacy remains a key challenge, as the Bush administration discovered during its efforts to expand the use of electronic health records. But privacy groups have so far approved of the provisions in the House and Senate stimulus measures.

Broadband

The Senate bill includes $9 billion for the National Telecommunications and Information Administration’s program to improve access to broadband, while the House legislation has $6 billion for broadband networks. Members of both chambers are focusing the spending on rural and underserved areas of the country.

One of the key policy debates is whether to ensure that the broadband networks are built to allow access to devices from multiple vendors. Consumer groups, including Public Knowledge, have praised the House for including provisions to that effect, but some industry executives say it might discourage companies from building the networks because of the potential benefits to competitors.

Public safety organizations and advocates for 911 emergency call centers are asking Congress to include provisions that would accommodate their need for additional broadband capacity, but Congress thus far has not specified any funding for that purpose.

Energy

Both the House and Senate versions of the economic stimulus bill would target billions for green Energy Department programs that incorporate IT. While improving the environment and conserving resources, efforts aimed at energy efficiency and research into renewable energy would also stimulate the creation of what Obama has termed green-collar jobs.

Cybersecurity

The House and Senate measures also allocate money for technology-related projects at the State Department, including $120 million to build a backup information management facility and about $98.5 million for State’s portion of the government’s Comprehensive National Cybersecurity Initiative.

James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies and a former Foreign Service officer, said the IT upgrades to State are necessary and appropriate. But he questioned whether they belong in the economic stimulus package.

“It’s nice to have, but it’s not a stimulus,” he said.