Stimulus funds for IT require new procurement strategy

The recently passed stimulus plan includes billions of dollars in information technology spending, but that money likely won't be distributed through traditional channels, according to a report from a government research group.

Federal agencies and contractors will have be creative in pursuing and distributing the more than $100 billion in technology spending that is included in the 2009 American Recovery and Reinvestment Act, IDC reported.

"This once-in-a-lifetime flood of new technology money requires a new way of finding and following opportunities," the report states. "Due to the aggressive timeline, success will not come from the traditional business development via relationships and requests for proposals."

Most of the estimated $101.2 billion in technology spending that IDC says agencies will spend during the next four years will be focused on the energy and health sectors. IDC estimates $78 billion will be spent on implementing more efficient alternative energy technologies and agencies will spend about $21.1 billion on health information technology. The act also sets aside $2.5 billion for individual IT projects in federal agencies.

Much of the energy and health money will be distributed in the form of grants and accelerated acquisition contracts, which the firm says will lead to new ways of engaging with the government. Vendors must promote the ability of technology to add value to alternative energy and health care, said IDC analyst Thom Rubel.

According to the report, government agencies already have identified objectives, cost savings and benchmarks of success in critical programs that they plan to spend stimulus funds on. Agencies and vendors would be well-served to focus on those objectives rather than try to distribute stimulus funds via the traditional procurement process, he said.

"Vendors should be promoting their ability to add value to those industries, not so much chasing the dollars, but solving the problems the stimulus is supposed to solve," Rubel said. "It's mission-focused IT procurement. The old way is not good business strategy. It tends to focus on dollars instead of the outcome the government is trying to achieve."

Rubel recommended agencies evaluate all vendor proposals with a focus on how the technology proposal could help the agency better fulfill its mission, lower costs or both. He added all stimulus funds include a "huge new expectation for accountability," a burden that would likely fall on agencies rather than vendors.

"It's a changed environment; vendors are going to be held accountable in the government," Rubel said.

Agencies will have the most difficult job articulating "transparency in a way that's digestible," he said. "Right now it's more of an accounting function than a performance function. When you talk about accountability, you want John or Jane Doe to go in and see where the money is going."

That requires posting data about program outcomes and performance, rather than technical descriptions of contractor objectives and job duties, Rubel said.

Instead of more regulation, he expects agencies to reach out to vendors to receive help with the transparency effort and show that taxpayer dollars are being used constructively. "Most good vendors want that," Rubel said. "They want to show they add value."