B2G Blog - President

FY 2014 Federal Budget Request: Challenges and Opportunities

Tue, 07 May 2013 08:53:00 -0400

Although two months late in delivery, the president’s FY2014 Budget Request continues promotion of administrative priorities while proposing cuts and savings to trim the deficit. Deltek's newly released report, FY 2014 Federal Budget Request: Challenges and Opportunities, analyzes the spending priorities, policy plans and information technology trends and initiatives in the FY2014 budget request.

The Obama Administration is requesting $3.8 trillion for FY2014. The budget focuses on jobs creation and economic growth to strengthen the American middle class. Deltek’s report examines patterns in the $1.2 trillion discretionary budget, as well as the $82 billion information technology budget, including market trends, drivers, and contractor-addressable spending.

Using a well-honed methodology for gleaning the contractor-addressable portion of federal spending, Deltek calculates projected expenditures for FY2014 for ten different federal product/services market segments.

The chart above shows the contractor-addressable portion of funding across federal agencies, as well as compound annual growth rate for each from FY2012 to FY2014. Nearly all of GSA's budget authority is under "Spending Authority from Offsetting Collections, Discretionary" to provide GSA the authority to fund its operations using funds collected from sources other than appropriations, primarily service fees.

Should the budget pass as written, Deltek estimates the contractor-addressable portion of IT spending for FY2014 to be $106 billion, which includes traditional IT spending captured in the Exhibit 53, as well as IT spending not typically captured in Exhibit 53 reporting, such as in embedded weapons systems.

Additionally, Deltek predicts contractor-addressable federal spending on architecture, engineering, and construction services will reach $27.7 billion in FY2014. Aerospace and defense spending will reach $149 billion. And operations and maintenance spending will reach $80.6 billion.

The budget request and Deltek’s research reveals the following in regards to the different market segments:

Information Technology: IT priorities are largely the same as the past 2 years, including shifting from an asset to a service mindset, infrastructure and data center consolidation, and continued transition to cloud computing.
Architecture, Engineering & Construction: Expect a continued shift in funding from major to minor construction, including deferred maintenance, especially in civilian agencies.
Aerospace & Defense: Despite budget constraints, DoD is focused on protecting investments that support the new defense strategy, and the war drawdown continues to impact spending on ground systems and mission support equipment.

As the federal government strives to reduce the deficit and decrease spending, finding contracting areas of opportunity becomes increasingly difficult. The request provides insight into the administration’s priorities, however the eventual enacted budget is somewhat of a wildcard. Don’t expect appropriations to conclude prior to Oct. 1, continuing resolutions are likely to prevail.

For more information on Deltek’s report FY 2014 Federal Budget Request: Challenges and Opportunities see the GovWin IQ website at www.govwin.com.

Federal FY 2014 IT Budget to Grow, but there?s Winners and Losers

Thu, 11 Apr 2013 09:30:00 -0400

Steven VanRoekel, U.S. Chief Information Officer at the Office of Management and Budget (OMB) released a presentation yesterday outlining the Obama Administration’s FY 2014 Information Technology priorities and budget numbers. The bottom line is that they are seeking 2% growth in the overall IT budget year-over-year, but individual department budget changes vary widely, meaning that there are “winners” and “losers.”

Preceding the public release of his presentation, VanRoekel posted a series of tweets on Twitter under the theme: All you need to know about the IT budget in 10 tweets. You can find the series under #FedITx10, but here they are in the descending order in which they appeared:

10-Flat or declining. IT=$82B in the 2014 Budget 2.1% increase from FY12, flat, 0.78% CAGR since 09, negative adjusted for inflation

9-Cut & Reinvest: Now more than ever we must use IT to drive savings to fund innovations that change how govt works

8-Priorities: IT priorities in 2014Budget: Innovate. Deliver. Protect. Evidence

7-Innovate: 2014 Budget enables the Digital Gov Strategy to build a 21st century govt, increase mobile services and Open Data

6-Deliver: PortfolioStat = +$2.5B in savings through IT consolidations and upgrades (over 3yrs)

5-Protect: Over $15B of the IT 2014 Budget is going to enhance our Nation’s cybersecurity

4-Evidence: 2014 Budget NEW evidence-based innovation initiative in my office to strengthen evaluations & drive results, beyond IT

3-Innovate with Less: Since 09 we flattened IT $ while FY01-FY09 IT increased ~2x At that rate, we’d be at +$110B on IT today

2-Dogfood: For geeks (like me!) interested in an Open Data 2014 Budget, key tables in XML here:

1-Progress: 2014 Budget enables strategic IT investment for a 21st century govt, drives innovation & protects our national assets

IT Budget “Winners” and “Losers”

The budget submission information included in VanRoekel’s presentation contains some top-line budget numbers which allows for some initial analysis. The IT budget summary table in the presentation calculates the amount and percentage change for FY 2014 based on FY 2012 budgets, even though he provides FY 2013 Continuing Resolution (CR) budget estimates that are different. To provide a more detailed perspective I ran the numbers comparing the dollar and percentage change for all scenarios.

The tables below are grouped by the “Winners” and “Losers” based on the percentage change from FY 2012 to FY 2014. The third table provides a comparison between Defense and Civilian segments, along with total federal IT.

Conclusion

While we are still waiting for the release of detailed IT budget information from OMB the proposed $1.4 or $1.7 billion increase for FY 2014, depending on which baseline year you use, is sure to surprise many who watch this market. Certainly, a 2% yearly growth rate is anemic compared to the growth rates we have seen over the last decade or so. (OMB reports a 7.09% compound annual growth rate (CAGR) between FY 2001 and FY 2009 and they are projecting a 0.78% CAGR between FY 2009 and FY 2014) Yet, many expected lower growth – if not an outright decline – in the federal IT budget for this coming fiscal year.

Now the budget is in the hands of Congress, which has historically appropriated more for IT than what the President requests. With fiscal priorities clashing and sequestration impacts now being felt across the market, federal IT could weather the current fiscal storm in relatively good shape.

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Originally published for Federal Industry Analysis: Analysts Perspectives Blog. Stay ahead of the competition by discovering more about GovWin FIA. Follow me on Twitter @GovWinSlye.

Cyber Executive Order Impacts Private Infrastructure and Network Protection

Thu, 21 Feb 2013 15:20:00 -0400

After months of speculation the White House has released its much-anticipated Executive Order (EO) pursuing comprehensive cybersecurity protection of public & private critical infrastructure. The timing of the EO coincides with the President’s State of the Union Address and as the House Intelligence Committee reintroduces the Cyber Intelligence Sharing and Protection Act (CISPA) that passed the House during the last Congress but died without an up-or-down vote in the Senate.

The Executive Order on Improving Critical Infrastructure Cybersecurity centers its efforts to strengthen cybersecurity critical infrastructure protection (CIP) through increased information sharing among industry and government and through standardized cybersecurity practices applicable across public and private infrastructures. Significant aspects include:

Threat Information Sharing – The EO expands the sharing of both classified and unclassified cyber threat and attack information to companies by requiring federal agencies to produce and quickly share unclassified reports of threats to U.S. companies. The directive also expands the Defense Industrial Base (DIB) Enhanced Cybersecurity Services (DECS) program to stimulate near-real-time sharing of cyber threat information with participating critical infrastructure companies.
Cybersecurity Framework – The Order gives the National Institute of Standards and Technology (NIST) the lead role in developing a Cybersecurity Framework of practices to reduce cybersecurity risks to critical infrastructure. This construct is to be built in collaboration with industry, leveraging existing and proven international standards, practices, and procedures. Further, the Framework is to be technology neutral to allow for innovation and competition among cyber products and services. The Department of Homeland Security (DHS) will promote the implementation of this Framework by industry through various sector-specific agencies like the Department of Energy and others.
Privacy Protections –The mandate requires federal agencies to incorporate privacy and civil liberties safeguards into their activities, based upon the Fair Information Practice Principles (FIPPS) and other applicable privacy and civil liberties standards. Agencies are also required to conduct regular assessments of the privacy and civil liberties impacts of their activities and make these findings available to the public.
Cybersecurity Regulation – The EO requires regulatory agencies to review existing cybersecurity regulations in light of the new Cybersecurity Framework to determine if current regulations are effective and sufficient, if any should be eliminated, or if new regulations are needed. Agencies will propose new, cost-effective regulations based upon the Framework to shore up existing regulations deemed ineffective or insufficient.

Implications

The White House considers this EO to be “a down-payment on expected further legislative action,” recognizing that certain executive actions require Congress to legislate such authorities. While we watch for those developments we can anticipate some potential implications for companies offering cybersecurity and other applicable solutions.

The broadened threat information sharing provision opens up participation in the DECS program which, according to media reports, has shown signs of languishing in recent months, while its parent program – the DIB Cyber Security / Information Assurance (DIB CS/IA) Program has grown. Depending on how things progress, this EO may breathe some new life into these programs and work toward broadening the sharing of threat information. A key element here is any costs incurred with the program. This EO provision comes on the heels of January’s 2013 National Defense Authorization Act which included several cybersecurity provisions, including requiring DoD contractors to report penetrations to their networks.

The new NIST-led Cybersecurity Framework development will present opportunities for industry to engage with policymakers and influence the future cyber policy. While the resulting Framework is intended to be technology-neutral, the ability to influence what elements constitute “secure” may drive future demand for certain technologies and services. Further, active engagement may place a firm’s solutions in the front of the mind of agency decision makers, producing a residual benefit.

The FIPPS privacy requirement may open doors for advisory services and training on FIPPS-related activities and assessments. As new regulations are developed agencies and industry will need help addressing new requirements and applying new approaches and technologies.

In the end, the new EO reignites the policy and legislative debate on federal cybersecurity as well as asserts broader federal influence over private critical infrastructure and networks.

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New presidential directive is more "cyber" aware, but its state and local impact is doubtful

Fri, 15 Feb 2013 12:56:00 -0400

On the eve of his State of the Union address, President Obama ushered in a major overhaul of U.S. homeland security policy with Presidential Policy Directive/PPD-21. Much of the news coverage this week referred to the directive as some sort of “cyber” policy. To that end, PPD-21 “identifies energy and communications systems as uniquely critical due to the enabling functions they provide across all critical infrastructure sectors.” However, while PPD-21 is not solely focused on information, or “cyber,” security [See Deltek's latest report on this market], awareness of “cyber threats, vulnerabilities, and consequences” is significantly higher in this directive than in HSPD-7.

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General government state and local ballot initiatives: lotteries, gaming and other news

Tue, 13 Nov 2012 14:02:00 -0400

While media outlets nationwide concentrate heavily on how Tuesday’s election results will affect federal

government spending, contracting and state and local funding, I would like to shine a light on a series of state and local ballot measures that will certainly fly under the radar in the wake of President Obama’s reelection, but may nevertheless have major impact on business, procurement and IT needs. Here’s a breakdown of several measures that are sure to affect state and local lottery and gaming operations, as well as procurement law:

LOTTERY AND GAMING

Maryland:

- Voters statewide weighed in on Question 7, the much-talked about gaming expansion ballot initiative to allow the construction of a casino in Prince George’s County. Public officials argued that tax revenues from the casino would go toward education funding. The measure was vociferously opposed (mainly by a rival casino operator in West Virginia), and led to the most expensive political campaign in Maryland’s history, with more than $90 million spent between supporters and opponents. Despite the opposition, the measure passed by a 52 percent to 48 percent margin.

Oregon:

- Oregon had two proposed amendments to the state constitution that would have legalized privately owned casinos with gambling, and used the tax revenue for various budget purposes. Both measures were defeated.

Rhode Island:

- Rhode Island approved a measure to allow state-operated casino gambling at the Twin River Casino in Lincoln, R.I. Another measure to allow state-operated casinos in Newport received support from statewide voters (67 percent), but failed to pass because the measure had to be approved by a majority of Newport voters. As with all new state-operated gambling venues, there will likely be substantial opportunities for vendors who provide video lottery terminals, gaming systems and other forms of electronic gambling.

Florida:

- Lee County sought to allow slot machine gaming at the Naples-Fort Myers Greyhound track. Voters approved the measure, though it remains subject to authorization by the state legislature. The approval of these machines is expected to lay the groundwork for future lottery and gaming expansions in the state.

- Volusia County also proposed installing slot machines at designated locations throughout the county. Results for this measure are not available at this time.

Illinois:

- Wood Dale City and Winfield Village both put initiatives on the DuPage County ballot to prohibit video gambling. Wood Dale voted in favor of prohibition, as did Winfield Village.

New York:

- The city of Geneseo voted on whether to allow video gaming. According to the Star Courier, the measure was barely defeated with a 17-vote margin of 1,730 to 1,713.

ODDS AND ENDS:

California:

- The cities of Newport Beach and Murrieta placed a pair of initiatives on the ballot to ban the use of red-light cameras. Red-light and speed cameras are produced almost exclusively by the private sector, and cities frequently contract these services out. Murrieta voters approved Measure N to ban the use of such cameras, as did Newport Beach. A fun fact I learned while writing a paper on red-light cameras for my public policy graduate school program: Since 1990, every time the use of red-light or speed cameras has been put to a referendum, the public has overwhelmingly voted to prohibit their use.

- The city of Santa Rosa voted on a measure to alter the city’s charter to allow the city to contract with a single vendor to provide both design and build services for projects. Previously, the charter required the city to solicit services separately. Though results aren’t final at this time, the Santa Rosa Press Democrat is reporting that the measure is likely to pass (68.4 percent to 31.6 percent).

Alabama:

- A measure to amend the Alabama State Constitution to allow the issuance of general obligation bonds of up to $750 million with the goal of providing financial incentives to existing companies within the state as well as attracting new industry passed with a 69.3 percent to 30.66 percent margin.

Florida:

- The town of Redington placed a measure on the Pinellas County ballot proposing alterations to the town charter codifying a requirement that bidding and purchases be done through a competitive bidding process “whenever practical.” Results are not available at this time.

Analyst’s Take

As for the large swatch of lottery and gambling initiatives, with the exception of Rhode Island and a few other governments, most of the measures were to legalize privately owned and operated gambling establishments, not state-run facilities with concrete contracting possibilities. Still, for many states, the first step toward state-run gambling is permitting the practice in the private sector. While this may not lead to business opportunities in the immediate future, keep an eye on the state and local governments that passed gambling referendums. Chances are that three to five years down the road, a lot of these governments will be looking to get into the lottery and gaming business as well.

Anti-Affordable Care Act initiatives pass in wake of Obama victory

Fri, 09 Nov 2012 10:45:00 -0400

As the dust settles from the two-year-long presidential campaign, and life begins to return to normal in swing states, voters in four states registered their continued disapproval of various provisions of the Affordable Care Act (ACA).

In a move that harkens back to pre-Civil War states’ rights advocates, voters in Alabama, Wyoming and Montana overwhelmingly approved ballot measures that seek to nullify the ACA’s most controversial provision: the individual mandate. In Alabama and Wyoming, the question was on amending the state constitution to prevent individuals from being compelled to participate in a health care system, and preserve individual rights in making health care choices, respectively. Montanans approved a measure with similar language that did not amend the state constitution.

Missouri, which had previously passed an anti-individual mandate ballot initiative, voted to prohibit the establishment, creation or operation of a health insurance exchange (HIX). State legislative Republicans proposed the initiative to prevent Democratic Governor Jay Nixon from establishing an exchange by executive order. This, however, will not prevent the federal government from running Missouri’s HIX when the state fails to meet the ACA’s deadlines.

Finally, the voters of Florida, which has not been officially called as voting for Governor Romney or President Obama, narrowly rejected a constitutional amendment prohibiting the individual mandate.

Each of these ballot measures, with the exception of the Missouri initiative, are widely agreed to be symbolic. States cannot nullify a duly-passed and constitutional law. Though many believed the Civil War had settled this issue, the ballot initiatives prove that a wide majority of voters in the states mentioned disagree. Interestingly, in each of the states (Missouri, Alabama, Wyoming and Montana), the ballot questions were agreed to by a larger margin than Governor Romney carried each state. This means that President Obama voters, ostensibly Democrats, switched their vote to approve measures that oppose the president’s signature achievement.

The waiting game is over: States must act on Obamacare

Wed, 07 Nov 2012 12:52:00 -0400

“The law is the law, whether you like it or not. It doesn’t matter if you like it. It’s the damn law.”

Many governors and insurance department heads awoke this morning with Mississippi Insurance Commissioner Mike Chaney’s words ringing true after last night’s reelection of President Obama. States holding out for a change in federal leadership on health reform now have fast decisions to make. The numbers are staggering for Mississippi: one in five people lack health insurance; it leads the “States of Misery” in health, poverty, and crime statistics; and has the highest level of obesity in the country at 34.9 percent. Despite Governor Phil Bryant calling for a stall on Obamacare, Chaney is creating a health insurance exchange (HIX) under his own authority, and with an Obama victory, plans to file a blueprint on November 16, unless he receives a court order from “some idiot out there trying to stop me.” Though his words could be considered somewhat crude, the logic behind them is solid: State’s ignoring the law does not mean the law disappears, and these words come from someone against Obamacare.

Exit polls from last night showed that roughly a third of voters listed health care as an important factor in their vote. Despite Obama being reelected, several states had voter efforts approved to limit Obamacare, including Missouri, Alabama, Wyoming, Florida, and Montana. Although some states were opposed to health care reform from the beginning, those that started the exchange planning process are finding that they have run out of time, and will likely adopt the federal exchange until a state-based exchange can be built.

With a scramble to hit the 2014 deadline, procurement strategies may be expedited, like Connecticut’s sole-source award to Deloitte for both its HIX and its integrated eligibility system. Expect to see even the early innovators relying heavily on federal hub resources for the first enrollment period. As Chaney pointed out, there is no more waiting; the Affordable Care Act is the law. Deltek will be watching as blueprints are submitted to the Center for Consumer Information and Insurance Oversight by November 16, 2012, and how federal-state relationships play out as the nation addresses health care reform.

As always, be sure to follow Deltek’s Health Care and Social Services Team on Twitter @GovWin_HHS, or connect with us through LinkedIN. Stay tuned for more information around a new Health Insurance Exchange Vertical Profile addition in the near future!

Vendors Should Game Out Potential Sequestration Impacts

Fri, 21 Sep 2012 11:41:00 -0400

Deltek has already discussed the likely impacts of federal budget sequestration on Justice and Public Safety programs here. Sequestration arises from the Budget Control Act of 2011, which established new budget enforcement mechanisms for reducing the federal deficit by at least $2.1 trillion over the 10-year period (FFY 2012-FFY 2021).

Vendors should expect state and local buyers to remain fairly uncertain—maybe even confused—about the potential impact of sequestration on their federally funded grant projects. Many agencies will not implement contingency plans for sequestration cuts. They will wait for sequestration to go into effect and let their state budget offices to sound the alarm and issue orders. So, vendors with projects funded by federal grant dollars should think ahead.

The National Association of State Budget Officers (NASBO) has reviewed the federal government’s most recent sequestration report and found that “the report has certain limitations – for example, its calculations are based on fiscal 2012 appropriated levels rather than fiscal 2013, and its organization by federal account rather than grant program may make it less easy for some state agencies to analyze.”

Federal Funds Information for States (FFIS), the leading analyst of federal aid to states and localities, has found that:

While 73% of the programs that FFIS tracks are covered by the sequester, most of the funding states receive via federal grants (82%) would be exempt from sequester. This is because Medicaid (which accounts for almost half of federal aid to states), several highway programs, and a host of other mandatory programs targeting low-income individuals are not subject to sequester.

However, vendors should keep in mind that grant funds underwriting special IT projects that are unrelated to long-established programs are more likely to be in that 18% of non-exempt funding. For example, the Centers for Medicare and Medicaid Services’ (CMS) funding for “State Grants and Demonstrations” is sequestrable. This means that this pot of $530 million (per FFY 2012 budget) would be subject to a 7.6% cut (or $40 million) over the sequestration period. Unfortunately, as NASBO has pointed out above, the White House report on the impact BCA does not provide the level of detail required to assess the impact of sequestration on specific grant awards.

In reviewing relevant federal documents, Deltek does find any indication that federal funding participation (FFP) on IT projects for means-tested benefit programs, such as Medicaid Management Information Systems (MMIS), would be affected by sequestration. This is in keeping with the fact that programs for low-income individuals are exempt from BCA cuts, but we will keep an eye on this. The BCA, which is due to go into effect on January 2, 2013, will immediately become a political hot potato after the November election.

For the time being, all IT vendors doing business with state and local government projects funded by federal grants (not FFP) unrelated to programs for low-income individuals would be well advised to have a contingency plan for sequestration reductions. It will be a good exercise for the continuing budget battles that are likely to afflict Washington for the next four years, regardless of the November results.

Government 2.0: Government Trends - IT procurement transformation (Part 2)

Thu, 13 Sep 2012 08:10:00 -0400

Continuing from my previous blog on Government 2.0’s effect on the traditional IT procurement process, I wanted to take a look at trends in government’s approach to acquiring Gov 2.0 technology. Part 1 of this blog series highlighted how small Gov 2.0 IT firms have begun to use non-traditional purchasing options to circumvent the traditional procurement process. Gov 2.0 firms are trying to avoid the procurement process because it has historically been more difficult for small IT firms to compete in the government IT market. However, today’s trends in IT procurement hint that times are changing. Since governments continue to face shrinking IT budgets against expanding IT costs and needs, they are now looking for alternative ways to do business as well. For many IT bureaucrats and contracting officers interested in Gov 2.0 technology, that means looking outside of the conventional procurement process, and toward smaller IT firms.

Code for America (CFA), an example of Gov 2.0 realized, is an organization that describes itself as “Peace Corps for geeks.” Established in 2009, CFA assigns programmers on year-long fellowships to work with local governments on in-house IT projects, to provide faster and more affordable alternatives to procuring vendor services and solutions. CFA noticed that new IT products, which it calls “civic startups,” were often created once the fellows had completed their assignments – essentially spawning new businesses. However, these civic startups that had created products for governments were having trouble selling their products. Finding the government procurement process difficult to navigate, many fizzled.

In response to this issue, CFA is setting up its first civic incubator, where a handful of IT entrepreneurs will participate in a five to six-month-long program that will provide funding and mentoring, while bringing their applications and solutions directly to local governments and school districts. This incubator is something CFA’s leadership hopes will turn the traditional procurement process on its head.

Another noticeable trend on the rise is localities across the country sponsoring crowdsourcing events and hackathon competitions as an alternative approach to the traditional solicitation processes for Web development solutions and services. In 2010, after working with CFA, the city of Boston took a one-day hackathon event to the next level by creating a permanent office within local government. The New Urban Mechanics Office was created to hire full-time programmers for in-house IT development projects as well as to conduct outreach to encourage, field, and partner with small IT entrepreneurs.

In another CFA spinoff, White House Chief Technology Officer Todd Park created the Presidential Innovation Fellows (PIF) program to pair “top innovators from the private sector, non-profits, and academia with top innovators in government to collaborate on solutions” using technology. On August 23, 18 innovators from outside of government were selected to work on one of five projects over the course of six months. The PIF program’s goal is to synthesize open data, expand e-government services, and simplify the RFP process by “building a platform that makes it easier for small high-growth businesses to navigate the federal government, and enable agencies to quickly source low-cost, high-impact information technology solutions.”

One of the five projects, RFP-EZ, was born after Sean Green, head of the Small Business Administration’s Investment and Innovation Program, remembered an instance with the Department of Health and Human Services (HHS). The department had a need for an IT project, but the project’s estimated cost was $5 million to implement by a traditional IT vendor. After some research and outreach, HHS partnered with smaller IT companies that were able to complete the project for just more than $400,000.

During the PIF announcement, Green gave an open call to developers, contracting officers, and small Web development firms to join the effort and participate through Github.com, which is an open platform where RFP-EZ will be demoed. If successful, many state and local level governments will likely partner with or imitate the RFP-EZ project. Park took to Twitter after the announcement to confirm that the PIF will also be working with both state and local governments, in addition to the federal government, to create these IT solutions.

Analyst's Take

At all levels of government, innovation and affordability have been contradictory terms. The Code for America debunked the idea that quality Gov 2.0 solutions and services had to come at a premium. CFA seems to have been the catalyst for the future direction of Gov 2.0. Governments willing to take the early leap by circumventing their IT procurement process and engaging with innovators directly can expect some growing pains, but they will likely be dulled by ultimate cost savings.

The traditional format of government procurement has been grounded in the 1950’s-style door-to-door salesman. Governments release a solicitation and wait for the salesman to ring their door bell to peddle goods. Now, government agencies with strict budgets have the option to shop around without going through a lengthy and expensive procurement process. Governments want convenience and efficiency without having to sacrifice quality and they are willing to go outside the traditional procurement process to get it.

Subscribers have access to the full article here, including expanded analysis and recommendations for contractors.

Also, be sure to follow Deltek's General Government Team on Twitter @GovWin_GenGov.

The consequence of the Middle Class Tax Relief and Job Creation Act of 2012

Thu, 29 Mar 2012 15:09:00 -0400

On February 22, President Barack Obama signed the Middle Class Tax Relief and Job Creation Act of 2012 into law. The bill provides a variety of benefits to help middle class Americans, including Medicare payment extensions, social security payroll tax cuts, extension of job incentives to small businesses, as well as moving some public safety radio systems to a new broadcast spectrum (one that has yet to be defined).

In the same month that President Obama signed this bill into law, the Lancaster County, Penn., Board of Commissioners voted to negotiate with ARINC to build a new radio system on a television communications band (T-band). The new bill threatens this project, as it has created an incentive auction of the broadcast TV spectrum. Despite the possibility that this project, and 800 like it across the country, are put in jeopardy, Lancaster County’s public safety radio communications consultant from MWF Enterprises does not see this as a problem. The legislation would require the county to abandon the spectrum in nine years. In addition, the law includes a requirement for TV stations to change channels, which may be unlikely considering the significant branding that stations have for their channel numbers. Also, the legislation would carry a $1 billion price tag for the federal government, which might force a future change.

Analyst’s Take:

While it might be too soon to determine what the end result of this new legislation will mean for public safety agencies, vendors should not change course. They should continue with plans to develop T-band radio communication systems and should ensure that they offer full disclosure when providing plans for these systems, whether it is at the planning and consulting phase or in the implementation phase. Local governments may be hesitant to spend tens of millions of dollars on a system that may have to change bands in less than 10 years. As the federal government continues its plans for the spectrum, vendors must keep a watchful eye to determine how this may affect their radio system development.

Deltek Pulse: Health care and social services ? February 2012 recap

Mon, 12 Mar 2012 07:47:00 -0400

As the January 2014 implementation deadline fast approaches, February was yet again chock-full of news surrounding health insurance exchanges (HIXs). While some states continue to make progress toward meeting the deadline, others are still contesting the federal HIX mandate and plan to wait out the results of this month’s Supreme Court case surrounding its legality.

On Feb. 22, the Department of Health and Human Services (HHS) awarded additional Level One and Two establishment grants to 10 states, totaling nearly $230 million. Among them, Colorado, awarded $18 million, completed proposal submissions for two HIX-related procurements: HIX Services and HIX Operational Services. Other consulting and quality assurance-related procurements are in the pipeline. Nevada, awarded its second Level One grant worth $15.3 million, will use the funding to build a rules-based eligibility engine, to develop an operational plan, and to determine certain business and IT requirements unrelated to eligibility.

As the 2013 fiscal year (FY) approaches, governors continued to release state budget recommendations throughout February. A commonality amongst states is the continued battle to fund the ever-growing Medicaid population, particularly in the face of Medicaid eligibility expansion resulting from the Affordable Care Act (ACA). Beginning January 1, 2014, states will be required to expand Medicaid eligibility to all people below 133 percent of the federal poverty level, adding approximately 15.9 million newly-eligible beneficiaries to the Medicaid program. Based on the state budgets Deltek has analyzed since the start of the year, Massachusetts will see the biggest increase in Medicaid spending in FY 2013, with a 64.4 percent increase since FY 2010. Other major increases since FY 2010 include Alaska at 49.7 percent, Delaware at 36.4 percent and California at 35.4 percent.

On Feb. 23, North Carolina announced it would once again extend its current contract with Hewlett-Packard (HP), while Computer Sciences Corporation (CSC) – awarded the replacement Medicaid management information system (MMIS) contract in December 2008 – continues to build its MMIS for the state. This $122 million, two-year contract extension is the second awarded to HP for the MMIS, bringing the total contract value up to an estimated $616 million. Meanwhile, CSC was awarded another replacement MMIS contract with the Maryland Department of Health and Mental Hygiene, valued at $297 million.

Further, Florida was selected by the Centers for Medicare and Medicaid Services (CMS) to pilot the latest version of the Medicaid Information Technology Architecture (MITA) initiative, MITA 3.0. In doing so, the Agency for Healthcare Administration (AHCA) will complete a state self-assessment (SSA) and develop a roadmap to be used in planning future system upgrades and replacements to be completed by the end of June 2012.

Continuing to work toward the HIX implementation deadline, I predict states will be busy hiring consultants, producing technical plans, and releasing HIX solicitations throughout the next few months. However, this all may come to a halt pending the outcome of the March 26 – 28 Supreme Court case surrounding ACA. Expanded Medicaid eligibility may also be affected by the outcome of the case.

Throughout March and April, Deltek will continue to delve into state budget recommendations and take a closer look at Medicaid spending data. Be on the lookout for the round 3 of our series on the rising price of health care costs! As always, remember to follow Deltek’s Health Care and Social Services team on Twitter @GovWin_HHS, or connect with us through LinkedIn!

Breaking down President Obama's FY 2013 budget: Health and human services

Wed, 15 Feb 2012 17:14:00 -0400

While most people were occupied with last-minute Valentine’s Day preparations earlier this week, President Obama was busy announcing the FY 2013 budget. Rest assured that Deltek will be analyzing every inch of the data to uncover key trends and opportunities for our member network. This analysis will focus on funds trickling down to the states from the health and human services vertical. The Department of Health and Human Services’ (DHHS) Deputy Secretary Bill Corr spoke to the public on Feb. 13 and highlighted the health objectives the budget package addressed. DHHS plans to strengthen the nation’s health care, continuing on the Affordable Care Act (ACA) of 2010. Initiatives include health insurance exchange development, expanding community health programs, and increasing the health care workforce. Fighting fraud, waste, and abuse continues to be priority number 1 – the department collected almost $4 billion last year in improper payment recoveries. Corr also stated the FY 2013 budget and, specifically, Medicaid reform will help reduce the federal deficit by $366 billion over 10 years.

Following the same trend as last year, discretionary spending (Table 1, below) is set at $30 billion, which is down nearly 3.5 percent from FY 2011. Programs seeing major cuts include the public health and social services emergency fund and low-income home energy assistance (LIHEAP). The Distance Learning, Telemedicine, and Broadband Program saw a 68 percent increase to $42 million, following through on DHHS’ promise to strengthen health care, especially in rural areas. Mandatory spending (Table 2) also corresponded with DHHS goals and saw an 82 percent increase in funding for health insurance exchange establishment, totaling $868 million. Grant funding to states for Medicaid totals $269 billion. Stay tuned for FY 2014 numbers as eligibility enrollment is estimated to increase by nearly 16 million Americans.

Table 1: Federal Grants to State and Local Governments, Discretionary (in millions of dollars)

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Table 2: Federal Grants to State and Local Governments, Mandatory (in millions of dollars)

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Other areas of the budget proposal include:

Temporary Assistance for Needy Families (TANF): TANF funding rises nominally to $17 billion in FY 2013.
Supplemental Nutrition Assistance Program (SNAP): The budget includes $7 billion in SNAP benefits, a 5 percent increase from FY 2011. Although states are seeing record food stamp numbers, the Department of Agriculture (USDA) transferred $400 million to support the Women, Infants, and Children (WIC) Program for FY 2012.
WIC: Program funds increased by 14 percent to $7 billion, which includes $14 million for infrastructure funding and $30 million for management information systems.
Child Support Enforcement: Funding took a 7 percent dip to $3.8 billion. The budget request includes new investments of $305 million in FY 2012 and $2.4 billion over ten years for the Child Support and Fatherhood Initiative.
Child Care: Proposes $6 billion for child care, which includes $2.6 billion for the Child Care and Development Block Grant to supplement assistance for low-income families; and entitlement to states is $3.4 billion.
Child Welfare: Requests $7.2 billion for foster care and permanency services including adoption and guardianship assistance, foster care, and independent living.

Overall, the FY 2013 budget produced minimal funding changes for health and social services programs. Vendors playing in the health care field will see the most benefit in those pocket areas of increased funding, especially surrounding health insurance exchange implementation, Medicaid system reform, and eligibility redetermination. Those thinking that the ruling on the ACA later this summer will stem exchange development should think again. Many states are planning to continue developing systems whether the act holds or not. With the major push to cut down on federal spending and fight abuse in the human services arena, vendors need to keep reporting systems up to date with all required mandates and regulations. As health information exchanges start to be rolled out this year, it should be interesting to see which states will find success in transferring electronic medical records, and which will not. It seems that health care will continue to be the hot topic of FY 2012 and FY 2013.

President Obama's FY 2013 budget: $6 billion in state and local public safety programs

Wed, 15 Feb 2012 14:09:00 -0400

On Monday, President Obama released his proposed fiscal year 2013 budget, which outlines proposed budget figures for highly-relied-upon grant programs within state and local governments. President Obama’s budget provides $632.7 billion to aid state and local governments in 2013 – an increase of $20.2 billion from 2012. Grant outlays for justice programs are estimated at $6.9 billion in 2013. A total of $2.57 billion will be discretionary funding made available to state and local public safety agencies via the Office of Justice Programs (see below). In regards to homeland security, the budget provides the Federal Emergency Management Agency (FEMA) with approximately $4 billion in discretionary funding (see below). In all, states and localities will have access to nearly $6 billion in public safety and homeland security grants for FY 2013.

Office of Justice Programs Budget Authority ($M)	2011 Actual	2012 Estimate	2013 Estimate	% change (2011-2013)
State and Local Law Enforcement Assistance	1,219	1,094	945	-22%
Juvenile Justice Programs	241	211	202	-16%
Community Oriented Policing Services	304	162	278	-9%
Violence against Women Prevention and Prosecution Programs	404	390	392	-3%
Totals	2,168	1,857	1,817	-16%

FEMA Budget Authority ($M)	2011 Actual	2012 Estimate	2013 Estimate	% change (2011-2013)
State and Local Programs	2,818	2,237	2,900	3%
United States Fire Administration and Training	4	3	3	-25%
Disaster Relief	2,523	1,204	1,204	-52%
Totals	5,345	3,444	4,107	-23%

Highlights:

Department of Homeland Security:

The budget provides $2.9 billion for state and local programs to equip, train, exercise, and hire first responders. To better target these funds, the budget proposes eliminating duplicative, stand-alone grant programs, and consolidating them into the National Preparedness Grant Program.
To retain an acceptable level of fire and emergency response coverage in the current constrained budgetary environment, the budget anticipates $1 billion in immediate assistance for the retention, rehiring, and hiring of firefighters in 2012, as requested by the president in the American Jobs Act.
The budget provides $6.1 billion for the Disaster Relief Fund.

Department of Justice:

The budget provides $312 million for Juvenile Justice and Child Safety programs that assist states with their juvenile justice systems.
The budget provides $257 million to support America’s first responders and the hiring and retention of police officers, sheriffs, and deputies across the country, and includes a preference for the hiring of post–9/11 veterans. This funding builds on the $166 million in COPS Hiring Grants enacted in 2012. These investments assist in building capacity to enable state and local law enforcement partners to make the most of their resources and encourage their most promising and effective public safety efforts. The budget includes $4 billion in immediate assistance for the retention, rehiring, and hiring of police officers in 2012, as requested by the president in the American Jobs Act.
The budget provides $413 million to continue efforts to combat the hundreds of thousands of violent crimes against women that are committed each year.

Department of Commerce:

The budget provides more than $10 billion of mandatory budget resources to help build an interoperable public safety broadband network that will strengthen economic growth and public safety, while benefitting from commercial innovation.

The federal government has had to tighten its belt, and the effects will be felt at all levels. Grant funding available to state and local governments for justice and homeland security programs has decreased, but the demand and need for those grants is likely to be just as high. The increased competition among governments for grant funding could leave some governments without the funding needed to pursue projects.

For more information on the public safety and homeland security market, Deltek and the Industry Council for Emergency Response Technologies (iCERT) have released Justice and Public Safety Market Overview, FY 2010-2012, which examines IT spending levels, trends and drivers, technology segments and their impact, and a look ahead to FY 2013 for the state and local justice/public safety and homeland security market.

Georgia Seeking To Boost Education With NCLB Waiver Request

Tue, 13 Dec 2011 09:31:00 -0400

In September, the Obama Administration announced plans to offer more flexibility from federal education mandates in exchange for a commitment from states to adopt reforms that boost overall student achievement.

After the announcement, a handful of states formally submitted requests to the U.S. Department of Education for waivers from key provisions of No Child Left Behind (NCLB), with numerous states indicating they plan to apply for waivers in a second round next year.

In this week’s installment, Deltek discusses Georgia’s plans to “increase the quality of instruction and implement a system to support continual improvement of student achievement.” Georgia said it’s seeking a waiver to fully implement a multi-dimensional system that supports the state’s core educational principles.

In its request, Georgia disclosed a few IT-specific initiatives, including a plan to 1) Develop and Administer Annual Statewide, Aligned, High-Quality Assessments that measure student growth (IT project A), and 2) Develop and Implement a State-based System of Differentiated Recognition, Accountability, and Support (IT Project B).

As part of its waiver request, Georgia is aiming to Develop and Administer Annual Statewide, Aligned, High-Quality Assessments (see IT project A above – at this time, there is no related Deltek tracked opportunity) which will support the development of a new system that will measure student knowledge and skills against a common set of college- and career-ready standards in mathematics and English language. It will also provide an accurate measure of student achievement across a full performance continuum and an accurate measure of student growth over a full academic year or course.

Georgia said that once the minimum requirements are determined for the assessment system, the GaDOE will evaluate district readiness. It also said that implementation may require additional infrastructure (such as hardware and bandwidth) for some districts.

Note: In developing their assessment system, Georgia may work with a state consortium in which other states may issue RFPs for procurements.

Elsewhere, Georgia is looking to develop and implement a state-developed system of Differentiated Recognition, Accountability, and Support (see IT project B above – at this time, there is no related Deltek tracked opportunity). The goal of this system is to provide meaningful information about school performance that guides initiatives to effectively improve student achievement and graduation rates; promote capacity for sustained progress over time; close achievement gaps for all schools across the state; and target interventions at those schools with greatest need.

Note: The system is expected to be implemented no later than the 2012-2013 school year.

While Georgia seeks to develop and improve its overall systems of Assessments and Accountability, the state currently has 8 Deltek tracked opportunities dealing with primary/secondary education While none of these are related to the state’s NCLB waiver-related IT projects listed above, when further information is available from the state, look to Deltek to track and publish the associated contracting opportunities.

Obama American Jobs Act: Contractor Implications

Fri, 09 Sep 2011 16:28:00 -0400

On Thursday night, President Barack Obama revealed the American Jobs Act, an ambitious $447 billion package of spending plans and tax cuts designed to stimulate the U.S. economy and create badly needed jobs. And according to Obama, the plan will be paid for in full by rolling it into the list of spending to be offset by the Joint Committee focused on a deficit reduction plan.

Overall, Obama pushed for more federal spending to help jump-start the economy, although he avoided the word "stimulus," which has become an issue with Republicans. Clearly, the GOP will continue to oppose anything resembling the last stimulus, and is quite weary of the threat of continued out-of-control spending.

Below are some key points from Obama's speech which could affect the government contracting community:

Helping Small Businesses ? As part of his infrastructure revitalization plan, Obama called for significant investments in schools, roads, rail and airports while helping small business contractors compete for infrastructure projects. He also called for tax cuts, reforms and regulatory reductions to help entrepreneurs and small businesses access capital and grow, which could benefit smaller contractors just getting started and those looking to expand their operations.
Contractor Impact: Obama's plan includes changing the way the government does business with smaller firms. The Administration will soon announce a plan to accelerate government payments to small contractors to help put money in their hands faster. The President is also charging his CIO and CTO to, within 90 days; stand up a one-stop, online portal for small businesses to easily access government services.

Transportation Infrastructure - Transportation infrastructure presents a double opportunity for Obama - a chance to get Americans working, while modernizing the U.S.'s deteriorating infrastructure. In total, Obama called for $50 billion to be spent on immediate investments for highways, transit, rail and aviation. The President's plan includes investments to improve America's airports, support NextGen Air Traffic Modernization efforts, and resources for the TIGER and TIFIA programs, which target competitive dollars to innovative multi-modal infrastructure programs. Another $10 billion will be spent on an infrastructure bank to help get private funding to support infrastructure-related projects.
Contractor Impact: Infrastructure work would benefit AEC contractors over the next several years. According to Deltek's "Federal Architecture and Engineering Market Outlook, 2011-2016" report, demand for architecture and engineering (A/E) services by the U.S. government will increase from $8.1 billion in 2011 to $9.5 billion in 2016 at a compound annual growth rate (CAGR) of 3.2%. As transportation infrastructure modernization progresses, so does the embedded technology, which could mean additional opportunity for technology contractors.

School Infrastructure - Obama also wants to create jobs to work on construction projects at thousands of deteriorating schools, with rural and Bureau of Indian Education funded schools having top priority. Obama aims to invest $25 billion in school infrastructure, including Internet-ready classrooms. He also emphasized the need to rehire teachers who have been laid off, and will look to spend $35 billion to help protect those teachers.
Contractor Impact: Infrastructure work would benefit AEC contractors and firms that could provide IT enhancements and upgrades. Projects would include energy efficiency upgrades, modernization of science and computer labs and technology upgrades.

Expanding access to high-speed wireless - The President is calling for a deficit reducing plan to deploy high-speed wireless services to at least 98% of Americans, including those in more remote rural communities, while freeing up spectrum through incentive auctions, spurring innovation, and creating a nationwide, interoperable wireless network for public safety.
Contractor Impact: There is opportunity for not only companies that provide wireless network capabilities, but also adjacent technology areas that would be facilitated by broader access, such as telehealth and telework.

Supporting the Unemployed ? The President proposes an overhaul of the Unemployment Insurance program, extending benefits and giving states more responsibility and flexibility to design better programs for reemployment, particularly for the long-term unemployed. There are some 6.2 million Americans who have been out of work for more than six months. States would also have the flexibility to help long-term unemployed workers create their own jobs by starting their own small businesses.
Contractor Impact: Depending on the scale and nature of the overhaul, states may need assistance in developing, implementing and monitoring new programs and information.

Creating Tax Benefits: The Act has several tax incentives for businesses to spur hiring:
- Payroll taxes - Topping the President's jobs initiative is the cutting of payroll taxes. The plan is to expand cuts worth $240 billion so that workers could expect to see their share halved through 2012. This provision would also cut the payroll tax in half to 3.1% for employers on the first $5 million in wages.
- Tax Credits for Hiring the Long-Term Unemployed - President Obama's plan would also give companies a $4,000 tax credit for hiring from the 5 million, long-term unemployed Americans.
- Tax Credits for Hiring Veterans - The unemployment rate for U.S. veterans below the age of 30 hovers around 24%, and that rate could expand. Currently, there are 2 million veterans of the Afghanistan and Iraq campaigns back home. But once those missions fully draw down, that number could easily double, reports say. The "Returning Heroes tax credit" will set aside $5,600 to $9,600 to encourage the hiring of unemployed veterans.
Contractor Impact: Tax incentives are useful to any company struggling with cashflow issues.

Spending Summary

Source: White House Office of the Press Secretary

The biggest criticism of the plan that seems to be leading the online debate is the tax credit element, the argument being that businesses only hire when the demand for their product or service is there, not simply to take advantage of tax credits. I tend to believe this will be true, except for those specific areas of investment that will drive demand and therefore the need to hire (e.g. transportation, education, wireless). Driving demand for struggling businesses in flattened industries outside of these will be an issue.

In the current environment, the first question might be "how will the government pay for all of this?"To pay for the plan, President Obama is calling on the Joint Committee that is currently working on a deficit reduction plan (required as part of the debt ceiling agreement) to find additional cuts. Obama noted that in the coming weeks, he would further outline his deficit reduction plans.

So what are the chances of this act passing Congress? Considering the level of contentious debate that has occurred since the 111th Congress was formed, particularly around budget-related legislation (e.g. FY11 budget, debt ceiling), this bill will likely face the same level of scrutiny. However, there are no less than 26 other job bills that were introduced and stalled in Congress in 2011 (some of them with very interesting names such as the "Keep American Jobs from Going Down the Drain Act of 2011," and "Don't Default on America's Debts and Destroy American Jobs Act of 2011").

I'm sure President Obama is hoping for the "Can We Please Just Pass This Bill Without Drawn Out and Stubborn Debate Act of 2011." And he may get his wish. Spurred by plummeting Congressional approval ratings, negative public perception and plain old weariness of continuous head-butting over numerous issues, Congress may be more willing to compromise than we've seen on any other issue in 2011 - as long as Obama's plan to pay for it comes to fruition.