Every so often a Member asks us: what is the industry average win rate? Here is a new look at average federal win rates using the FY07 FPDS data.

When IT work is competed and there is more than one bidder, the average win rate is 30%. How does your company fair?

What do you think about these rates?

Methdology by example:

Assume total spending was $100. If $50 worth of spending had 2 bids, and $50 worth of spending had 10 bids, the win rate for the first $50 was 50%, and 10% for the second $50.

The average win rate across the total $100 = 1/2*50% + 1/2*10% = 30%.

The 13th Annual Governing Live! Outlook in the States 2008 was held this past week in the nation's capital. IT vendors, Governors, Chief Information Officers and Budget Analysts attended the conference to hear what lies ahead the localities and states in 2008. For the most part, the main message and feeling from the conference was one of "doom and gloom". The horizon for Cities, Counties and States is pretty bleak the next couple of fiscal years.

The first day consisted of experts discussing the issues and trends for our nation's cities and counties. Don Borut, Executive Director of the National League of Cities kicked off the first panel with his thoughts on 2008 for cities. Major issues affecting cities in 2008 range from the unraveling of the intergovernmental system, economic downturn, housing foreclosures and predatory lending, immigration, transportation/infrastructure, energy/environment/sustainability and public safety/safe neighborhoods.

Larry Naake, Executive Director of the National Association of Counties commented on the outlook for the counties. Issues looming for counties are very similar to what is affecting our cities: sub-prime loans and the housing crisis; infrastructure challenges; illegal immigration; climate change; election reform; and an antiquated tax system.

GovWin's Take

• With the recession at its beginning stages, localities are feeling it the most and taking the biggest hit. IT spending and investment is projected to be relatively flat with some decreases across the board in States with huge budget deficits (Florida, Michigan, Arizona, and California). Cities and Counties will be asked do more with less. Less discretionary funding and reductions in staff will lead to more consolidation and a big push for regional approaches to help offset the lack of resources available.

According to an article appearing on WashingtonPost.com, the White House is set to increase the role the intelligence agencies play in cyber security operations. Issued under a classified joint directive – National Security Presidential Directive 54/Homeland Security Presidential Directive 23 – signed on January 8 - the National Security Agency (NSA) is being tasked with the job of monitoring the internet traffic of all government agencies.

Prompted by an increasing progression of attacks on government networks the Whitehouse is taking a proactive approach to monitoring networks, something a number of agencies have failed to do successfully, having thus fallen victim to a number of network intrusions.

NSA was chosen because of its experience in monitoring major communications systems – although historically overseas. Moreover, a task force created under the initiative will be headed by the Office of the Director of National Intelligence, which will coordinate efforts to identify the source of network attacks on the government. The Department of Homeland Security will be tasked with network protection, and the Pentagon with developing counterattack measures.

Funding requests are expected to appear in the FY 2009 budget request.

GovWin's Take:

• This appears to be a concerted effort by the administration to take hold of a problem that has been haphazardly addressed by the majority of federal agencies. This initiative, combined with the current creation of the Air Force Cyber Command will be injecting a significant amount of new money into the cyber security market over the coming years.
• The intent to use a spy agency - NSA - for the purpose of monitoring domestic network traffic is certainly going to raise a red flag, especially in light of the wiretapping incidents that have occupied the news over the past few years.

Laura Tobler, NCSL's Health Program Director joined NCSL's Top 10 Legislative Issues for 2008 podcast series to confirm that this year lawmakers will continue to wrestle with health care cost issues. Health care represents the largest area of total state spending at 32 percent. One in six people are uninsured and millions more are underinsured. Due to Presidential vetoes of proposed expansion packages of the State Children's Health Insurance Program (SCHIP), in favor of a short-term funding extension until March 2009, state lawmakers must grapple with funding limitations to insure families over the 250% poverty level. These pressures along with the increasing uncertainty of the number of states projected to have budget shortfalls in 2008 make health care a top legislative issue lawmakers will struggle with this year.

In 2008, states are expected to draft strategies to include the expansion of SCHIP and Medicaid programs. States will also look at implementing a universal coverage system for kids by expanding the eligibility poverty. Unfortunately, financing these programs is becoming more and more challenging, especially with the Federal government pushing back on states for federal assistance. Although Congress has passed a limited extension for SCHIP, the urgency of the matter is encouraging states to consider universal health care coverage legislation. For instance, California legislators will be considering ABx1 - The Health Care Security and Cost Reduction Act. California's effort is being recognized as the Country's largest Health Care Reform. In addition, New York has recently announced the publication of a RFP for the Analysis of Proposals for Achieving Health Care Coverage. According to Tobler, in 2006 Massachusetts and Vermont passed universal health care packages, which will continue to increase attention in all states to mirror such policies.

States will also discuss plans to place health care reform responsibility among all players; individuals, employers and state governments. Tobler emphasis that states are placing responsibility in individuals by expanding public programs, allowing the public to assume responsibility of the poorest and involving employers to finance the programs. "Employers would be charged a fee for every uninsured employee and the collected money will be used to finance the subsidy for low income" said Tobler.

If universal coverage fails to pass, states will be looking at filling in gaps by introducing health care reform legislation. In 2007, more than half of the states proposed new health care laws and in 2008 the same or greater momentum is anticipated to introduce this type of legislation, especially with presidential candidates making health care reform a priority for their administrations.

GovWin's Take

• The crisis of health care costs will compel states to introduce legislation to change the current health care system and ultimately reduce health care costs. Transforming the system will encourage state and local governments to look to Health IT technologies such as electronic health records systems as well as health information exchange networks to alleviate cost and increase efficiencies.

• For an in depth analysis of the trends/market drivers in health care, be sure to look for GovWin's State and Local Health Care IT Market, 2007-2012. A number of states have already established statewide health IT agendas. Most states are in the early planning stages while a few others have embarked on pilot projects.

The collapse of the I-35 Bridge in St. Paul, Minnesota this past summer is a distressing remainder to state legislators of the fragile condition of most of America's roads and infrastructure. Jim Read, NCSL's Transportation Program Director, joined NCSL's Top 10 Legislative Issues for 2008 podcast series to discuss the challenges legislators will face this year to allocate funds and creatively look for ways to increase revenue in efforts to fix roadways.

Roads and bridges underlie entire state economies, therefore funding sources to fix infrastructure is a critical mission for legislators. Read explains that the decline in state gas taxes and purchasing powers are the two main concerns for states - "less money is available for states to spend and states will be looking at variety of ways to increase revenue including tolling and private-public partnerships". According to Read, 23 states have authorization to partner with vendors. For example, Indiana's toll road initiative totaled $4 billion in a vendor partnership to take care of roads.

In addition, states might be playing a bigger role in this issue if Federal spending for reauthorization of transportation programs remains underfunded. This is where partnerships with vendors come into play. Read says "States will look at basic contracting services to selling or leasing toll roads" However, contracts are negotiated behind close doors questioning the protection of public interest.

In 2008, legislatures are expected to take a number of actions on this issue. For instance, Colorado assigned a study commission to closely examine revenue strategies. The commission concluded that increasing gas taxes remains the number one source of funding for the state. Other states will be empowering local governments to pass increases in tax legislation as well as authority to create and maintain transportation infrastructure.

States are also expected to embark on pilot projects to implement innovative strategies to increase revenue. In the case of Oregon, a vehicle-mile-travel-fee system is being tested. Rather than charge a gas tax at the pomp travelers will be charged a fee for each mile they travel. Read confirms the system will probably be implemented in ten years.

GovWin's Take

· The trend of State and Local governments to look to tolls and partnerships with vendors as attractive options to generate much needed revenue is also a major driver for investment in information transportation systems (ITS). GovWin's State and Local IT Market Forecast 2007-2012 provides an detailed analysis of this trend and emphasis that investments of ITS deployments such as traffic signal optimization, electronic sign boards and others are expected by the end of 2012.

· State and local governments benefit from the largest federal funds offered for transportation programs within their communities. Among the several programs funded by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for User (SAFETEA-LU), states will closely follow federal-aid aimed at testing tolling, encouraging private sector investment and promoting the innovation of new technologies.

Matt Sundeen with NCSL's Transportation Program joined NCSL's Top 10 Legislative Issues for 2008 podcast series to discuss REAL ID, NCSL's third hottest issue for 2008 state legislatures. May 11, 2008 marks the deadline mandated by federal law for states to become compliant with REAL ID regulations. Those states not in compliance will no longer be able to use their issued driver licenses for federal purposes. According to Sundeen, in 2007, approximately 44 states considered 130 bills or resolutions related to REAL ID. Most states proposed legislation that opposed real ID or urged congress to amend or repeal the Act. These legislative actions are expected to continue in the 2008 legislative sessions and beyond.

Sundeen identified three key problems encountered by state legislators this past year with the Real ID Act. The first major concern has been the cost associated with the unfunded mandate. Initial estimates set the state burden at around $11 billion. The anticipated version of the Final DHS REAL ID Regulations has lowered the anticipated cost to a now estimated $3.9 billion. The most significant cost factor for states is expected to be the process to verify source documents used to prove identity. Sundeen explains that the verification process would increase the time to issue a driver's license and increase requirements for the states.

The second major concern to legislators is privacy. The act is seen as creating a national identification card, causing much concern and adverse reactions from states.

The third concern relates to states' rights. The Federal government is considering an issue that has been historically been under state control. Add to this the Act's status as unfunded and people start to pay attention.

For further information, NCSL dedicates a website to tracking REAL ID developments including the text of the Act, DHS draft and final regulation, and a REAL ID legislative tracking database linking to state legislations.

States currently evaluating ways to improve DMV and Real ID technologies include:

• Kentucky – Driver's License System Upgrade (Opp ID 45605)
• Maryland – REAL ID Technology System Implementation (Opp ID 41991)
• Arizona - Real ID Automated Business Systems Replacement (Opp ID 37919)
• District of Columbia - Modernization of Drivers License System (Opp ID 33143)

GovWin's Take

• The release of the Final DHS REAL ID Regulations is expected to alleviate much of the worries associated with the cost, the process, and the requirements of this mandate. However, states expecting budget deficits will remain slow in accepting the Real ID requirements and deadlines.

• Peruse GovWin's REAL ID State Profiles for an in-depth analysis on state progress with implementation of REAL ID.

• Be sure to review GovWin/Output Report Final Rule Provides Extra Time and Flexible Options for Technical Compliance for in-depth analysis on the IT implications of each of the compliance guidelines required in the final rule for REAL ID.

On January 1 of the great 2008, the Texas County Purchasing Association (TCPA) and the Texas Purchasing Management Association (TPMA) began their new life as the Texas Public Purchasing Association (TxPPA). The merger came about after a decision in November 2006 by the seed associations to unite and resulted in Texas' first statewide, multi-agency, public purchasing organization.

TxPPA starts with a combined membership of more than 300, but will likely expand quickly with eligibility expanded from counties and cities to also include school districts, state agencies and non-profits. Of course, everything is big in Texas, as evidenced by the 254 counties, over 1700 cities, 140 hospitals, over 1000 independent school districts, and over 400 special districts.

TxPPA is a sign of the growing revelation within states and locals that there is power in numbers and that there is value in community. Some of TxPPA's goals include:

• Establish cooperative relationships among members
• Promote ethical standards of conduct
• Promote uniform public purchasing laws
• Provide informed counsel to other members
• Collect and share best practices
• Encourage research and investigation

GovWin's Take

• With increased budget constraints and increased demand for results, S&L purchasers must capitalize on the successes and failures of their piers through associations and communities that share best practices
• Vendors must continue to look to the locals in S&L for new business, and cooperative purchasing groups are a wonderful avenue for entry to the market.

OMB has issued a new rule M-08-09, to be implemented in each agency's 2008 year-end FISMA report, increasing the level of detailed privacy reviews that must be included in each FSIMA report.

Under the new rule, each agency will be required to submit:

• The number of each type privacy review conducted during the last fiscal year;

• Information about the formal written policies, procedures, guidance, or interpretations issued by the agency during the prior year;

• The number of written complaints for each type of privacy issue allegation that was submitted to the Senior Agency Official for Privacy during the year including; how the issue was addressed and mitigated; and

• The number of complaints the agency's Senior Agency Official for Privacy reviewed, but referred to another agency during the prior year.

GovWin's Take:

• This new reporting rule is an effort by OMB to improve its ability to gauge agency efforts to secure the privacy federal government information.

• M-08-09 is OMB's effort to provide a level of security where legislation has been slow to develop. It effectiveness will be what if any results are returned from the collection of the information, such as more rules akin to the memorandum M-07-16 limiting the unnecessary use of Social Security numbers as a personal identifier.

According to NCSL's Top 10 Legislative Issues for 2008 podcast series, Ann Moore, NCSL's Immigration Policy Project Program Director, confirms Immigration will be the second most controversial issue in 2008 state legislatures. While this issue remained prevalent in the top large seven immigration states, it is now been debated in all 50 states. Unfortunately, the failure of the Federal Government to address a comprehensive immigration reform has led states to take matter into their own hands. Moore explains that since 2005 there has been an increasing trend in states to introduce immigration laws and these policies are anticipated to gain greater attention in 2008.

Among the many immigration policies already debated in 2007 such as licensing, employment and public benefits, in 2008 states will continue to look at this range of policies to try to figure out if there are policies that need to be adjusted. States without an immigration policy reform package are expected to introduce strategies to address the following issues; legal and illegal immigration, language acquisitions, redefined or discontinued eligibility for public benefits, employment authorization and hiring of illegal immigrants. In addition, states will also attend to legislation on human trafficking and their victims.

NCSL's biennial Report on Immigration, 2007 Enacted State Legislation Related to Immigrants and Immigration, monitors immigration reform in all states and tracks introduced and enacted laws in each state. The next publication of this report will be available mid 2008. By that time, the majority of legislative sessions would have adjourned and Governors would have enacted many of these reforms.

GovWin's take:

• States and localities, with the assistance of sophisticated federal and non-federal systems, are expected to introduce technology initiatives focusing on law enforcement information sharing and employer-conducted background checks, enhanced driver licensing and visitor tracking systems.
• Most, if not all states and localities do not have a stand-alone homeland security department to implement IT projects in this arena. However, vendors should pay close attention to IT opportunities relating to immigration/visitor control technologies implemented by Health Care, Justice and Public Safety and Transportation agencies.

In efforts to prevent severe consequences of projected state budget shortfalls for FY2009 and beyond, state legislatures will actively seek crucial actions to take during an anticipated fiscal crisis. According to the National Conference of State Legislatures (NCSL), state budget concern is forecasted to be the top issue to be tackled by states as their 2008 legislative sessions convene.

Corina Eckl, NCSL's Fiscal Program Director joined NCSL's Top 10 Legislative Issues for 2008 podcast series to discuss state budgetary concerns. Eckl affirmed that last summer the organization reported preliminary indications that budget conditions were changing. Revenue growth rates were slowing and states were anticipating lower year-end-balances. Since then, a larger number of states have reported lower revenues than forecasted. However, there is indication that several states are showing some fiscal strength by exposing that their revenues are either on target or exceed what had been forecasted. Eckl insists that although a number of these states lowered their revenue forecasts to report on target revenues, NCSL concludes that not a lot of state spending is over budget and that spending is stable for most states.

The burst of the housing bubble has reduced state sales taxes, which account for a third of state revenue collections. These include sales in housing renovation and construction materials. In addition, there is a reduction in property tax revenues as well as mortgage and deed transfer taxes, all which have adversely been affected by the national housing crisis.

Therefore, as legislative sessions convene in the next couple of months to fix current and future budgetary shortfalls, Eckl suggests that legislators will primarily focus on figuring out what the states revenue growth rates will be for FY2009. Legislators will also keep in mind other factors affecting state budgets such as a possible recession and budget pressures in K-12 education, health care and Medicaid, which accounts for half of state budgets. Consequently, states will be operating with tighter budgets. Budgets will be adopted but no major policy initiatives are expected to be drafted and ultimately fall elections will deeply affect actions states take.

GovWin's take

• Vendors should closely follow the release of Governor's proposed state budgets and State of State Speeches, as these are great indicatives of states current fiscal status and governors' strategy to endorse action plans to balance and tighten budgets.

• GovWin is actively monitoring the fiscal conditions of each state on our State Government Profiles and continues to report a positive outlook for investment in technology initiatives, especially in New Mexico, Alaska, Montana and Wyoming.

• GovWin has observed that about half of the states are not foreseeing budget shortfalls in the next fiscal year. Certainly, all states will be operating with tighter budgets and about 14 states have reported budget deficits. However, Governors remain optimistic and will continue to innovate and invest within their means.