Despite the fact that SCHIP reauthorization has been momentarily derailed, states continue to demonstrate the importance of the program and the need for additional funding to effectively serve the target population. In the meantime, states have to balance increasing enrollment with flat funding levels and therefore are turning towards greater information technology (IT) utilization.

A recent National Academy for State Health Policy NASHP webcast in association with Kasier Family Foundation reviewed the current status, successes and challenges of the State Children's Health Insurance Program (SCHIP). SCHIP reauthorization discussions were a central theme with an emphasis on timeliness in conjunction with adequate funding. The webcast highlighted the need for stronger data collection, technical assistance and IT systems. Program Directors from Montana, Illinois and Alabama provided further insights into how their respective states tailor the program to address low-income children's needs.

As reported by NASHP, the top successes and challenges for states are one-in-the-same, outreach, enrollment and maintaining enrollment. According to research presented, approximately two-thirds of children in the United States are eligible for SCHIP or Medicaid, but only a low percentage of that population is actually enrolled. The major barriers presented were knowledge gaps, administrative hassles and continuous enrollment. One of the recommendations for addressing these barriers was simplifying the enrollment process either through paper applications, online applications or a hybrid of the two. Survey results indicated that several states are exploring electronic verification and vital information systems to streamline and simplify the process. The use of the Medicaid Transformation Grants funding to improve services was cited as "interesting" and the innovative approaches could be looked at as examples for potential SCHIP improvements. Finally, the use of technology was touted as a potential for cost savings and improved enrollment.

As we head toward the Presidential Election on November 4th, precious little has been said by any of the major Party candidates about the future of U.S. Space Policy. Of the three candidates, Hillary Clinton has provided the most detailed policy position thus far. Yet it increasingly appears that she will not be the Democratic Party nominee. This leaves Barack Obama to consider. Mr. Obama has expressed overall support for keeping America at the forefront of space exploration and he has specifically stated that if elected he will continue to back the development of the Ares I Launch Vehicle and the Orion Crew Exploration Vehicle (CEV). Ominously for cash-strapped NASA, however, Mr. Obama has also hinted that he would divert some agency funding into math and science education in order to help train the next generation of America's scientists and engineers.

For his part, Republican candidate John McCain has taken a "carrot and stick" approach. Senator McCain supports continuing to fund NASA at levels seen in recent years. This is not bad news, although NASA's funding has been insufficient for even its current missions, not to mention any planned future programs. McCain has also expressed the belief that maintaining a strong U.S. space program is desirable for national security and for maintaining America's lead in technological innovation. This said, McCain has also waved a big stick at NASA, stating that future funding will be dependent on responsible management and stricter Congressional oversight.

Regardless of who wins the next presidential election, NASA personnel have to be nervous about the future. The ballooning federal budget deficit and increasing failure of the American educational system to provide the skilled personnel required by NASA do not paint a rosy picture for the years to come. In the meantime, NASA faces pressing immediate needs. Critical programs, like Ares I, are falling further and further behind schedule due to budget shortfalls even as the retirement of the Space Shuttle in 2010 looms ahead.

NASA's response to tightening federal budgets has been to consolidate its agency-wide IT structure to gain efficiency, reduce costs, and take advantage of economies of scale. So, vendors who win contracts for major acquisitions like NASA UNITeS, ODIN Desktop Services, and Goddard Unified Enterprise Services and Technology will be ideally placed to benefit from NASA's IT focus. Finally, regarding the Space Program, it would not be surprising if retirement of the Shuttle is postponed by one to two years, meaning that some current Shuttle support contracts could be extended (or new short-term support contracts could be competed) in order to operate the Shuttle fleet beyond its official retirement date. The recent emergency Shuttle launch to replace the only commode on the International Space Station demonstrates how important the Space Shuttle is to NASA.

One thing about NASA remains sure even if the presidential candidates remain vague about the future of U.S. space policy. This is that budget pressure and human capital shortages mean industry will have to play a key role in NASA's mission success in the coming years. NASA's place in presidential politics may be "lost in space" for the time being, but industry's importance to the future success of U.S. space policy will remain firmly on the ground.

In Boston, a murder suspect was released from custody due to a delayed response in their Fingerprinting system. The system currently in place in Boston failed for the first time since 1994 and should be a warning sign that the national and federal crime database is not a flawless system.

Despite the use of this technology in major metropolitan cities, there is always the possibility of error. In this case, a computer server error resulted in a delayed response from the crime database. The judge ordered the release of the suspect, likely because he perceived the lack of an immediate result from the database as a sign that there was nothing to be found. Typically a match would be detected in fifteen minutes, while in this case, several hours were needed to obtain the proper results.

Police Departments across the country are moving towards Automated Fingerprinting Information Systems (AFIS) and it is important to realize the importance of such systems. AFIS allows a department to scan an individual's fingerprints and run them through the national and federal crime database. While most large localities have this technology, not all departments have implemented such technologies.

It is important for more cities to look to the federal government for grants and other means of paying for AFIS. It is possible that an arrest in a small town could lead to a similar release due to a lack of a digital and automatic fingerprinting system. In order to prevent situations such as in Boston, automated fingerprinting is necessary to protect citizens across the country from potentially dangerous criminals. Not only do police departments need AFIS, but motor vehicle departments require similar systems to prevent duplicate licenses and fraud. As more localities look to this technology, vendors will need to determine the type of system necessary that will fit the needs of that department.

Currently GovWin is tracking several large AFIS initiatives across the country, some of which include a Biometric Identification System (BIS). In San Franciso, a Request for Information was released earlier this year, in the hope of implementing a BIS and AFIS database which would be integrated with the current Computer AIded Dispatch and Records Management System. In New York, a Request for information was released in 2006 with the hope of implementing a statewide fingerprinting technology. While funding had initially been an issue, $24 million has been allocated as part of the FY09 budget plan. Statewide and large city intiatives to implement AFIS will continue, as improvements and enhancements to this technology are rolled out. GovWin continues to track and monitor these developments and monitors the state's progress in releasing solicitations for these systems.

On May 23, 2008, the Pennsylvania State Police (PSP) released a solicitation for a replacement of its legacy message switch system entitled "Commonwealth Law Enforcement Assistance Network" (CLEAN). The CLEAN system has provided justice information exchange consistently and reliably to the Commonwealth for over 35 years. This system is further used to connect to the FBI and NLETS, at a rate of 1.2 million transactions daily.

The CLEAN Services Project's (CSP) purpose is to modernize the entire CLEAN platform into a fully open architecture and up-to-date environment that will accommodate 21st Century technology. These improvements will facilitate the implementation of requisite state and federal security enhancements. PSP is seeking a solution that will provide a new switch, new user interface, new databases with conversion of existing data, enhanced security, and enhanced administration. This solution must also meet existing state and federal requirements and standards, with each component being completed in logical phased approach.

The CSP will include the following components:

• Switch/Bridge,
• Portal/User Interface,
• Database/Hot Files/Application,
• Administration,
• Network/Infrastructure,
• Security, and
• Project Management.

This is a large undertaking for the State Police, and GovWin has estimated that this project will cost around $7 million. This project is expected to have many big-name vendors involved such as Unisys (who currently holds a contract for this system), EDS, and possibly Bio-Key (State's provider of mobile data computers).

In order to ensure that spending reduction goals are met, New York Governor David A. Patterson has adopted a plan that allows state leaders to monitor agency finances throughout the year, and provides the public access to the same information.

In the most recent in a series of high profile decisions coming out of the New York Governor's office in the post-Spitzer era, Governor David A. Patterson has adopted a New York City deficit reduction mechanism for state level use. The Program to Eliminate the Gap (PEG) was first created during the City's financial crisis in the 1970's and been has proven successful at monitoring City spending levels. The PEG will allow the governor to track the progress of recently implemented agency spending cuts.

What does this mean for state agencies?

Increased Accountability

• Agencies that are required to implement the largest budget cuts will be monitored on a monthly basis to identify problems areas ahead of time.
• An Oversight Board will be created with authorization to freeze hiring and/or funding for agencies that do not meet their goals.
• Just like in school, no one wants to bring home a bad report card, this type of scrutiny could provide the extra push that is needed to ensure that some agencies stick to their budgets.

Increased Transparency

• All of this information will be made available to the public on the NY Division of the Budget website.
• Transparency websites created by other states have proven to be extremely popular among citizens, and in today's tight economic times citizens have a heightened interest in making sure that their tax dollars are being spent appropriately.

Or gain more insight into transparency initiatives within state and local governments at GovWin's 3rd Annual State & Local MarketView event on June 4, 2008 in Tysons Corner, VA.

The recent history of social services outsourcing in places like Indiana, Texas, and Colorado has not been a success. Projects are initiated with intent to reduce costs and improve service. However, at the end of the day it mostly ends up looking like automation and outsourcing were used to boot recipients off the rolls. Now, many of the stakeholders in these systems (i.e., beneficiaries, state/county caseworkers, and welfare advocates) would like to exploit these failures and put the very idea of social services outsourcing on trial.

Here at GovWin, we've blogged about Indiana's welfare outsourcing effort several times going all the way back to its inception. (Just search this blog for: "Indiana".) As Gov. Mitch Daniel's re-election effort heats up, it looks like the state's deal with IBM-ACS will be a political football. Most recently, the state's chapter of the American Civil Liberties Union (ACLU) is suing the state for the shortcomings of the system. The ACLU claims that new Internet/fax/call center-based eligibility determination process has created barriers for some of the state's welfare population and wrongfully terminated benefits in some instances.

Of course, much of the case will hinge on whether the problems are related to...

1. client "failure to cooperate,"
2. automated procedures, or
3. third-party caseworkers.

Vendors interested in social services outsourcing should keep a close eye on this case (Gibson v. Roob) as it has ramifications beyond the state of Indiana. GovWin will be following it and chiming in here as events merit.

We have seen reports recently indicating the federal spending sky is falling, perhaps by double digits. While GovWin finds that conditions are not optimal, we would argue for cloudy skies -- and perhaps a fog of uncertainty -- rather than negative growth. GovWin's 2008-2013 IT Market Forecast calls for tempered momentum. As the chart below shows, our analysis estimates IT spending growing over the next 5 years at 3.9%. We also track the portion of spending that is contracted out to industry, which we see growing at 4.1%.

Source: GovWin

Growth from 2008 to 2009 will grow slightly slower (3.2% for the total IT market and 3.1% for the contracted portion), but once the uncertainty surrounding the administration transition and the budget chaos begins to settle, we believe IT spending growth will pick back up slightly. Two other factors weigh on the market. First, war spending will continue to constrain discretionary spending both in the DoD, which we believe will grow at a slower rate than average, and the government at large. Also, the economic downturn could create fiscal constraints on government spending. While GDP growth may be anemic, however, it has not yet turned negative. And, there is equal evidence that things could get better instead of worse. While a new administration will have some tough fiscal choices before it (tax policy, rising mandatory spending), we do not agree with forecasts of negative growth in discretionary spending. Slower growth, perhaps, but still growth.

As the chart below shows, federal IT spending has grown consistently over the past 20 years, even when discretionary spending has been on the decline. In fact, as a percentage of total discretionary spending, IT spending has increased almost 2.5 percentage points since 1989. While some of this increase can be attributed to better reporting of IT, the overall trend continues to be toward much higher government reliance on IT to support the mission and reduce operating costs.

Source: OMB, GovWin

Also, we believe that the government's own human capital challenges will contribute to IT spending growth. Federal employment has been largely flat or shrinking for nearly 20 years, during which time discretionary spending has more than doubled, as seen in the chart below. Not surprisingly, agencies have been looking to industry for solutions to make up the difference. While these trends both may be moderating, we do not believe it means a downturn in the reliance on IT solutions.

Source: OMB, GovWin

So, while the outlook is cloudy, the biggest issue may be the fog. Due to uncertainty in the near term, agencies are not indicating a lot of new activity in the form of major new programs. We expect this will change after the transition as priorities and funding become clearer. In the meantime, we expect federal agencies will be paying a lot of attention to their technology, even if only to figure out how to drive costs out of steady state operations to free up funding for new work. The spending environment may seem gloomy, but aggressive vendors can still find plenty of opportunity.

Update: GovWin's 2008 -2013 IT Market Forecast has been released. Click here to purchase or download.

Representative Chris Carney (D-PA) and Senators John Kerry (D-MA) and Olympia Snowe (R-Maine) finally got their wish this week. DHS amended its procurement regulations to include TSA, which means that TSA (which up until now operated under the FAA's Acquisition Management System (AMS)) is now subject to the Federal Acquisition Regulations (FAR) that governs most other agencies.

AMS has an interesting history. FAA's previous effort to modernize its Air Traffic Control System resulted in cost, schedule, and performance issues lasting two decades. FAA explained those results by blaming the FAR and personnel regulations. In response, Congress not only exempted FAA from the FAR in 1995, it asked the agency to develop its own acquisition system. Somehow, I don't think FAA's explanation would work in today's acquisition environment.

TSA followed some FAR guidelines, but lawmakers became increasingly concerned with inconsistency in TSA's acquisition environment over the past few years. Amidst cries of wasteful spending, mismanagement, and confusion, Representative Carney and Senators Kerry and Snowe introduced the TSA Procurement Reform Act of 2007. Representative Carney asked during a 2007 House Homeland Security Committee meeting, "If the FAR is good enough for the overwhelming majority of the federal government, why not for TSA?" TSA's Assistant Administrator of Acquisitions discussed the AMS' "efficiencies" and "flexibility", which may be codewords for "don't want to have to read 25,000 pages of the FAR."

The 2008 omnibus appropriations bill requires the transition as well, and as of June 23, 2008, it will be done.

So what does it all mean for contractors serving TSA? How is the AMS different from the FAR? According to various GAO reports from 2004 and 2007:

The good news - anecdotal evidence suggests that TSA used a mix of the FAR and the AMS during acquisitions over the years, so any major differences resulting from the change may very well be invisible to contractors.

The approach of summer brings with it warmer temperatures, the scent of flowers in the air, and road trips to the beach. During an election year, it's also peak "burrowing in" season - the mad scramble among some political appointees looking for career positions before the administration change.

So what's wrong with this? Don't we want people with the institutional knowledge and expertise to stay around for the next administration? Yes, of course. These individuals could be the loudest proponents for the technology programs that are the bread and butter of the IT contracting community. However, transition year burrowing season brings to mind a 2006 GAO report that found that 18 out of 130 conversions from non-career to career positions at GS-12 level or higher were not done using the appropriate procedures. In those instances, the merit-based hiring process either failed to catch individuals who didn't have enough of or the right type of experience, or overlooked those who did. That may not be statistically relevant, but it can affect the morale of career employees who followed the rules. With focus on bringing in its own people, will the new President have the bandwidth to make sure that conversions are being done correctly this time around?

According to the 2006 GAO report "Personnel Practices: Conversions of Employees from Noncareer to Career Positions, May 2001 – April 2005:"

"Some of the apparent improper procedures included: selecting former noncareer appointees who appeared to have limited qualifications and experience for career positions, creating career positions specifically for particular individuals, and failing to apply veteran's preference in the selection process."

One of the 18 cases involved the 2003 hiring of a Program Specialist to conceive and implement new initiatives and projects to strengthen emergency management programs. In one corner was a former Schedule C FEMA Staff Assistant with 14 months of government experience following 4 years working for the former FEMA Director. Her opponent - a career employee with over 10 years experience at FEMA as an Emergency Management Specialist. Both received Best Qualified status, but somehow the 10-year veteran was passed over. We are all aware of another infamous case of a hiring "misstep" at FEMA.

So what can OPM do in the future to minimize this problem? One approach would be to convert many of the politically appointed positions to career positions. I was recently included in an email distribution from an SESer at OMB whose position was recently reclassified from political appointee to career competitive. Although he is leaving government, he is helping identify potential replacements. While this approach won't fix the merit hiring system, it will hopefully serve two purposes: recruitment participation by someone who knows what the job takes, and reducing the number of political appointees in the next administration.

Despite abundant publicity on the number of failed IT projects, Colorado's new administration has stepped in as stewards of technology with goals to revamp support for innovative IT projects and avoid previous IT redundancies and inefficiencies and will hit a new milestone on July 1, 2008 when Governor Ritter's IT Consolidation Act becomes effective.

Consolidating Colorado's IT operations became Gov. Ritter's number one priority as he came into office in 2007. Determined to avoid costly IT projects supported by previous administrations, the administration dedicated resources to planning a good change in management plan. Governor Ritter announced Colorado's IT consolidation plan, issued an interim Executive Order appointing a Chief Information Officer to an elevated cabinet-level position addressing oversight over procurement and created an Innovation council advancing the state's technology sector. On May 22, 2008, following bipartisan support by the state legislature, Gov. Ritter signed into law Colorado's IT Consolidation Act enacting all of the Governor's reforms.

According to Gov. Ritter's bill ceremony press release, the state currently has "39 separate data centers and more than 1,600 servers." The legislation would streamline, consolidate and centralize the state's fragmented IT operations. Effective July 1, agency CIOs and IT workers will report to OIT.

As a featured guest speaker for NASCIO's Corporate Leadership Council, Michael Locatis, urged vested vendors wanting to partner with the state, pertaining to the consolidation initiative, to do so early as Colorado prepares to move forward restructuring its IT infrastructure. Vendors were also encouraged to review thoroughly the state's IT consolidation plan, key IT initiatives by the administration and to initiate relationships with the state Chief Enterprise Architect. Some of the contracting opportunities to take advantage of include data center consolidation, centralization of services, operations, resources and infrastructure. In addition, partnering with key players in the state that already have strong contracting relationships promises to be critical in winning opportunities with the state.