New Political Landscape Bodes Well For Government Solution Providers

By virtue of the fact that the same party will control, the executive branch, as well as the House and the Senate in January, President Bush had all the leverage he needed to move forward with the formation of a department of homeland security. Some may argue it was a superficial victory--that it was a given that Congress ultimately would have supported the new department but nonetheless, one less roadblock exists to getting IT initiatives for homeland security moving downstream.

Those same solution providers will equally benefit from new business by states, counties and municipalities, who will get federal funding from the new department for IT initiatives that will facilitate communications and ward off cyberterrorism. Still it will be a slow process. At the recent National Association of State CIOs conference in St. Louis, Steven Cooper, CIO for the president's Office of Homeland Security, expressed frustration at the pace by which things were moving. Experts point out that fiscal 2003 budgets are already defined and the real money probably won't flow until the next fiscal year, which begins in October.

However, Cooper reached out to the states by proposing an interstate backbone that he defined as analogous to the interstate highway system. If Cooper gets his way, the feds will help the deficit-plagued states fund what he called an Interstate Communications Expressway. The only caveat is the networks must interoperate, supporting Web services standards such as XML--a certainly reasonable request. In an interview, Cooper described this huge interstate network as analogous to a giant VPN. He also offered to fund pilots that were three to six months in duration and cost no more than $1 million that showed particular promise toward advancing homeland security and interstate commerce. I asked him where he was going to get the money for all this--he said he plans to start pitching this to Congress in the coming months. That was just days before the election. His job may have gotten easier but it remains to be seen how much money is allocated for this. But in theory the implications of such an effort are tremendous. For one, it would facilitate sharing of information between states, locals and the feds, and for another, it would enhance e-commerce, Cooper said.

Now Bush has an even higher aim--he said last week he wants to put 850,000--or nearly half of all civilian jobs up for competition among private contractors over the next several years, according to a published report. Given the fact that the Federation of Government Employees, a union that represents a vast majority of those employees, will fight that move, Bush's majority in both houses may not be enough to push that through without a major battle on Capitol Hill.

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The administration's desire to outsource more operations has been long understood. Gartner has predicted that by 2005, 80 percent of all government functions will be outsourced, up from 50 percent today. "The administration has been really pushing hard on all of the executive departments to achieve much higher objectives of outsourcing," notes Ray Bjorklund, an analyst at Federal Sources.

The move also is indicative of a trend pervasive throughout all aspects of government--performance-based management. "The government wants to buy results rather than products or things," says Jack Littley vice president of program services at GTSI, a solution provider based in Chantilly, Va.

If Bush gets his way--by no means a given--it could be a huge windfall for outsourcing providers. We could even see some contracts that dwarf some of the large business deals now in the offing, such as the bids out by JP Morgan Chase and Proctor and Gamble. "There's nobody bigger than the federal government," says Jim Weynand, vice president and general manager of HP's US public sector practice.

But now the onus is on outsourcers to convince the government they can make a huge difference--and convince employees and their unions that there is upside potential for them as well. If not, the battle to get an office of homeland security will dwarf the president's desire to outsource government operations.