Senate Bill Passage Brings IT Stimulus Spending In Sight

With the passage of the US Senate version of the $838 billion economic stimulus bill today, and the reconciliation of the Senate and House versions now in progress, we begin to get a clearer picture of what new IT stimulus spending to expect.  

The compromise Senate version of the bill that finally passed reduced funding for broadband grants from the original $9 billion to $7 billion. It did retain tax breaks for high-speed Internet deployment in underserved areas and still mandated that fifty percent of the funds are to be used for projects in rural areas.

The House bill has $6 billion for rural and underserved area broadband, to be split between the Commerce and Agriculture departments, so both are roughly in the same ball park for this.

Additionally, the Senate version allocated $3 billion for the Health and Human Service Department's Office of the National Coordinator for Health Information Technology. The House version allotted $2 billion for the coordinator to set up a national framework for creating and sharing patient health records electronically.

The National Institute of Standards and Technology's (NIST) funding for science and technical research and services is now cut to $118 million, from $218 million. The House version has $100 million in that account.

However, even if the reconciliation happens quickly and the bill is signed into law by President Obama early next week as he asked, the process of actually spending this money is going to take some time - years in fact.

Funding Difficulties

In a letter to the Senate Committee on the Budget a couple of weeks ago, Douglas W. Elmendorf, director of the Congressional Budget Office pointed out that federal agencies, along with states and other recipients of the funding could find it difficult to properly manage and oversee a rapid expansion of existing programs.

"Brand new programs pose additional challenges," Elmendorf added. "Developing procedures and criteria, issuing the necessary regulations, and reviewing plans and proposals would make distributing money quickly even more difficult--as can be seen, for example, in the lack of any disbursements to date under the loan programs established for automakers last summer to invest in producing energy-efficient vehicles. Throughout the federal government, spending for new programs has frequently been slower than expected and rarely been faster."

Elmendorf's suggestions of how to accelerating spending in infrastructure included:

- Waiving requirements for environmental and judicial reviews;

- Allowing contracts and grants to be awarded outside the normal competitive bidding process;

- Waiving maintenance-of-effort requirements for state and local governments; and

- Changing the way funds are distributed.

He also suggested that some funds for infrastructure projects might also be spent more quickly if recipients were:

- Offered financial incentives for work completed within one to two years of enactment;

- Given deadlines for obligating funds;

- Given the authority to "pre-award" contracts (that is, award contracts before all of the currently required approvals and certifications are obtained); and

- Allowed to self-certify compliance with certain standards (federal agencies would then review paperwork and documentation after projects have begun).

However, he warned that, "Undue speed could result in: errors in planning, design, or contracting that might result in poor performance, legal challenges, or increased project costs; unanticipated environmental impacts; or the undertaking of projects that are of little value but that can be started up quickly."

Photo by Rob Crawley, Creative Commons Attribution 2.0 Generic