By: Melanie Berkowitz, Esq.
It began last February with the money: $787 billion to be spent on nearly every sector of the American economy. Money for business, money for individuals, tax breaks, housing and infrastructure projects, help for the unemployed and research grants. With the money came optimism, tempered with the government’s caution that economic recovery would take time and a plea for patience.
Five months later, that patience is wearing thin for some.
According to Recovery.gov, the American Recovery and Reinvestment Act (ARRA or Recovery Act) has so far made available $174.9 billion to projects and programs designed to stimulate the economy, create jobs and help pull the country out of its recession. Of this, a large portion (over $22 billion) has been paid for healthcare programs, including money for local health clinics. But with unemployment hovering around 9.5%, frustration over slow economic growth is leading some to question whether the Recovery Act is on track.
Predicting the law’s ultimate success is nearly impossible. But how well is the law working now? Has it succeeded in fulfilling the government’s promise of accountability, transparency and jobs? How many new projects has the Recovery Act funded? Not surprisingly, the answer is different depending on who you ask.
Government Reassurance about ARRA Hiring
Ask the White House how the Recovery Act is working and you’ll hear promises that the country is “going in the right direction,” and that “this summer, we will go down that road even faster.” Indeed, speed of ARRA spending appears to be a key component of the government‘s plan: On June 8th, the White House announced its Roadmap to Recovery, which looks to step up the Recovery Act activity in the next 100 days.
The Roadmap identifies ten project categories across various Federal agencies that will receive particular focus and spending in the coming months. Highlighted projects include a push to expand the capacity of over a thousand community health clinics, the start of rehabilitation work at 98 airports and the hiring or retention of 5,000 peace officers. According to the White House, the initiative will create 600,000 jobs by mid-September.
Other major programs that are expected to begin in the coming months include $7.5 billion for broadband construction, new money for a high speed rail system and the implementation of the new smart electric grid. This comes on the heels of a May 2009 report by the Council of Economic Advisors which estimated that by the end of 2009, the Recovery Act will have saved or created 1.5 million jobs. The Council estimates that number rising to 3.5 million by the end of 2010.
Regardless of the accuracy of the government’s numbers, what is certain is that Recovery Act money is being allocated for new projects every day (over 12,000 as of June.) So far, less than 2,000* of the allocated projects have been formally awarded, so expect to see more hiring as businesses and other entities win government contracts.
Private Sector Recovery Act Skepticism
In the private sector, the most comprehensive analysis of the Recovery Act has been made by INPUT, a leading authority on government business. INPUT’s May 2009 “report card” graded the first 100 days of the ARRA in four categories. It gave the government high marks (a B+) for its quick rate of spending, but gave “transparency and reporting” a D (based on still vague reporting requirements for Federal contractors), and awarded Contracting Effectiveness a C- (primarily because most of ARRA money so far has gone to existing government contractors and not to new or smaller businesses).
INPUT ‘s report does not dispute that the Recovery Act will create or save jobs, but it recognizes the near impossibility of counting them. In the end however, if the economy improves and unemployment falls, few Americans are likely to care whether any particular job is a result of Recovery Act spending or not.
Finding Middle Ground for Hiring
Reconciling INPUT’s assessment with the government’s promises is not as difficult as it seems. Given the brief ARRA timeline, some of INPUT’s criticism of the law makes sense. Who else but larger, more established Federal contractors would be ready to bid on the first Recovery Act projects? Businesses without Federal contracting experience will naturally have a steeper learning curve.
“Small businesses are scrambling to understand Federal contracting so they can take advantage of Recovery Act opportunities,” says Irl Scissors, Principal of government affairs consulting firm, ILS Consulting, LLC. “There is a lot of confusion about how the process works.” He sees more small companies and local agencies hiring consultants to help navigate government contract requirements.
“Once small businesses get educated about the contracting process, there will be opportunities available for them,” says Michael Balsam, Chief Solutions Officer at Onvia, a public company that tracks government spending. Balsam predicts that as money trickles down to the state and especially local level, more projects will become accessible to smaller companies. He also notes that large contracts “are often held by integrators who serve as the prime contractor, and in turn, hire specialized subcontractors to perform the work.” Much of this subcontracting work should become available for small business.
Recent government activities may ultimately help improve INPUT’s report card. For example, in June, the White House issued a comprehensive guidance on reporting requirements for Federal contractors so that the public can better track the flow of money.
ARRA Resources to Keep You in the Know
How can employers stay on top of the Recovery Act landscape? As Scissors suggested, education is key. Whether it’s by hiring an independent government affairs specialist, designating a current employee as an “expert” on Federal contracting and grant writing, or taking advantage of government websites and webinars, companies that understand how the government does business are most likely to succeed in getting a share of Recovery Act work. For additional information, consider these resources as well:
- The USDA and HUD recently created a web mapping tool showing the location, project amount and other information about all of their Recovery Act projects.
- A number of government agencies and private entities host webinars on a variety of issues related to the Recovery Act.
*Source: Onvia.com