Having spoken with a number of local, Miami-Dade County government vendors it appears that many federal government contracts are going to big business. Despite the reasoning that government has a local preference and that it aims to help out small business, this has not entirely been the case. Throughout Miami-Dade County various workshops and seminars have been held for small businesses that hold such certifications as a SBE or CSBE. Despite programs aimed at generating activity for small business and the local community it has been increasingly difficult for small, local companies to win government contracts.

According to local vendors, most of the Miami-Dade projects are going to medium and large companies while small companies are sitting at home or attending these seminars trying to win new work to sustain their businesses. Other companies with little luck are simply disappearing from the market.

Meanwhile companies like Dell Computer, General Electric and Boeing have moved in. All three were actually counted as “small businesses” doing work in Florida last year. These three Fortune 500s – along with a dozen other billion-dollar companies – soaked up at least $76 million in federal contracts that were recorded as going to small businesses during fiscal year 2008.

The issue of how federal dollars are spent is critical in a state like Florida where 90% of all businesses have fewer than 20 employees and government contracts represent a valuable lifeline amid a tanking economy. While the federal government should be giving around 23% of all direct, or prime, contracts to small companies it has missed the mark during the last three years.

It is simply not fair that Fortune 500 companies have been recorded as “small companies” in federal government contracts. According to the Small Business Administration small companies throughout the U.S. have received a record $93.2 billion in prime contracts in 2008. While that was $10 billion more than the previous year, it only represented 21.5% of all deals.

Some U.S. government agencies have been overstating their commitment to small business. Under federal guidelines, companies that start small and grow large – as well as small companies that are acquired by larger firms – can maintain the small-business status of their long-term contracts for up to five years.

The multiple loopholes, incomplete government data and the challenge of prying information out of privately held companies make the problem difficult to quantify.

The American Small Business League estimates more than $100 billion a year in small business contracts goes to Fortune 500 companies and others that are clearly not small.

Even successful small businesses have found the process challenging.

Structured Cabling Solutions, a Hialeah, Florida company that designs and installs data and communications networks, spent about nine months compiling the documents required to become a government contractor.

Among its 32 employees are two estimators and three project coordinators who focus on drumming up new clients. But even with an experienced staff, the process of bidding on federal contracts is so time-consuming the firm can only compete for a handful a year. The company only pursues Florida deals but often finds itself up against out-of-state firms with a strong national presence.

Large companies clearly have an advantage because they can afford to play the numbers game and submit more bids at lower prices leading to greater chances of success – particularly in a bad market.

The company recently won its first contract — a deal with the National Park Service to provide data and electricity cabling in the Everglades.

The contracting issues are not new. The Government Accountability Office and the SBA have produced more than a dozen reports since 2000 highlighting problems. While some contractors may misrepresent or erroneously calculate their size, most incorrect reporting results from errors made by government contracting personnel.

The House of Representatives is hoping to close some of the loopholes by making it illegal for publicly traded companies, and any firm with more than 50 percent foreign ownership, to be counted as a small business for the purposes of meeting federal agency contracting goals.

However the federal government could just as easily raise the federal small-business target from 23% to 30% of all federal contracts. Although this might not help considering the fact that the government has not been meeting their small business goals to begin with.

Recovery.org (not to be confused with the official federal site) is a great tool for tracking local stimulus projects. It uses search technology to aggregate information from local, state and federal websites as well as researchers who browse newspapers and public notices. Recovery.org also has clickable county-by-county maps and offers detailed breakdowns of specific projects often including the contact information of the person in charge of the project.

Here is how to get started with tracking local stimulus projects:

Click on a state (e.g., Florida) within the map. The map will then zoom in on the state of Florida and all the active recovery projects will be listed below. You can mouse over different counties within the state to view the current number of active projects along with their total value. On the list below the map you can filter statewide active recovery projects by city and project type (e.g., bid, presolicitation) which makes it easier to browse.

When you scroll down the list of active projects, you can then view each project’s name, location, county where work is being done along with the project type, estimated value, estimated jobs and publication date. You also have the option to comment on a specific project, which is a great feature.

Filter by city and select Miami.

Click on Rehabilitate Runway to view the details of the project.

You can view a more detailed description of the project. You also can vote on the project as “Worthwhile” or “Unnecessary” and select from specific reasons that support your point of view. For example, if you click on “Worthwhile” you can select “Long-Term Value” and then click submit. Keep in mind that you can select multiple reasons from the list.

If you decide to comment, scroll down and click “Be the First to Comment” – this will only appear if no one else has commented. Otherwise the link will appear as “Add New Comment.”

Another great feature of Recovery.org is the automatic notification feature or Business Registration Form. Without having to actively browse the Recovery.org website for projects, you can register with Recovery.org to continually receive notifications of upcoming economic recovery projects to your inbox for the location and industries you select.

Stimulus Watch is an interesting website that provides a list of “shovel ready” Stimulus Package Projects around the United States that want to be funded by money emanating from the American Recovery and Reinvestment Act.

The projects that are listed are taken directly from a recent report of the US Conference of Mayors.  Miami Mayor, Manny Diaz who is the President of the Conference, asked cities to submit projects that reflect their infrastructure needs, will create jobs and contribute to economic development.  The result is a report containing 18,750 local infrastructure projects from 779 cities that are “ready to go.”

Stimulus Watch takes each of these projects and provides a platform for the public to voice their opinions, discuss and use their local knowledge to help determine the worthiness of each project through a rating system.

Critics of the site point to the fact that there are many notable omissions of critical projects, the list is a series of unrealistic wishes that have not been vetted and many of the projects are far from “shovel ready”.  However, none of these criticisms can outweigh the benefits that a site like Stimulus Watch can and will bring.

Stimulus Watch is trying to do something the Obama Administration and Recovery.gov promise but are unlikely to ever achieve – real accountability.  While I have commented previously that Recovery.gov should be commended because it goes further than any other federal government initiative to ensure transparency and accountability, the problem is that it is all back loaded.  By the time we can hold the Administration and our state and local governments accountable the projects will already be underway and the money will be spent.  Stimulus Watch is frontloading accountability by allowing the public to be an active constituent in the decision making process.  It will also likely go further than any federal website will go after the money is spent by allowing local residents to discuss how well the money was used.

Frontloading accountability also helps businesses that hope to sell their goods or services to government and benefit from Stimulus Package Projects (which is after all part of the reason for the plan).  Once a state or local government agency is granted money for a particular project they are going to be under pressure to show fast progress.  Projects will be put out for bid and the speed at which the process is likely to happen may favor vendors that already work with the government.  By highlighting projects that may be the recipients of money, smart vendors can use Stimulus Watch to track and be part of the discussion now.  The site does a good job of allowing one to search for projects by state and city and I’d encourage any vendor who is looking to sell to government to check the projects that have been submitted in their region and contact the local cities for more information.

If you don’t already know, Recovery.gov is the White House’s answer as to how it will provide stimulus package transparency and accountability.  The site went live in the last few days, and for now, is more of a promise of what we can expect rather than any revealing data.

In President Obama’s video message we are assured that Recovery.gov will be a searchable database of how the stimulus package money is spent.  For now though, the information that we are given (if you don’t want to read the full text of the bill) is very much overly simplified into 2 parts:

1. First a list of 8 areas where the money will be shared – tax relief, state and local fiscal relief, infrastructure & science, protecting the vulnerable, healthcare, education and training, energy and “other”
2. Second a map of the US showing state-by-state, how many jobs are expected to be created or saved – note, we don’t know the proportion that are “saved” versus “created”

There is also a timeline which shows when and how federal agencies are to decide who will receive grants and awards.  Agencies are required to feed the information to the Recovery.gov team who will then make it available to the public through this website.  Until this happens we shouldn’t expect much more from the site.

Obama promises transparency – how, when and where the money is spent – and accountability – enough data to allow the public to evaluate the successfulness or not of the stimulus package.  It also seems like we will get the ability to provide feedback through a form although it’s not clear whether these comments will be viewable on the site.  It would be hard to imagine the Administration allowing too many negative comments.

Overall, I am confident that this site will ultimately provide a level of transparency that we have not seen before but I will hold judgment for now on whether it is enough.  Government sites like USASpending.gov already collect data about all types of contracts and grants, but this is limited to the federal government.  Money distributed under the American Recovery and Reinvestment Act will also fall into the hands of state and local government.  While Recovery.gov will track that money this is a chance to demand much more accountability and transparency from state and local government that goes beyond the scope of the stimulus package.  Demand that they put infrastructure in place to report on stimulus money they receive and it will be difficult for them not to use the same for their general spending.

Time will tell how effective Recovery.gov is but at the outset the Administration’s intentions appear to be in the right place.

I saw President-elect Obama pledge “unprecedented transparency” regarding his new economic stimulus plan yesterday.

According to Mr Obama, his Administration is planning a Google-like search function to show every program funded by the stimulus package, whether it comes in under or over-budget, whether it is meeting its intended purpose and how many jobs it is creating.

Better transparency and accountability is what we all want so this should be good news, right?  Well, I hope so but I am worried that the incoming Administration will create something that cosmetically looks like a massive step forward but in reality only has a short-term effect.  As I mentioned yesterday the passing of a stimulus package and the accountability and transparency that is demanded to go with it, provides a chance to oblige state and local agencies to put in place the (IT) infrastructure to make all of their spending data transparent – not just that relating to the stimulus package.  Some of the work needs to be pushed to the agencies themselves – make them change the way they do things today so that they are forced to change for everything.

The Washington Post’s Kim Hart, blogged yesterday about Obama’s appointment of a Chief Technology Officer and speculation that Vivek Kundra could be the chosen one.  She also wrote a good article about Kundra.  PublicSpend supports Kundra as the best choice.  He is well versed in state and local government and knows that agencies are less than enthusiastic about making their data transparent.  But he knows it can be done because he is making it happen in the District of Columbia.

Unprecedented transparency is great but let’s make sure it goes far enough and is done the right way.  Perhaps Kundra is the man that can make it happen.  Rumor is that a CTO announcement will be made this week.

Like the rest of us, Washington will be (properly) getting back to work today and various members of Congress will be meeting with President-elect Obama as he starts the passage of a massive economic stimulus package.

We don’t yet know the exact amount of the package but it seems like it will be in the range of $700-$850 billion.  We also are not at all clear about how Obama and his team are suggesting that the money be spent and I am sure that there will be much debate over the next few weeks about the importance of the public being able to scrutinize what is included in the legislation.

I am not an economist and can’t with any authority tell you whether creating the stimulus package is the right approach to helping the economy emerge from its dire position, although it sounds sensible to me.

What I do know, is the passing of any legislation provides a tremendous opportunity for Congress to oblige federal, state and local government agencies to put in place mechanisms to make them completely transparent about how they spend their money.  In my opinion this is even more important than the public scrutinizing the legislation.  We must have the ability to hold government agencies at all levels accountable as to how they spend this money and how they choose contractors to execute on their plans.  By doing so these same agencies will then have tools in place to be transparent and open about their ordinary spending.  I believe that most government executives have no problem about being transparent but they need to be pushed to create the infrastructure to make it happen.

Old ways can be changed when major events take place.  The passing of the economic stimulus package is such an event and it will be a travesty if its passing is not used to help enforce openness and transparency.  This is some of the change that we are looking for from President-elect Obama.

I watched Jim Kramer do an interview on Monday with Google’s Eric Schmidt and was excited to hear one of Obama’s economic transition team talk about the importance of government transparency and the role Internet companies can play in helping make government more open.

Schmidt said that Google’s karma in the new Administration will be to push hard to get the government to be more transparent.  He argued that if more information had been known about what was going on in the financial industry smart people could have figured out a solution earlier and people would have lost less money.

I agree with Schmidt’s assessment but want to expand upon it in 3 ways given this is exactly what PublicSpend is doing.

First, we shouldn’t think about the importance of government being open and transparent as simply a mechanism to prevent a crisis, find solutions to problems or keep a check on those in power.  While I can’t deny that those are all important, I see the real benefit of government opening up as the fact that we will be able to find ways of using public information positively to improve business, health, education, justice, services and the community at large.

Second, let’s be careful not to focus on just federal government.  Transparency at the state and local level is just as, if not more important to the communities we live in day-to-day and the small local businesses that make up the majority of our economy.  The challenges however are more complex due to the sheer volume of government agencies (more than 85,000 in the US) and the fact that they mostly work independently, capturing and storing public information in different ways.

Third, we can’t rely on government alone to gain the benefits of transparency.  It is the role of entrepreneurs and innovators to accumulate, structure, analyze and present the data and partner with government to achieve this.  Government is not nimble or capable enough to do this alone.  Even today we are not nearly using enough of the information we can access in a positive way.

At PublicSpend we are working to push county and city governments to be transparent and use the information we collect to help vendors win more contracts and businesses make smart choices about who to buy from.  We are using the Internet and other technologies to help enable the accumulation and structuring of the data and be the vehicle that provides the access to the information.  As Schmidt noted, while other industries are in turmoil, the Internet is “growing just fine” and “continues to be the wonderful story that it is”.  Government is not all bad – they actually do a lot of good things.  Getting the information and using the Internet to channel it will benefit everyone.  I am excited that PublicSpend is at the forefront of this revolution