Survey highlights government market opportunities

President Barack Obama’s economic stimulus proposal outlines a significant increase in federal spending on "shovel-ready" construction of roads and bridges, 21st-century school projects, healthcare IT, and modernization of energy-inefficient government facilities. According to a report released by Onvia, a provider of business-to-government solutions, states and municipalities are in response prioritizing their initiatives based on the greatest short-term impact to their respective regions.

Onvia’s 2009 Government Market Outlook summarizes findings of a recent survey of more than 4,000 government executives, managers, and purchasing officials at state, local, and educational purchasing offices, and reflects anticipated opportunities from the economic stimulus package. The survey looked at projected spending activities in government agencies throughout the country and across the categories of infrastructure, technology, and business services.

Highlights from Onvia’s 2009 Government Market Outlook include the following:

• 20 percent of officials surveyed project an increase in government spending activity across 2009, 25 percent expect levels to remain the same as 2008, and 55 percent expect spending activity to decrease in 2009;
• officials rank public safety and infrastructure as top priorities; and
• investment in shovel-ready infrastructure projects will be a primary objective, with education, technology, and energy-efficiency initiatives also prioritized.

Overall, state and local leaders are somewhat more optimistic about 2009 as details of President Obama’s federal stimulus package emerged; however, none are expecting intervention by the federal government to be a silver bullet. Many government agencies at the city, state, and county levels have prepared and prioritized lists of the projects in their jurisdictions deemed to have the greatest short-term impact.

Overall, 61 percent of government agencies plan to maintain or increase spending activity on infrastructure in 2009. In addition, 59 percent of government agencies plan to increase or maintain spending on architecture and engineering services and 57 percent of government agencies plan to increase or maintain spending on construction services and building supplies. In contrast, 51 percent of state agencies plan to decrease their spending on construction services and building materials.

Last year, green initiatives such as energy efficiency increased 25 percent compared with 2007 as agencies pushed to modernize and reduce operating expenses. This trend is expected to continue as aging government buildings are retrofitted to meet modern day standards.

The report offers the following trends to watch for in 2009:

• a buyers market with a more competitive landscape for securing government contracts as more companies follow the money;
• an increase in subcontracting opportunities as many of the large general contractors are extended across infrastructure projects;
• late 2009 rebound of construction-related companies such as heavy equipment manufacturers, materials suppliers, and engineering service providers;
• a potential increase in the cost of regional goods and services if too many large projects get underway concurrently;
• a call for leading-edge technologies to drive a wave of modernization ranging from intelligent transportation systems to smart, green buildings;
• further expansion of electronic procurement and cooperative purchasing practices by government agencies to further drive down cost; and
• previously unseen levels of transparency and accountability around how taxpayer dollars are spent.

Onvia’s 2009 Government Market Outlook is available online.