$3.2 Trillion in Federal Grants Disbursed to States and Localities by 2013

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$466.6 billion in grant funding will be disbursed in 2008 alone

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Vendors should not be daunted by the current administration’s stingy grant-funding projections

– According to a report recently released by INPUT, the authority on government business, it is anticipated that a cumulative total of $3.2 trillion will be disbursed to states and localities via federal grants between 2008 and 2013, with $466.6 billion being disbursed in 2008 alone. Long-standing grant programs and eventual economic stimulus for state and local governments will drive $134.3 billion of growth in federal grants to state and local governments between 2008 and 2013, with total grant awards reaching $600.9 billion annually. Assuming that a modest 1% of this grant funding underwrites state and local information technology (IT) spending, the grant-driven market for government IT vendors will amount to $31.7 billion over the forecast period. During the last recession (2001-03), grant programs were the primary channel for federal fiscal stimulus to state and local governments in budget crises.

"Vendors should not be daunted by the current administration’s stingy grant-funding projections," said Chris Dixon, manager, state and local industry analysis for INPUT. "The next President and Congress will be free to revise figures as they see fit and will certainly do so. INPUT expects some sort of grant-based federal fiscal stimulus for the states in the 2009-10 timeframe. The ‘Education,’ ‘Income Security,’ ‘Veterans Benefits and Services,’ and ‘General Government’ functions are the likely channels for such aid."

The report focuses on the 16 grant funds that have the greatest potential to underwrite or spur IT spending at the state and local levels. While few state and local grants are dedicated specifically to IT, more than $1 billion in such grants are indentified within the report. Also included are numerous links to additional information from granting agencies as well as some “rules of thumb” as to how vendors can best incorporate federal grants into their state and local business development (BD) strategies.

"Federal grant funding is a significant indicator of program areas that are important to Congress, but it is not a directly addressable market for vendors," said Dixon. "Therefore, while grant funds can point to fruitful areas in which to do business, vendors should not consider going after federal grants to state and local governments as though it’s going to be ‘easy money.’ For the most part, you still have to build relationships and lay the groundwork for an opportunity in the usual way, regardless of the ultimate funding source."

The report explains the four ways in which federal grants funds underwrite state and local IT spending, providing vendors with some ideas as to how they can incorporate grant funds into their BD strategies. For example, grant-funded programs must be managed and most grants allow for some percentage of administrative overhead (including management information systems) to be taken out of the grant funds themselves. A few grants are entirely dedicated to such administrative costs.

INPUT’s $3.2 Trillion in Federal Grants Will Underwrite Major State & Local IT Spending Between 2008 and 2013 Industry Insight report is available on INPUT’s website at http://www.input.com/corp/library/detail.cfm?ItemID=4632.

EDITOR’S NOTE: For access to the full report or an interview with the report author, please contact Helena Brito at hbrito@input.com or 703-707-4161.

About INPUT

INPUT is the authority on government business. Established in 1974, INPUT helps companies develop federal, state, and local government business and helps public sector organizations achieve their objectives. Over 1,300 members, including small specialized companies, new entrants to the public sector, and the largest government contractors and agencies, rely on INPUT for the latest and most comprehensive procurement and market information, consulting, powerful sales management tools, and educational & networking events. For more information about INPUT, visit http://www.input.com or call 703-707-3500.

Media Contact:

Helena Brito

hbrito@input.com

703-707-4161

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INPUT
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