Every so often a Member asks us: what is the industry average win rate? Here is a new look at average federal win rates using the FY07 FPDS data.

When IT work is competed and there is more than one bidder, the average win rate is 30%. How does your company fair?

What do you think about these rates?

Category	Win rate
All FY07 federal spending (approx. 50% had only 1 bidder)	65%
IT spending	62%
IT spending and competed (competed = full and open, competitive delivery order, or full and open after exclusion of sources)	49%
IT spending and competed and > 1 bidder	30%

Methdology by example:

Assume total spending was $100. If $50 worth of spending had 2 bids, and $50 worth of spending had 10 bids, the win rate for the first $50 was 50%, and 10% for the second $50.

The average win rate across the total $100 = 1/2*50% + 1/2*10% = 30%.

The 13th Annual Governing Live! Outlook in the States 2008 was held this past week in the nation's capital. IT vendors, Governors, Chief Information Officers and Budget Analysts attended the conference to hear what lies ahead the localities and states in 2008. For the most part, the main message and feeling from the conference was one of "doom and gloom". The horizon for Cities, Counties and States is pretty bleak the next couple of fiscal years.

The first day consisted of experts discussing the issues and trends for our nation's cities and counties. Don Borut, Executive Director of the National League of Cities kicked off the first panel with his thoughts on 2008 for cities. Major issues affecting cities in 2008 range from the unraveling of the intergovernmental system, economic downturn, housing foreclosures and predatory lending, immigration, transportation/infrastructure, energy/environment/sustainability and public safety/safe neighborhoods.

Larry Naake, Executive Director of the National Association of Counties commented on the outlook for the counties. Issues looming for counties are very similar to what is affecting our cities: sub-prime loans and the housing crisis; infrastructure challenges; illegal immigration; climate change; election reform; and an antiquated tax system.

INPUT's Take

• With the recession at its beginning stages, localities are feeling it the most and taking the biggest hit. IT spending and investment is projected to be relatively flat with some decreases across the board in States with huge budget deficits (Florida, Michigan, Arizona, and California). Cities and Counties will be asked do more with less. Less discretionary funding and reductions in staff will lead to more consolidation and a big push for regional approaches to help offset the lack of resources available.

According to an article appearing on WashingtonPost.com, the White House is set to increase the role the intelligence agencies play in cyber security operations. Issued under a classified joint directive – National Security Presidential Directive 54/Homeland Security Presidential Directive 23 – signed on January 8 - the National Security Agency (NSA) is being tasked with the job of monitoring the internet traffic of all government agencies.

Prompted by an increasing progression of attacks on government networks the Whitehouse is taking a proactive approach to monitoring networks, something a number of agencies have failed to do successfully, having thus fallen victim to a number of network intrusions.

NSA was chosen because of its experience in monitoring major communications systems – although historically overseas. Moreover, a task force created under the initiative will be headed by the Office of the Director of National Intelligence, which will coordinate efforts to identify the source of network attacks on the government. The Department of Homeland Security will be tasked with network protection, and the Pentagon with developing counterattack measures.

Funding requests are expected to appear in the FY 2009 budget request.

INPUT's Take:

• This appears to be a concerted effort by the administration to take hold of a problem that has been haphazardly addressed by the majority of federal agencies. This initiative, combined with the current creation of the Air Force Cyber Command will be injecting a significant amount of new money into the cyber security market over the coming years.
• The intent to use a spy agency - NSA - for the purpose of monitoring domestic network traffic is certainly going to raise a red flag, especially in light of the wiretapping incidents that have occupied the news over the past few years.

Any discussion of national cyber security is not complete without the inclusion of the national infrastructure - energy grids, power plants, nuclear facilities, water treatment facilities, financial facilities, etc. All are inherently important to the operation of the nation and all are heavily dependent on the use of information systems, so not to include them in the initiative is falling short in providing the necessary protection to the nation's critical infrastructure. However, the use of a classified spy agency to monitor domestic network traffic in the private sector will certainly cause resistance from a Democratic controlled Congress and parts of industry alike.

Governor Arnold Schwarzenegger's plan to insure nearly all Californians was rejected on January 28th by the state Senate Health Committee, citing that the state is facing a $14 billion budget shortfall and does not have the funds for a major health care initiative. Revenues are expected to be flat over the next budget year. Earlier this month, the Governor proposed a $101 billion general fund budget for 2008-2009, declaring a fiscal emergency.

INPUT's Take

Presently there are just too many pressing issues, such as the state's fiscal challenges, for a reform plan to be successful in 2008. However health care reform is too big to go away. There's a chance we could see a greater national momentum for health care reform after the presidential race, where candidates have proposed similar plans.

In late 2007 the Texas Health and Human Services Commission (HHSC) announced that the state will begin a statewide smart card system to verify Medicaid coverage. Based on the positive performance and the success of the state's pilot projects, HHSC is planning on expanding operations statewide by procuring similar services for the implementation of a permanent card. The card is to be encoded with eligibility and identify information. The state released a Request for Information (RFI) for Medicaid Access Card (MAC) Services in late January 2008. Texas plans to be fully implemented late 2009 and fully operational by early 2010. In doing so, Texas will become the first state to use smart card-based identity in its Medicaid program.

Background: Pilot Projects

The use of smart cards for social welfare is already in place as Electronic Benefit Transfer (EBT) projects across the states as either magnetic stripe cards or chip-based smart cards. The use of biometric applications in state's human service programs is not new either. In fact, in 1995, the Texas Legislature mandated the use of biometrics to reduce fraud and abuse in their public assistance programs and in turn deployed the Lone Stare Image System (LSIS)*. The LSIS, a fingerprint imaging systems, was implemented in the 1990s to prevent fraud in programs such as Food Stamps and Temporary Assistance for Needy Families (TANF). Building on the success of the LSIS, the 2003 Texas Legislature directed the HHSC to obtain the technology necessary to meet the responsibility of combating fraud, abuse, and waste in health and human services. The bill established a front-end Medicaid fraud pilot program including the use of biometric readers, smart cards, and finger imaging systems. The state conducted two phases of a pilot project, the Medicaid Integrity Pilot (MIP) and the MAC project.

The state conducted the MIP between 2004-2005 in order to evaluate the state's use of the smart cards and to compare vendor's technologies and approaches. HHSC procured the services of MTG Management Consulting, L.L.C. (MTG) and International Biometric Group (IBG) to serve as the respective project manager and evaluators of the pilot project. Four vendors piloted the projects in six counties, including Atos Origin in Tarrant, Maximus in Harris and Dallas, eMedical Files in Travis, and Electronic Data Systems (EDS) in both Hidalgo and Cameron. During the pilot smart card and biometric readers were put in the offices of participating Medicaid providers, physicians, ERs and clinics. The patient presented their card and put their finger over the biometric scanner and the two were compared to validate their identity. The benefits of the technologies included automatic check-in for patients, faster benefit processing, cost reductions, better security measures, limited Medicaid fraud, and less practices of "phantom" services.

The second phase, the MAC project, became operational in 2006. The MAC project differed from its MIP predecessor in a number of ways. A single system from EDS was implemented in the MAC project and it was only implemented in three counties including Hidalgo, Cameron and Travis. The MAC project was also considered the mandatory participation phase. Also, in the MIP project there was a larger focus on fraud prevention, however the MAC pilot focused more on accessibility and facilitation.

The Big Picture: Integrated Benefits Card

In 2006, the state issued a feasibility report to the Legislature of the cost-effectiveness of integrating client identification for the issuance of several health and human service programs on a common-card platform. It was concluded that an Integrated Benefits Card (IBC) was a positive investment and will pay for itself after 5 years of operation and could save $400k each year thereafter. Since the Medicaid card project has been approved for statewide implementation, it is likely that it will also be approved for IBC participation. Then the four main human service programs, Food Stamps, Temporary Assistance for Needy Families (TANF), Medicaid and Women Infant and Children (WIC) could be implemented on one card. The IBC could replace the other methods of fraud prevention and identification including the EBT or the Medicaid smart card. The feasibility report suggests that once the IBC service delivery model is in place the Food Stamp and TANF program will be implemented. A year later, the Medicaid and WIC programs will follow.

In preparation of an integrated solution, it's important to note that the state used hybrid smart card specifications in the last procurement of their cards for the WIC program. This will supply the infrastructure to support the interoperability of WIC EBT smart cards between Texas and other states as well as enable the program to participate in the IBC. The RFI for the MAC also specifies the mission to use a technology infrastructure to allow expansion of the program to include the IBC. HHSC intends to issue a Request for Proposals to select a contractor for the continuation of their IBC project.

INPUT's Take:

The smart card is a practical application for the assistance programs and the Medicaid card is a natural progression for Texas' biometric-carrying smart card technology. Overall, a universal services card concept will allow citizens ease of use by having one card for a number of or all of their state assistance benefits. As this trend grows, more and more data can be added to the cards; besides public health and human assistance programs we can start to think about immunization records and prescription information data being utilized as well. And then as we look further into the future there's the potential of a health and human service access card's compatibility with a national identity card, which is a whole other topic for discussion.

Laura Tobler, NCSL's Health Program Director joined NCSL's Top 10 Legislative Issues for 2008 podcast series to confirm that this year lawmakers will continue to wrestle with health care cost issues. Health care represents the largest area of total state spending at 32 percent. One in six people are uninsured and millions more are underinsured. Due to Presidential vetoes of proposed expansion packages of the State Children's Health Insurance Program (SCHIP), in favor of a short-term funding extension until March 2009, state lawmakers must grapple with funding limitations to insure families over the 250% poverty level. These pressures along with the increasing uncertainty of the number of states projected to have budget shortfalls in 2008 make health care a top legislative issue lawmakers will struggle with this year.

In 2008, states are expected to draft strategies to include the expansion of SCHIP and Medicaid programs. States will also look at implementing a universal coverage system for kids by expanding the eligibility poverty. Unfortunately, financing these programs is becoming more and more challenging, especially with the Federal government pushing back on states for federal assistance. Although Congress has passed a limited extension for SCHIP, the urgency of the matter is encouraging states to consider universal health care coverage legislation. For instance, California legislators will be considering ABx1 - The Health Care Security and Cost Reduction Act. California's effort is being recognized as the Country's largest Health Care Reform. In addition, New York has recently announced the publication of a RFP for the Analysis of Proposals for Achieving Health Care Coverage. According to Tobler, in 2006 Massachusetts and Vermont passed universal health care packages, which will continue to increase attention in all states to mirror such policies.

States will also discuss plans to place health care reform responsibility among all players; individuals, employers and state governments. Tobler emphasis that states are placing responsibility in individuals by expanding public programs, allowing the public to assume responsibility of the poorest and involving employers to finance the programs. "Employers would be charged a fee for every uninsured employee and the collected money will be used to finance the subsidy for low income" said Tobler.

If universal coverage fails to pass, states will be looking at filling in gaps by introducing health care reform legislation. In 2007, more than half of the states proposed new health care laws and in 2008 the same or greater momentum is anticipated to introduce this type of legislation, especially with presidential candidates making health care reform a priority for their administrations.

INPUT's Take

• The crisis of health care costs will compel states to introduce legislation to change the current health care system and ultimately reduce health care costs. Transforming the system will encourage state and local governments to look to Health IT technologies such as electronic health records systems as well as health information exchange networks to alleviate cost and increase efficiencies.

• For an in depth analysis of the trends/market drivers in health care, be sure to look for INPUT's State and Local Health Care IT Market, 2007-2012. A number of states have already established statewide health IT agendas. Most states are in the early planning stages while a few others have embarked on pilot projects.

The collapse of the I-35 Bridge in St. Paul, Minnesota this past summer is a distressing remainder to state legislators of the fragile condition of most of America's roads and infrastructure. Jim Read, NCSL's Transportation Program Director, joined NCSL's Top 10 Legislative Issues for 2008 podcast series to discuss the challenges legislators will face this year to allocate funds and creatively look for ways to increase revenue in efforts to fix roadways.

Roads and bridges underlie entire state economies, therefore funding sources to fix infrastructure is a critical mission for legislators. Read explains that the decline in state gas taxes and purchasing powers are the two main concerns for states - "less money is available for states to spend and states will be looking at variety of ways to increase revenue including tolling and private-public partnerships". According to Read, 23 states have authorization to partner with vendors. For example, Indiana's toll road initiative totaled $4 billion in a vendor partnership to take care of roads.

In addition, states might be playing a bigger role in this issue if Federal spending for reauthorization of transportation programs remains underfunded. This is where partnerships with vendors come into play. Read says "States will look at basic contracting services to selling or leasing toll roads" However, contracts are negotiated behind close doors questioning the protection of public interest.

In 2008, legislatures are expected to take a number of actions on this issue. For instance, Colorado assigned a study commission to closely examine revenue strategies. The commission concluded that increasing gas taxes remains the number one source of funding for the state. Other states will be empowering local governments to pass increases in tax legislation as well as authority to create and maintain transportation infrastructure.

States are also expected to embark on pilot projects to implement innovative strategies to increase revenue. In the case of Oregon, a vehicle-mile-travel-fee system is being tested. Rather than charge a gas tax at the pomp travelers will be charged a fee for each mile they travel. Read confirms the system will probably be implemented in ten years.

INPUT's Take

· The trend of State and Local governments to look to tolls and partnerships with vendors as attractive options to generate much needed revenue is also a major driver for investment in information transportation systems (ITS). INPUT's State and Local IT Market Forecast 2007-2012 provides an detailed analysis of this trend and emphasis that investments of ITS deployments such as traffic signal optimization, electronic sign boards and others are expected by the end of 2012.

· State and local governments benefit from the largest federal funds offered for transportation programs within their communities. Among the several programs funded by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for User (SAFETEA-LU), states will closely follow federal-aid aimed at testing tolling, encouraging private sector investment and promoting the innovation of new technologies.

Matt Sundeen with NCSL's Transportation Program joined NCSL's Top 10 Legislative Issues for 2008 podcast series to discuss REAL ID, NCSL's third hottest issue for 2008 state legislatures. May 11, 2008 marks the deadline mandated by federal law for states to become compliant with REAL ID regulations. Those states not in compliance will no longer be able to use their issued driver licenses for federal purposes. According to Sundeen, in 2007, approximately 44 states considered 130 bills or resolutions related to REAL ID. Most states proposed legislation that opposed real ID or urged congress to amend or repeal the Act. These legislative actions are expected to continue in the 2008 legislative sessions and beyond.

Sundeen identified three key problems encountered by state legislators this past year with the Real ID Act. The first major concern has been the cost associated with the unfunded mandate. Initial estimates set the state burden at around $11 billion. The anticipated version of the Final DHS REAL ID Regulations has lowered the anticipated cost to a now estimated $3.9 billion. The most significant cost factor for states is expected to be the process to verify source documents used to prove identity. Sundeen explains that the verification process would increase the time to issue a driver's license and increase requirements for the states.

The second major concern to legislators is privacy. The act is seen as creating a national identification card, causing much concern and adverse reactions from states.

The third concern relates to states' rights. The Federal government is considering an issue that has been historically been under state control. Add to this the Act's status as unfunded and people start to pay attention.

For further information, NCSL dedicates a website to tracking REAL ID developments including the text of the Act, DHS draft and final regulation, and a REAL ID legislative tracking database linking to state legislations.

States currently evaluating ways to improve DMV and Real ID technologies include:

• Kentucky – Driver's License System Upgrade (Opp ID 45605)
• Maryland – REAL ID Technology System Implementation (Opp ID 41991)
• Arizona - Real ID Automated Business Systems Replacement (Opp ID 37919)
• District of Columbia - Modernization of Drivers License System (Opp ID 33143)

INPUT's Take

• The release of the Final DHS REAL ID Regulations is expected to alleviate much of the worries associated with the cost, the process, and the requirements of this mandate. However, states expecting budget deficits will remain slow in accepting the Real ID requirements and deadlines.

• Peruse INPUT's REAL ID State Profiles for an in-depth analysis on state progress with implementation of REAL ID.

• Be sure to review INPUT/Output Report Final Rule Provides Extra Time and Flexible Options for Technical Compliance for in-depth analysis on the IT implications of each of the compliance guidelines required in the final rule for REAL ID.

On January 1 of the great 2008, the Texas County Purchasing Association (TCPA) and the Texas Purchasing Management Association (TPMA) began their new life as the Texas Public Purchasing Association (TxPPA). The merger came about after a decision in November 2006 by the seed associations to unite and resulted in Texas' first statewide, multi-agency, public purchasing organization.

TxPPA starts with a combined membership of more than 300, but will likely expand quickly with eligibility expanded from counties and cities to also include school districts, state agencies and non-profits. Of course, everything is big in Texas, as evidenced by the 254 counties, over 1700 cities, 140 hospitals, over 1000 independent school districts, and over 400 special districts.

TxPPA is a sign of the growing revelation within states and locals that there is power in numbers and that there is value in community. Some of TxPPA's goals include:

• Establish cooperative relationships among members
• Promote ethical standards of conduct
• Promote uniform public purchasing laws
• Provide informed counsel to other members
• Collect and share best practices
• Encourage research and investigation

TxPPA will work towards these goals through committees and events, the first event being the Spring Workshop 2008 happening in Austin, TX February 26-28.

INPUT's Take

• With increased budget constraints and increased demand for results, S&L purchasers must capitalize on the successes and failures of their piers through associations and communities that share best practices
• Vendors must continue to look to the locals in S&L for new business, and cooperative purchasing groups are a wonderful avenue for entry to the market.

OMB has issued a new rule M-08-09, to be implemented in each agency's 2008 year-end FISMA report, increasing the level of detailed privacy reviews that must be included in each FSIMA report.

Under the new rule, each agency will be required to submit:

• The number of each type privacy review conducted during the last fiscal year;

• Information about the formal written policies, procedures, guidance, or interpretations issued by the agency during the prior year;

• The number of written complaints for each type of privacy issue allegation that was submitted to the Senior Agency Official for Privacy during the year including; how the issue was addressed and mitigated; and

• The number of complaints the agency's Senior Agency Official for Privacy reviewed, but referred to another agency during the prior year.

INPUT's Take:

• This new reporting rule is an effort by OMB to improve its ability to gauge agency efforts to secure the privacy federal government information.

• M-08-09 is OMB's effort to provide a level of security where legislation has been slow to develop. It effectiveness will be what if any results are returned from the collection of the information, such as more rules akin to the memorandum M-07-16 limiting the unnecessary use of Social Security numbers as a personal identifier.