President-elect Obama will be taking the helm of the country in less than two weeks, and faces an unprecedented laundry list of critical issues that must be addressed quickly. Most presidents have the "luxury" of focusing on one or two major tasks during their first months in office. Obama has a significant to-do list that he must begin tackling immediately.

Stimulus Package: Obama's team is working to gain support for his economic stimulus package. It's unlikely to be on his desk on his first day in office as many originally hoped, but it's obviously the top priority. The package could be as much as $775B, and could include tax cuts for workers and businesses, funding for large infrastructure and public works projects (e.g. highways, broadband infrastructure, health IT, and energy), and assistance for struggling state governments. He's also made it clear that this bill will not have any earmarks.

TARP: Obama must determine what should be done with the remaining $350B of the Troubled Asset Relief Program funds. Treasury Department leadership came under fire for the perceived lack of monitoring of recipient financial institutions' use of TARP funds. Under Obama, we can expect much more scrutiny - not only of the financial institutions, but also of the mid-stream strategy change from purchasing troubled assets to purchasing stock.

Budget: Obama's team will have to begin work quickly on drafting the FY2010 budget. Although some agencies may prepare a full budget, President Bush only required them to prepare a current services budget, which only reflects baseline funding needs. Obama may decide to leave the FY2009 budget - currently a continuing resolution for all but 3 appropriations bills - to Congress to hammer out. Like FY2008, it will likely be an omnibus, which rolls up the remaining 9 appropriations bill into one. The word on the street is that he will try to make some room for some of his priorities, such as tax cuts, environmental issues, and public health in the FY2010 budget. There's not much time between inauguration day and the early February budget deadline, so we'll probably see the the budget sometime in late March or April.

Bush Policies: Obama's team has been reviewing the executive orders and agency rules established under President Bush. I expect to see many of those overturned fairly soon into the new administration.

President-elect Obama certainly faces a situation unlike any we've seen in recent history. He's been praised by both Democrats and Republicans so far on his transition planning and bipartisanship, and hopefully those opinions will carve a quick path to action.

There's a reason that the first 100 days are so critical - it's the new President's shot at showing what he is made of in order to gain the political capital needed to get things done.

Normally, a topic like this would be in the federal domain, but, since two of the high-profile names being mentioned hail from the state and local domain, I'll take a shot at it.

During his campaign, President-elect Obama promised to "appoint the nation's first Chief Technology Officer (CTO) to ensure that our government and all its agencies have the right infrastructure, policies and services for the 21st century." The CTO would carry out the administration's agenda to "create a transparent and connected democracy." (Read the full plan to get the details.)

This would, in essence, be a the first federal enterprise-wide IT leader. Two of the state and local names that have been bandied about include Aneesh Chopra, Virginia's secretary of technology, and Vivek Kundra, the District of Columbia's CTO. Both are members of the Obama transition team's Technology, Innovation & Government Reform working group. Chopra has a strong background in health care, and his boss, Gov. Tim Kaine, who was one of Obama's first major campaign supporters will be assuming the chair of the Democratic National Committee. The only other state or local name I've heard mentioned is Colorado's CIO, Michael Locatis. This was based on some speculation that Obama sees Colorado as a hotbed for "green tech" innovation. Locatis does have a role similar to that of the prospective Obama CTO with Gov. Ritter's innovation council.

Having a state or local IT leader assume the CTO role under the Obama administration would (hopefully) result in a major boost of federal attention to federal/state/local IT interconnectedness. The states and localities are major programmatic partners in the areas of health care, homeland security, justice/public safety, and social services. Federal systems must be designed and maintained with those linkages at the forefront of architectural considerations, rather than as an afterthought (as has been the case historically).

Of course, given the fact that the CTO would have to wrangle the disparate federal agencies, it's hard to discount working group member Dan Chenok, who was the right hand man to Jim Flyzik--the closest the federal government ever had to an enterprise IT leader back in the Clinton administration. He was also enjoys a strong reputation among state and local IT leaders for his outreach efforts during that time. The Bush administration toyed with the idea of an enterprise IT leader in Mark Foreman but, for whatever reason, never pulled the trigger.

Here's some additional INPUT coverage on two of Obama's campaign advisors, both of whom are members of the transition working group.

Will Kaine's coattails carry Chopra into the CTO slot? Is Kundra's flashier "Web 2.0" style more to Obama's liking? Is Obama set on appointing an American of Indian extraction (with the related political ties) to the position or does he need a seasoned federal insider like Chenok or his predecessor at OMB, Bruce McConnell? How about the rest of the field? Feel free to post your insights in the comments below.

As the economy takes a downturn and the demand for human services goes up, states are experiencing larger volumes of paperwork with tighter deadlines, fewer staff, and decreasing budgets. Thus, the modernization of human services will continue to be front and centered in 2009 as states are going to continue to look at increased efficiencies and cost savings with staff reductions in the upcoming year. Yet, the current fiscal conditions appear to be deteriorating the objective to improve human services by cutting millions, in some cases billions, from state-funded programs, which include reductions in social services programs.

Earlier this month, the Treasury Department reported an additional $164.4 billion to the federal budget deficit, bringing the total deficit to $401.6 billion for the first two months of the fiscal year, which began October 1st. Furthermore, it is projected that our nation will be faced with a record budget deficit of $1 trillion or more for the 2009 fiscal year. As a result of what is said to be the worst recession in history, most states are unable to cover expenses and it can take years for them to recover from the current financial crisis. As indicated by the Center on Budget and Policy Priorities, 43 states are facing budget shortfalls for this year and/or next year with virtually all states' deficits anticipated to end up totaling over $100 billion in fiscal year 2010. In fact, some states are facing their biggest deficits in history. The state of California for example, is facing an additional $11 billion shortfall and may be unable to pay its bills come spring 2009. The District of Columbia's Chief Financial Officer is anticipating nearly half a billion budget shortfall for FY 2010 and double-digit unemployment. According to a recent survey conducted by the National Association of State Budget Officers (NASBO), since budget enactment, economic conditions have further deteriorated with more than half of the states reporting budget gaps of $29.7 billion as of December 2008. Additionally, states will experience the first spending decrease since 1983 with a projected 0.1 percent decrease in Fiscal 2009.

Sadly, the biggest cuts are being made to social services programs. On December 1st, the Kansas Department of Social and Rehabilitation Services (DSRS) announced that it was immediately freezing access to a program that provides home- and community-based services for low-income Kansans with disabilities, which could affect hundreds of people. The freeze will be in effect through July 1, 2009. Additionally, the Association of Community Mental Health Centers of Kansas is looking at a $1.8 million cut in grants from DSRS. In a two-year budget proposed by Oregon Governor Ted Kulongoski at the beginning of the month, "children and education were the apparent winners, and human services the loser," with cuts affecting virtually all human-services programs, including in-home care for 6,500 older and disabled people, cash and job assistance for 2,745 low-income households with children, and child-care subsidies for 3,500 low-income families with employed adults. As indicated by Senate President Peter Courtney, "We need to explore every option and we absolutely must protect those who can't protect themselves - our children, our elderly and those with multiple disabilities." Several other states are also facing similar cuts to their human services programs.

In the upcoming year, the legislative leaders who are championing these efforts will be faced with some tough decisions revolving around resource allocations and prioritization, while state agencies' program and IT staff will have to build a strong business case to justify their IT projects. Moreover, the magnitude of the economic downturn is pushing governors to make decisions between cutting services or raising taxes. Some governors are demanding hiring freezes and some states have already implemented hiring and spending freezes resulting in project delays. Based on conversations with several states' human services program and IT staff, some projects are getting cancelled as departments have decided to build their own solutions in-house, while other projects are put on hold or further delayed due to a lack of funding. Lately, INPUT has been hearing the same comments from human services program offices, such as "this project was frozen due to an expected deficit" or "everyone in the state is scrambling to hold on to what they currently have, let alone ask for additional funds for future initiatives." Looking ahead to 2009, INPUT expects this trend in project "freezes" to continue with greater frequency, especially with governors in several states asking departments to slash their budgets.

Also, with the upswing in unemployment, some states are finding their unemployment insurance funds running dry. In Ohio for example, where the unemployment rate is more than seven percent, the state may need a federal loan for the first time in 26 years to cover unemployment costs. As per INPUT's recent communication with the Chief Information Officer (CIO) from the Virginia Department of Social Services (VDSS), Division of Information Systems (DIS), the state is likely to face a shortfall of $3 billion in the upcoming year and the drastic spending cuts will affect IT projects. According to the CIO, VDSS has already reduced their IT staff by 35 people and had to let go of 32 contractors. Although the CIO is currently pushing to hire more state FTEs since they are cheaper than contractors, he is fully anticipating more budget cuts in 2009 as well as cuts in program spending or even getting rid of some social services programs altogether.

Yet, despite the fiscal conditions, major child support and child welfare IT system projects, whether it's a replacement or an enhancement, are still in the pipeline, but just being prolonged. As these systems are becoming obsolete, their faulty design and architecture make them difficult to maintain and enhance. Additionally, maintenance complexities inhibit the ability to be responsive to changing requirements. Thus, many states have been planning their modernization efforts for over a year and although some ongoing budget commitments have already been secured to protect projects currently underway, some projects initially planned for 2008 are getting pushed to 2009 or even 2010 and beyond as states are taking their time, utilizing a step-by-step planning approach. Consequently, projects are being phased out into multiple solicitations versus the initial plan for one large Request for Proposal (RFP), which is a trend that INPUT expects to be continued in 2009 and beyond. While a part of the multi-faceted/multi-phased planning approach has to do with budget uncertainties, a major part of it has to do with assuring that risks are manageable and to also avoid project failures or system glitches.

A lot is going to happen in 2009 as the new administration will have to make a lot of momentous decisions. Not only will President-elect Barack Obama inherit the huge state budget deficits faced by our nation, but the tax cuts for example, will be a huge issue that is going to shape the rest of the landscape as his plan for the highly anticipated economic stimulus package, that is yet to be determined, will rely on tax cuts. Even though IT funding has always been an issue for large and risky IT modernization projects, with a new administration in 2009, states have high hopes of replacing their legacy systems and can only remain hopeful for federal dollars to be pushed down to these programs to support IT. The commonwealth of Pennsylvania currently has two feasibility studies underway, one with Symbiosys Solutions, Inc., (INPUT Opp ID 45820) to determine the future technology approach for their child support system, and the other with Public Consulting Group (INPUT Opp ID 46234) to determine how to best move forward with an automated child welfare solution that will meet federal, state and county business needs. Both Symbiosys and PCG will also be responsible for drafting the RFPs for the design and implementation phases (INPUT Opp ID 46191 and INPUT Opp ID 46206). Beyond their high dollar values, both projects represent good opportunities to demonstrate competence in modernizing the legacy systems. For more details on similar opportunities coming down the pipeline, keep an eye for the upcoming INPUT/Output report on the Top 10 Social Services Opportunities of 2009.

As President-Elect Obama begins the long task of locating and appointing the sub-Cabinet level leadership for the federal agencies, he is clearly focused on the impact these individuals will have in spending our money. The Bush Administration chooses to deliver an economic stimulus package in the form of rebate checks from the U.S. Treasury to most of our mailboxes. Transition officials and the President-elect himself have implied that federal agencies may see a large portion of the funding in an effort to kick-start the economy. One topic of interest that we've debated around our water cooler is whether President-elect Obama's plan for job creation involves expansion of Government positions and hiring more federal employees or promoting policies which stimulate private sector jobs, or both.

But, I digress.

In a December 19, 2008, GovernmentExecutive article , a mid-level transition official is quoted as saying that President-elect Obama would prefer that his appointees be in place on or around January 20 in order to oversee the spending of federal money. In fact, they will be "supervising the spending of the economic stimulus package" which could "mean a massive infusion of money" in some departments. INPUT is already tracking much of the transition agenda but it will be interesting to see how this financial infusion could affect current programs versus new projects. See this INPUT Blog from last week for more information on transition activities.

We already know that the economy, energy and healthcare top the list of priorities in the new administration. In addition, a greater reliance on technology, fiscal management and overall efficiency are likely to be strong messages for all agency leadership. Agencies that can show tangible results and track the benefits a funding increase could mean to the agency, the economy and the country will make a strong case to get the money. Since the jockeying for the Fiscal Year 2010 budget has already begun, you can bet agency leadership are putting together plans to get immediate stimulus funding as well as sustained long-term budget funding. So, there's still hope or at least blurry dollar signs at the end of the tunnel.

Lastly, one thing to note. Many senior leadership positions will not be confirmed until after the Cabinet-level leaders have completed the process, which means even though the President-elect's team is moving quickly with these names, lower level appointees may be running the show until their supervisors are confirmed.

INPUT expects President-elect Obama's economic stimulus package to provide billions of dollars in contract opportunities to government contractors over the next several years. The package, which is likely to approach $1 trillion in spending over the next two years, is expected to have significant funding for infrastructure, health IT and green initiatives to generate jobs, all of which rely heavily on government contractors to implement.

According to The Washington Post, the preliminary plan has three buckets of money:

• Funds to States for Health Care – at least $100 billion
• Tax Cuts – at least $140 billion
• Infrastructure, eHealth and Green Initiatives – $350 billion

• Dramatic increase in spending with the Army Corps of Engineers to accelerate construction projects
• Grants to state and local governments to support infrastructure improvements, funds to increase technology and modernization of schools
• Funding for GSA and agencies managing their own buildings to implement green initiatives
• Funding to health care providers to accelerate adoption of electronic medical records

INPUT will provide additional research and insight on the economic stimulus plan as it gets formalized in legislation, but contractors should be thinking now about how they position themselves for these opportunities when they emerge.

Background to the Government's E-Health Initiatives:

During the past 5 years, the Bush Administration laid the ground work to expand the use of Health IT across the Federal Government. One of the first major acts to push this initiative forward occurred during 2005, when President Bush set a goal for most Americans to have access to secure, interoperable Electronic Health Records (EHR) by 2014. President Bush created the Office of the National Coordinator for Health Information Technology (ONC), a central office at the Department of Health and Human Services (HHS) to oversee this effort. Another important act for this initiative occurred during August, 2006, when President Bush signed an executive order requiring the Department of Health and Human Services, the Department of Defense, the Department of Veterans Affairs, and the Office of Personnel Management to adopt interoperable health information-technology standards, and adopt quality-improvement measures.

The Forum:

On December 15-16, the ONC sponsored the 5th Nationwide Health Information Network Forum in the Grand Hyatt Hotel, in Washington DC. The Nationwide Health Information Network (NHIN) is being developed to provide a secure, nationwide, interoperable health information infrastructure that will connect providers, consumers, and others involved in supporting health and healthcare.

The forum focused on the Trial Implementations which were conducted by the NHIN participants and their limited production partners. Organizations that participated in the trial implementations discussed specifications to facilitate interoperability, and lessons about preparing for production-based data exchange. The higher profile discussions centered on developing trust agreements among the participants. The Privacy of Electronic Medical Records was also a key issue, and was raised repeatedly.

In a keynote address Secretary Mike Leavitt announced key privacy principles, and a toolkit to guide efforts to connect the potential of new technology and more effective data analysis, while protecting privacy. Secretary Leavitt stated, "Finding the balance between increased access to information and privacy is very important. If we don't have it, we won't succeed. Consumers shouldn't be in a position to have to accept privacy risks they don't want. Each consumer should be able to choose products and services that best fit their health needs and privacy preferences."

The Incoming Administration:

Several speakers mentioned that it is highly expected that President-Elect Obama will sign a new stimulus package as soon as he takes the Office. In a recent speech, President-Elect Obama stated that he plans to upgrade health care by introducing new technology and electronic medical records.

The additional Health IT focus and funding may create a potential for new business opportunities for Federal Vendors involved in the Health, and Health IT Space. Examples of potential opportunities include the development of standardized electronic medical records software that increase the efficiency and productivity of physician charting, billing and e-prescribing. If the stated focus in Health IT continues with the next Administration, many more opportunities to develop this field should emerge.

Although you read my speculation here over a month ago, President-elect Barack Obama has nominated former Iowa Governor Tom Vilsack to head the U.S. Department of Agriculture. (I went to college in Iowa and did some study of ag policy, so maybe I have a sixth sense on this particular nomination.)

Anyhow, the big question that will linger over this nomination is whether the USDA will finally crack down on state outsourcing of eligibility determination for the old food stamps program, now known as SNAP. It's one of the biggest welfare programs in terms of the number of families served (which makes it fairly IT intensive and subject to enrollment spikes during economic downturns) and basically serves as another of the many subsidies for corporate agriculture in America, allowing low-income Americans to buy up surplus production and keep prices up. Sen. Tom Harkin (D-IA) heads up the Congressional oversight of the USDA and SNAP, and, being one of the most pro-union members of the Senate, he has not been happy with the outsourcing of state workers who support SNAP. The left-right political compromise that underlies nutrition-based welfare (a.k.a. subsidies for "big ag") has always been that the programs would be administered by civil servants--preferably (to Harkin's mind, at least) unionized. Expect Harkin to begin reclaiming his side of the bargain.

Besides, Vilsack's first order of business is going to be shoring up the ethanol industry against low gas prices and Brazilian competition. (Ethanol policy is the new price-support system for King Corn.) He won't have much time or inclination to buck Harkin on welfare outsourcing. But, maybe as a former governor, he will be able to broker a compromise that's a win for the taxpayer, the SNAP beneficiary, the state worker, and, let's not forget, the dear ol' "family farmer."

The foreign policy agenda for the incoming Obama administration is finally taking shape with the recent pick of Hillary Clinton as Secretary of State. Senator Clinton is expected to bring President-Elect Obama's agenda of increased diplomacy to the forefront. According to an article published by CNN on December 1, 2008, "Clinton said she would work to restore America's position as "a force for positive change" in the world." The United States Agency for International Development (USAID) being one of the three pillars of US foreign policy (Defense and State being the other two), is expected to play a more important and more dynamic role in future.

However, this is not to say that USAID did not play an important role in the current Administration's agenda. The Bush administration's vision for USAID was different, with the agency's primary focus on global healthcare issues, and utilizing USAID to help rebuild Iraq and Afghanistan.

The Global Health programs are highlighted most by the US President's Emergency Plan for AIDS Relief or PEPFAR Program. This program, which was launched during 2003, is the largest commitment by a nation to fight a single disease in history with a commitment of $15B over the initial 5 years of this program (2003-2008). The program was recently renewed for 5 more years during July, 2008, and available funding was increased to $48B through 2013.

USAID has been heavily involved in rebuilding infrastructure in Iraq and Afghanistan, primarily focusing on developing their infrastructure, and enhancing their capacity to govern. According to a recent GAO Report on contract activity in Iraq and Afghanistan published on October 1, 2008, USAID has 276 active contracts with approximately $1.768B in funding in Iraq and Afghanistan for fiscal year 2007, and the first half of fiscal year 2008.

Under the New Administration's foreign policy lead from the Department of State, expect USAID's Bureaus of Economic, Growth, and Trade (EGAT), and Democracy and Governance (DG) to be heavily invested in over the next few years to help improve America's global image, and provide needed legal and governance assistance to friendly Governments, with the Bureau of Global Health (GH) continuing to lead in many global health issues.

As expected, President-elect Obama's first cabinet-level appointee selections have come early and align with the most critical issues he'll face coming into office - the economy and national defense (however, Obama has not confirmed any of the picks circulating throughout the media, and we're hearing that he's more than a little irritated by the leaks coming from his transition team).

Word on the street is that New York Federal Reserve President Tim Geithner will be taking over the Treasury Department, Arizona governor Janet Napolitano has been selected as DHS Secretary, and Hillary Clinton as Secretary of State. Most recently announced is his choice to keep Robert Gates in his position as Secretary of Defense, and retired General James Jones as his National Security Advisor. We've also heard rumors of New Mexico Governor Bill Richardson for Commerce Secretary and former South Dakota senator Tom Daschle for DHHS Secretary. These individuals still face a fairly lengthy confirmation process (although a DHS Administration Transition Task Force recommended a expedited confirmation process for top DHS leadership for the sake of national security).

Following up on work it did in 2000 at the request of Congress (which was concerned about the lack of "depth and breadth of experience required to manage a federal agency effectively"), GAO has compiled a list of questions that should be included in the confirmation process. What could Tim Geithner, Janet Napolitano, Hillary Clinton, and Robert Gates be asked?

Here are some of the questions that GAO recommends:

Timothy Geithner, Department of the Treasury

There are inherent challenges in implementing and managing any new federal program. However, the Troubled Asset Relief Program faces a number of unique challenges in achieving its statutory purposes, which include mitigating foreclosures, stabilizing financial markets and protecting taxpayers. How will your prior experience help you in meeting your responsibilities over the Troubled Asset Relief Program?

Governor Janet Napolitano, Department of Homeland Security

The department is pursuing the Secure Border Initiative, a multiyear, multibillion-dollar program aimed at securing U.S. borders and reducing illegal immigration. Concerns have been raised about whether early results are meeting user needs, and whether the department will be able to deliver the program on schedule and at cost. Do you have significant experience you can cite with major programs or initiatives depending on the integration of technology? What were key success factors? Based on your experiences, what would be key considerations for deciding whether to continue when faced with significant delays or cost overruns?

Senator Hillary Clinton, State Department

What experience do you have successfully working with a wide variety of civilian and military stakeholders and balancing competing priorities, approaches, and objectives?

Robert Gates, Department of Defense (he may not have to go through the confirmation process again, but will likely face the same scrutiny from President-elect Obama)

To what extent do you have experience in managing complex organizations with large budgets, including developing near-term and long-term investment strategies, prioritizing resource needs, and balancing needs with resource constraints to prepare affordable program plans and funding requests? Given the significant challenges facing the department to address current, emerging, and future threats and the considerable increases in the department's funding to address these threats, if confirmed, what management actions and timelines would you establish to identify defense plans and budgets that are linked to a strategic, risk-based framework?

There are also questions specifically addressing acquisition management and information and technology management:

Acquisition Management

Information and Technology Management

Confirmation hearings are a matter of public record, and it will be interesting to see the new leadership's responses to these questions, especially those surrounding acquisition and informatio/technology management. While it would be promising to have a department Secretary well-versed enough to answer acquisition and technology questions in depth, I wonder if we may end up seeing responses that ultimately say, "I'll hire someone to think about that for me." As long as he or she sees the vision of technology in government, perhaps that's all that the contracting community can wish for - for now.

Arizona governor Janet Napolitano will be President-elect Barack Obama's secretary of homeland security. Gov. Napolitano has been a staunch advocate of state's rights when it comes making the federal government cover the costs of deterring and detaining illegal aliens. She along with governors Perry (R-TX), Schwarzenegger (R-CA), and Richardson (D-NM) were urging comprehensive immigration reform long before it was popular in Washington. She was the only governor to use national guard troops to supplement federal border patrols, although she was never a fan of the border fence. So, assuming she does assume the post at DHS, here are a few observations.

1. Her appointment would further solidify INPUT's expectation that homeland security funding will continue to gravitate toward "blue state" concerns on the coasts, borders, and big cities--primarily seaport/container security, mass transit infrastructure protection, and a "kinder, gentler" approach to immigration control that relies less on workplace raids that serve only to rile up immigrant advocates and local chambers of commerce and manufacturer's associations.
2. INPUT's earlier expectations in regard to REAL ID under the Obama administration still hold. Napolitano will most likely be charged with ensuring that state driver's licensing is no longer the weakest link in the immigrant identity-documentation process. This process is well underway, and most states are probably already in compliance, but, before we can put this to bed, we'll need one more round of clarification regarding DHS's nebulous guidelines and one more round of federal funding. (If you thought the states hated picking up the tab for REAL ID prior to the economic meltdown...) Then the focus of attention will shift to the federal databases that are needed for states and employers to conduct adequate background checks.
3. Regarding IT, the $64,000 question remains. Will she continue to push top-down information-sharing systems out of Washington into the states and cities? Will she rely more on long-standing, consensus-built systems such as NLETS and RISS, which are far more popular among state and local law enforcement? Will she relax DHS's tribal obsession with security clearances and focus more on synthesis of open source and "homeland security sensitive" (but not classified) information into actionable guidance for state and local officials?
4. Sen. Obama campaigned on a platform supporting thousands more intelligence analysts at the state and local levels. This would require an intelligence-gathering and information-sharing infrastructure in fusion centers and EOCs far beyond what has been seen to date.
5. Will Gov. Napolitano be the first major official in the history of the federal government to actually care about "cyber security"--I mean really care?