Who Will Get The Stimulus Funds?

The Stimulus Bill worth over $780 billion passed by Congress last month will fund a wide variety of projects. From road repairs, to weatherizing houses, to teacher salaries to just regular local and state expenditures there is a great deal of money available to the private sector. Much of the money will go to various Federal, State and local government entities but a significant amount will flow to private companies.

Some of the first contracts awarded were to companies to aid Federal departments in tracking and managing their portion of the stimulus funds. The Forest Service awarded Government Contract Solutions on April 10th to provide support to their Operations Center. This contract is for one year and is worth $696,000. The Service is to spend $1.5 billion of the stimulus bills.

Some companies worry that they will be passed by due to the amounts of money involved and the rush to award. CNNMoney.com reports that there are concerns that the large, existing Federal contractors will see the bulk of the funds. The Federal government does have goals on percentages of their contracts need to be awarded to small and disadvantaged businesses. In the past there have been struggles to meet these goals, and often the small companies must subcontract with the larger ones. The company in the article, Next Step Living, is doing the right thing by building a relationship with its home state so that the money would flow through them to it. With the money that the states will spend this is certainly a viable strategy.

Much of the money to be used to build roads or bridges will utilize the existing process to award those contracts and one can expect the existing contractors seeing the bulk of that work. The states and Federal transportation officials are comfortable with them and they have a track record of performance. Subcontracting opportunities will be available to newer or smaller companies to gain a part of that funding. In Virginia the first contracts are being announced for bid and the state will award fifty percent more work in 2010 then planned for 2009. This increase will most likely require more companies then normally execute this work meaning that new or smaller companies will be able to participate.

There is a downside of a sudden peak in short term funding like this, though, if there is not a continuous flow of funds then there will be a whole group of companies that will go away once the money dries up. This will lead to a negative economic effect in a few years. This is why you would prefer a steady build up of work and a steady lowering of it. All of the money and contracts will eventually be tracked, counted and tabulated to see who gets what when. This will allow a great deal of analysis and discussion of how well the funding was executed and applied.