Stimulus money: Much approved, little deployed

By Features IDG.net

The U.S. Congress poured billions of dollars into three technology-related programs when it passed a huge spending bill designed to stimulate a sluggish U.S. economy. Ten months later, two of three programs have spent a small fraction of what they've been allocated.

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The US$787 billion American Recovery and Reinvestment Act, passed by Congress in February, included $7.2 billion for broadband deployment, $19.2 billion for health IT programs, and $4.5 billion for an IP-enabled smart energy grid. The broadband programs run by two U.S. government agencies have announced grants and loans for just 3 percent of the $7.2 billion, and the deadline for a first round of awards has slipped by a month and a half.

The stimulus bill included $11 billion for updating the nation's electricity grid, including $4.5 billion specifically for smart-grid projects. Of that $4.5 billion, more than $4 billion has been awarded, with President Barack Obama announcing $3.4 billion in smart-grid grants in late October.

The other two IT-related stimulus projects have been slower to get off the ground, although the bulk of the money for health IT in the stimulus package wasn't designed by Congress to kick in until 2011 or later. The stimulus bill provides $17 billion in incentives for health-care providers to adopt electronic health records, with incentives starting in 2011 and continuing on, with diminishing incentives, until 2016.

The U.S. Department of Health and Human Services has announced more than $400 million in electronic health records projects from the remaining funding.

The funding deadlines for the broadband programs, however, have slipped. The U.S. National Telecommunications and Information Administration (NTIA) and the U.S. Rural Utilities Service (RUS) had originally planned to award about $4 billion in grants and loans by the end of this year.

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Instead, Vice President Joe Biden, speaking at a Georgia manufacturing plant, announced just $182 million in grants and loans on Dec. 17, in addition to about $39 million in broadband mapping grants NTIA has awarded since early October. Instead of $4 billion by the end of this year, the NTIA and RUS will now award $2 billion in broadband grants and loans by the end of February.

The number and complexity of applications for broadband grants and loans has led to the longer award cycle, said representatives of the RUS and NTIA. The two agencies received nearly 2,200 applications, asking for about $28 billion, for a first round of grants and loans.

"NTIA is committed to providing full and fair consideration to our pool of applications," the agency said in a report to Congress filed Nov. 16. NTIA extended the deadlines, "given the large number of complex applications and the voluminous amount of information the agency needs to review," the agency added.

RUS continues to process applications and is "fully confident" that it will award the full $2.5 billion it was given for broadband in the stimulus package by next Sept. 30, as required in the bill, said Bartel Kendrick, a spokesman there.

"RUS believes that the combination of its funding and NTIA's funding will comfortably exceed the funding level announced at the vice president's event in Georgia," he said.

Some broadband experts weren't impressed with the small number of awards announced this month.

"It's what we expected, but it's extremely disappointing," said Daniel Hays, director of the telecom practice at PRTM, a management consultant firm. "Despite the delay beyond the original plan, it seems that NTIA and RUS are having difficulty plodding through the 2,200 applications."

The two agencies "clearly weren't prepared" for the volume or the complexity of applications, Hays said. The average length of applications was 300 to 500 pages for the applicants Hays has spoken to, he said.

The agencies have been working under a compressed timeline, with notices of funds availability, or NOFAs, going out July 1. The original deadline for filing an application was Aug. 14, which the agencies extended to Aug. 20 because of problems with the online application database. Under the original timeline, the agencies then had about four months to evaluate 2,200 applications for the first funding round.

In addition to the number of applications, there appear to be many applicants that "underwhelmed" the agencies with the level of detail and thought that went into the applications, Hays said. That left the two agencies with an "unenviable task" of shifting through applications to find the good ones, he added.

With those factors added up, the agencies aren't meeting the objectives of the broadband programs, Hays said. "One [objective] is to accelerate the pace of broadband availability to unserved and underserved communities," he said. "Yet, awarding less than 3 percent of the available monies after a delay is really not acceptable."

A second objective was to create jobs during the economic downturn in the U.S. "Certainly, we're not going to have nearly as significant an impact on that, as we could have," Hays said. "If all they're going to get out is $2 billion, then I think there need to be some significant changes to the process and the criteria so that they get a better pool of applications."

Others watching the broadband awards process said it shouldn't be a surprise that it took the two agencies time to develop rules and issue grants. A rural health-care broadband program at the U.S. Federal Communications Commission has taken years to launch, said John Windhausen, coordinator of the Schools, Health and Libraries Broadband Coalition.

In addition, Obama's administration didn't have a lot of staff in place until May, Windhausen noted. Still, the stimulus package hasn't produced jobs as fast as some people had hoped, he said.

We are concerned for the nation that the stimulus bill as a whole is not working quickly enough to generate jobs and reduce the unemployment rate," Windhausen said in an e-mail. "But we are pleased that NTIA has processed the ... applications very quickly (considering their complexity) and has made some good initial decisions."

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