*Intergovernmental Solutions Newsletter:*

*Innovative Funding*

Your comments and suggestions are always welcome. Let us know if you
find the information useful and what articles you like. Send mail to:
lisa.nelson@gsa.gov

**In This Edition**

*Agile Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3*

*An Innovative Funding Model for Selling Government Surplus Property . .
. . . . . . . . . . . . . . . . . 5*

*Implementing Share-in-Savings As a Performance Based Contracting Tool .
. . . . . . . . . . . . . . . 7*

*Enterprise Procurement . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9*

*Funding Texas Online . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10*

*New Trends and Approaches for State IT Funding . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . 11*

*Michigan Wi-Fi Funding Model . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14*

*Earth 911 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16*

*Service Contract Saves US Government \$140 Million in the Arctic Circle
. . . . . . . . . . . . . . . . . .18*

*The Invest to Save Budget (ISB) . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19*

*IT Innovations at the Heart of Cost-efficiency . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .21*

*S.A.I.L. Public Private Partnership . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23*

**Government Agencies: Meeting the Challenge Using Innovative Funding
Strategies**

*M.J. Jameson,*

*Associate Administrator,*

*Office of Citizen Services and Communications*

*General Services Administration*

It is a major challenge for any large organization -- including
governments --to acquire the necessary resources to fulfill their
missions and meet the growing needs of customers. For government
entities, funding projects that are not earmarked for appropriated funds
are a special challenge. Accordingly, many governments have found new
ways to meet their financial needs by using various innovative funding
strategies. It is those strategies that will be discussed in this
newsletter and they range in scope from the innovation fund and Invest
to Save Budget, to fee for service. These strategies are being employed
by agencies on the local, state, federal, and international levels.

The **INNOVATION FUND MODEL** creates a source of seed funds for new
projects; usually pilot projects and can be established through a fee
against other expenditures of funds such as a percentage of telephone
charges. Funds distributed under the innovation fund model can be
provided as a loan or as a grant to the requestor. The structure of this
fund often calls for the development of a business case, which creates
opportunities for a return on investment.

The **INVEST TO SAVE BUDGET (ISB)** which has been employed successfully
in the United Kingdom, encourages partnerships throughout the public
sector. The ISB approach promotes funding for projects that call for a
partnership among two or more public bodies and tests innovative methods
of service delivery, often at the pilot stage. A goal of the ISB
strategy is to improve the quality and cost effectiveness of public
service.

The **FEDERAL ASSET SALES (FAS) INITIATIVE** calls for an innovative
pricing strategy for selling surplus personal and real estate property.
This strategy does not require appropriated funds or any upfront
investment from the government. FAS teams design an end-to-end,
vendor-owned and -operated commercially available capability that
leverages existing marketplaces and provides services to facilitate the
sale of federal assets.

The **TEXASONLINE MODEL** is designed to generate revenue by placing
applications and services online. Agencies and local governments
participating in TexasOnline not only build a revenue stream but also
receive a host of added benefits. These benefits include
telecommunications services, access to call center operations, strong
Web site security, 24/7 availability, a common payment system,
translation services and outreach and marketing services.

**U.S. General Services Administration • Office of Citizen Services and
Communications**

**EARTH 911** is an environmental clearinghouse serving both governments
and communities. Information provided includes everything from what to
do with solid waste to beach reports to educational activities for the
environmentally conscious. With donations from companies and grants from
governments, a staff of about 30 has created a one-stop shop for people
who want to get information and live in more environmentally responsible
ways.

The province of Ontario has created a number of cost-effective funding
solutions by consolidating the IT functions of nearly 30 ministries into
seven key **IT CLUSTERS**. In doing so, Ontario has created an
environment encouraging innovation and greater efficiency. Under each
cluster's umbrella, a number of like ministries move toward common IT
goals that build on shared and unique information and knowledge
management requirements and are enabled by an enterprise-wide,
infrastructure platform.

**SvalSat** is a satellite facility operated by the Norwegian Space
Centre (NSC) through an intergovernmental agreement between the United
States and the Kingdom of Norway. SvalSat acts as a receiving point for
polar-orbiting satellites to download data for critical NASA and NOAA
weather and earth science programs. Data downloaded from the satellites
can be transmitted to the U.S. through undersea trans-Atlantic cables, a
system developed by NSC and US agencies. Hannon Armstrong provided
funding for the project which was engineered by Tyco Telecommunications.
In exchange for providing the up-front capital for the project, the
financial services firm will receive annual service payments from each
of the U.S. agencies for the next five years. After that time, the
agencies will have essentially free use of the service until 2030.

The **SHARE-IN-SAVINGS** concept links payment to performance, whereby
payment to a contractor is made from future savings (or revenue)
achieved by improving the efficiency and/or effectiveness of government
processes. Since payment is only received based on achieved benefit, the
risk to government is minimized. The United States General Services
Administration, Office of Governmentwide Policy, has established a
Share-in-Savings program to conduct additional research, develop tools,
and promote the concept governmentwide.

**MICHIGAN WI-FI (MI WI-FI)** is a collaborative project among the
Michigan Department of Information Technology, Department of Natural
Resources, Michigan Department of Transportation, Travel Michigan, SBC
(FreedomLink) and Intel. This public-private partnership is working to
provide wireless Internet access to business travelers, truckers,
boaters, campers and tourists in Michigan. The Michigan Wireless Funding
model is a hybrid approach that consists of state assets, state
--in-kind services, grants and one time donated equipment, services and
user fees. The state as well as the private sector provides marketing
and promotion.

The **SOLUTION ARCHITECTURE INTEGRATION LAB (SAIL)** is a private/public
partnership formed to improve the efficiency and effectiveness of the IT
Capital Planning and Architecture process by providing a collaborative
IT research and validation "lab". SAIL was formed to reduce the time,
costs and risk associated with researching, modeling and validating
reusable IT solution frameworks. SAIL members provide the necessary
infrastructure and share lessons learned, vetting methods, solution
templates, and a knowledge repository. SAIL provides government and
industry a set of reusable IT solution blueprints that detail critical
attributes required for decision making; services functions,
interoperability requirements, security metrics, return on investment,
business fits and infrastructure requirements.

The Florida State Technology Office, through its **ENTERPRISE
PROCUREMENT** program, provides enterprise-purchasing opportunities to
state agencies and eligible cities and counties. Using this economies of
scale approach resulted in significant cost savings across state and
local agencies. For example, during the 2003-2004 fiscal year, the
Florida State Technology Office conducted enterprise procurement for
personal computers (PC) and realized savings of \$350 per PC. Agencies
purchased a total of 5,300 PCs, resulting in total savings of \$1.8
million.

Government officials must frequently evaluate their existing business
lines and reallocate resources as necessary. Over time, governments add
new business lines but often fail to take the time to review their
existing work and determine if it still has value. For example, to fully
realize the capabilities of GSA's USA Services Initiative it became
necessary to reallocate staff and funds, develop a clear course of
action and reshape the leadership team. Even with adequate funding, it
was critical to obtain buy-in from other agencies to ensure long-term
success. To accomplish this, senior GSA officials met personally with
the senior executives of all cabinet-level agencies. This has resulted
in increased collaboration and 22 working agreements.

In summary, it is essential for managers to take a broad approach to
funding IT and other projects. Governments should explore the innovative
funding strategies discussed in this newsletter in the hope that they
may benefit from the innovative approach taken by various government
entities across the country. Finding alternative sources of funding may
be the determining factor in implementing a valuable initiative that
will allow government to do what it should be doing -- serving the
people in the most efficient and effective manner possible.

**Agile Funding**

*By Michelle Hefner*

*Electronic Government and Technology Office, Office of Governmentwide
Policy*

*General Services Administration*

**Introduction**

In the U.S. Government, funding for new projects has always been a
challenge -- it is even more so now with tight budgets. At a time when
Federal agencies are being held to higher accountability for performance
and results, the complexity of meeting evolving needs and obtaining new
funding in the year when it is needed can seem overwhelming. Added to
this challenge is the need for more cross-agency coordination on
projects driven by the need for integration, economies of scale, and the
ability to be more agile in a rapidly changing environment. Agility
implies a need to have a more creative way to fund solutions than the
traditional two-year appropriated budget cycle. Various innovative
funding strategies can be employed, such as the use of working capital
funds, fee for service, share-in-savings, public-private partnerships,
and innovation funds. This article focuses on the use of innovation
funds.

**The Innovation Fund**

Similar to venture capital frameworks, the innovation fund model creates
a source of seed funds for new projects, usually pilot projects. The
fund can be created either through a direct appropriation or through a
fee against other expenditures of funds such as percentage of telephone
charges. Funds distributed can be provided as a loan or as a grant to
the requestor.

As a caveat, using this model can be politically sensitive. While there
are criteria for selection for projects, there usually is not the same
Congressional oversight provided for selection of initiatives. For
example, in FY 1995 the U.S. Information Technology (IT) Innovation Fund
was created as a guaranteed source for seed money to start innovative
initiatives. Money for the fund came from a one percent surcharge on the
Federal Technology Service (FTS) 2000 long distance telecommunication
service to agencies. Funds were loaned or granted based on proposals and
competition. Selection of projects and oversight of funds was achieved
through a joint committee representing the Interagency Management
Council and the Government Information Technology Services (GITS) Board.
There was always controversy about the fee charged to agencies on their
telecommunications expenses. The add-on fee also raised the price of
telecommunications at a time where the FTS had to maintain a competitive
position on the now non-mandatory telecommunications program. The
innovation fund was ended.

Directly appropriated funding from Congress for an innovation fund
became the next source of funds. The E-Gov Fund was created for new
initiatives that are cross-agency in nature. This fund has had its ups
and down. Authorized for \$345 million over six years, the fund has only
had \$3-5 million appropriated each year since its inception in FY02.
The E-Gov fund has provided seed funding to some of E-Gov initiatives
including Gov Benefits, FirstGov, Business Compliance One Stop,
E-authentication, and On-Line Rulemaking. Since the level of new funding
needed was not forthcoming, a new approach was sought.

The U.S. General Services Administration's Federal Supply Service
collects 0.75% as administrative overhead on all goods sold. Most of
that is used for personnel and management costs. But, since the supply
fund produces a revenue surplus that otherwise would be returned to the
Treasury each year, it was viewed as a possible source of funds. Using
the surplus funds requires Congressional approval. Therefore, GSA
requested approval for the E-Gov Fund to tap surplus revenues from the
GSA's Federal Supply Fund for as much as \$40 million to fund projects
in FY2005.

Some Federal agencies also have funding available for pilot projects
that have the potential for demonstrating positive return on
investments. For example, the Department of Navy (DON) eBusiness
Operations Office provides seed money for projects that use technology
innovation to improve business processes across the entire department.
Successful eBusiness pilot proposals are of limited scope, cost, and
duration in order to rapidly develop working prototype solutions.

Proposals are expected to address improving current DON business
processes and provide a positive return on investment (ROI). In order to
meet the criteria for selection, projects should address a business
problem, not duplicate another initiative underway in Navy and be
performed within specific schedule and cost parameters. A key to the
success of this effort is the formal process established to select and
control pilot projects. Decisions whether to fully implement the project
are based on the results of the pilot. The Department of Navy eBusiness
Office has an office dedicated to reviewing potential pilot projects and
providing seed money. They have a rigorous review process, including
established criteria, scripted interviews, senior level review and
approval, and a follow-up process to evaluate results. This is critical
to the viability of using innovation funds as means to apply creative
ideas to legacy or emerging issues.

**Advantages**

The advantage of innovation funding is that it provides an opportunity
to test the waters with a proof of concept. It also allows time to
develop a business case for the project and have more realistic return
on investment and analysis of alternatives data. If implemented
properly, the innovation fund can be self-funded, thus
institutionalizing the program and providing benefits over many years.
The innovation fund also provides an avenue to channel creative
approaches to addressing emerging issues. It can provide the agile
funding needed in a development cycle that does not necessarily mimic
the budget cycle.

**Challenges**

One of the benefits of innovation funding is that it can be
self-funding. This is also one of the challenges. Unless there is a
formal, enforceable agreement in place that provides for repayment of
future savings to the innovation fund, the replenishment of funds will
most likely not happen. Additionally, many of the benefits achieved
through the use of innovation funds avoid future costs rather than
realize real savings. Given this, there needs to be a steady source of
seed money available each year to provide to promising projects.

Sustained and consistent funding has always been the challenge to
developing a proof of concept and then institutionalizing the program.
Once a program is shown to have value, requesting new funds,
particularly in times of tight funding, is not likely to provide
sustained funding. Often funding projects requires existing processes to
be reengineered or abandoned, which can be met with resistance in
projects that have been ongoing for many years. Of course, much of this
looks to squeeze savings from existing appropriated funds. The problem
is that it takes investment upfront to realize savings down the road --
a long-range view not always readily accommodated in a budget-cutting
political environment.

**Summary**

The use of an innovation fund is a valuable tool that can help agencies
generate new ideas and approaches to addressing new or existing
challenges. For this funding option to be viable, it has to be well
managed, with a vigorous process in place to select projects and oversee
their implementation. Senior management level support and strong
management of the process will determine how successful an innovation
fund will be. Innovation funding provides an opportunity for agencies to
be agile and responsive in a fast moving environment.

*Ms. Heffner can be reached via e-mail at michele.heffner@gsa.gov or via
phone at (202) 501-0954.*

**An Innovative Funding Model for Selling Government Surplus Property**

*By Mitra Nejad*

*Federal Asset Sales Initiative, Public Buildings Service,*

*General Services Administration*

One of the early priorities of the Bush Administration was to generate a
quantum leap in the Federal Government's ability to provide services to
citizens using modern technology. The Federal Asset Sales (FAS)
Initiative, one of the initial 24 e-Government Initiatives borne from
the Quicksilver e-Government Task Force, developed an innovative pricing
strategy for selling surplus personal and real estate property that does
not require appropriated funds or any upfront investment from the
Government.

The Federal Government sells billions of dollars of surplus personal
property and real estate to the public each year. Currently, each agency
uses disparate methods to sell their assets, including various Federal
web sites to list their asset sale information online. This
decentralized environment is confusing to both citizens and businesses
that want to acquire surplus Government assets. Further, the process
often does not maximize sales proceeds since it does not always use
efficient marketplaces that increase competition among buyers.

The FAS Team crafted an end-to-end vendor-owned, vendor-operated
commercially available capability that leverages existing marketplaces
and provides services to facilitate the sale of Federal assets. This
innovative approach will utilize a "Service Aggregator" whose tasks will
include providing strategic sales advice and sales-related services. The
Service Aggregator will also tailor the offering to generate the maximum
return on assets for the Government. The FAS solution will enable the
Government to achieve the following five high-level program objectives:

-   **Objective 1**. Make it easier for citizens, businesses, and
    Government agencies to locate and acquire Government personal
    property assets: The FAS solution will allow citizens and businesses
    to simply and easily find assets for sale.

-   **Objective 2.** Increase net proceeds from asset sales: The FAS
    solution will leverage efficient marketplaces, provide a wide range
    of strategic, pre- and post-sale value added services, and determine
    the most effective online or off-line sales channel to maximize the
    net proceeds from sales of Government goods.

-   **Objective 3.** Decrease agencies' expenses related to asset sales:
    The FAS solution will leverage economies of scale to obtain a
    simpler, more cost effective approach for agencies to sell their
    assets.

-   **Objective 4.**Accelerate asset disposal cycle time: The FAS
    solution will allow agencies to sell assets quickly without
    compromising pricing performance.

-   **Objective 5.** Improve and streamline Government sales processes:
    The FAS solution will allow agencies to increase efficiency and
    sales turnaround times.

To meet these objectives, the FAS Team created an innovative pricing
structure that will enable the Government to receive services from the
most qualified vendor and to procure a solution that maximizes value for
both the Government and the citizens. The innovative structure comprised
of two pricing models: the "Incentive Aligned" model and the
"Fee-for-Service" model. These two models promote a thorough aligned
partnership between the chosen Service Aggregator and the Government,
while providing flexibility for the Federal agencies to choose and pick
from an available array of services through a pre-negotiated menu. The
pricing structure ensures that the Service Aggregator and the Government
share in any risks associated with the sale of Government assets and
that both parties have complementary enticement to maximize net sales
proceeds.

**Incentive Aligned Model**

Under the Incentive Aligned Model, the Government will receive the
amount of the sale proceeds from asset sales ("gross proceeds") less the
amount of approved costs of managing, marketing and selling the property
("direct costs"). Under this approach, the Service Aggregator each month
receives payment of a fee equal to the percentage of the net proceeds
(gross proceeds minus direct costs) for the preceding month for all
sales transactions completed. This model aligns financial incentives
since the Service Aggregator can only increase its compensation by
maximizing the net proceeds and increasing the corresponding payments to
the Government.

The Fee under the Incentive Aligned Model (generated by multiplying the
pricing percentage by the difference between gross proceeds and direct
costs) will provide compensation to the Service Aggregator to cover its
costs relating to administration and oversight, and marketing activities
conducted to secure the participation of federal agencies. The above
costs are separate and distinct from Deal Specific Costs, which are
included in direct costs (i.e., fully reimbursable to the Service
Aggregator), so long as they can be reasonably attributed to a specific
agency relationship. The Fee covers overhead, profit and the Service
Aggregator's costs of administration and management, and marketing its
services to agencies.

**Fee-for-Service Model**

Under the Fee-for-Service Model, the Service Aggregator is reimbursed
through a fee paid as a percentage of gross proceeds for marketplace
services, payment collection, and other required pre- and post- value
added services. Under this model, the Service Aggregator is offering to
agencies a "menu" of separately price services from which the agency may
choose. For example an agency may select only marketplace services,
while another agency may choose both value added services and payment
collection.

In closing, the FAS solution represents an incredible opportunity for
the Federal Government to generate additional revenue, while saving
millions of dollars by reducing agencies' asset sales expenses,
accelerating their asset disposal cycle times, and improving and
streamlining their sales processes. Under this innovative pricing
structure, which required no down payment for start-up costs, the
Service Aggregator will be reimbursed over time through the sale of
surplus Government assets. This pricing structure entices both the
Government and the Service Aggregator to maximize net sales proceeds,
and at the same time distributes the risks inherited with the sale of
Government assets to both parties. Taking advantage of such an
opportunity will generate great revenue for the Government, but also
make it easier for citizens and businesses to find and buy assets for
sale. Now, that's a win-win for the Government, citizens, and
businesses!

*Ms. Nejad can be reached via email at mitra.nejad@gsa.gov or via phone
at: (703) 872-8607.*

**Implementing Share-in-Savings As a Performance Based Contracting
Tool**

*By Kenneth J. Buck*

*Share in Savings Program Office,*

*General Services Administration*

*(published in Spring 2004 issue of Procurement Lawyer Journal)*

The passage of the E-Government Act of 2002 (Public Law 107-347) sent a
strong message to federal agencies and industry that performance based
concepts in procurement and program management should be the rule rather
than the exception. A key provision in Sections 210 and 317 of the Act,
entitled Share-in-Savings (SiS) Contracting, expanded the authority
established in the Clinger Cohen Act of 1996 and addressed many presumed
legal impediments.

Under the concept of SiS, agencies may launch or expand information
technology (IT) programs with little or no upfront funding, while
linking payment to performance. Payment to a contractor is made from
future savings (or revenue) achieved by improving the efficiency and/or
effectiveness of government processes. Since payment is only received
based on achieved benefit, the risk to government is minimized. By
amending Title III of the Federal Property Act, as codified in 41 USC

266a (b) (3), Congress clarified that an agency can enter into a
contract without funds \"made specifically available for the full costs
of cancellation or termination of the contract.\" As such, any lingering
doubts about violation of the Anti Deficiency Act were satisfactorily
addressed.

In partnership with the Council for Excellence in Government, GSA's
Share-in-Savings Program Office held a widely attended Summit on January
22, 2004. Congressman Tom Davis (R-VA), an outspoken proponent of the
SiS concept, served as the keynote speaker. In response to his
challenge, several agencies including EPA, Navy, DHS, Transportation and
the Interior

Departments have launched initiatives ranging from telecom recovery
audits to large-scale systems consolidations. In addition, GSA's Program
Office has overseen the promulgation of FAR policy, the posting of
e-tools to help with business case development and proposal evaluation,
the development of a two-day training course, and the establishment of
Blanket Purchase Agreements as a means to pre-qualify industry partners
that have experience with implementing programs under the SiS concept.
Progress in each of these key areas can be found at:
http://www.gsa.gov/shareinsavings

The SiS concept is not new to government. It has been applied for
decades to energy savings performance contracts and through value
engineering provisions. However, those applications are somewhat less
complex than in the information technology environment since the
baseline costs are generally more clearly identified and progress
somewhat easier to measure. In energy savings contracts, there are often
meters, which offer objective and credible baselines against which to
measure accrued savings or revenue. In the value engineering arena, the
contracts are already established which allows for a more credible
parametric baseline analysis based on historical data.

The application of SiS to IT related programs, while widespread at the
state and local levels, has been limited at the federal sector. One of
the chief reasons is the federal government's inability to deploy
reliable cost accounting systems, which makes it difficult to formulate
credible cost baselines. According to a recent GAO report (January
2003), as well as interviews conducted with members of the International
Technology Association of America (ITAA) , there are additional reasons
for the slow adoption of performance based type concepts such as SiS.

These include: lack of senior leadership at OMB and within agencies to
engage in a concept that can create "off budget" funding sources, little
understanding of the nuances of incentive/performance based contracting
by government acquisition officials, and the resistance on the part of
agencies to allow industry access to key documents and information.

Many government procurement officials were found to be reticent to
engage prospective contractors as equal partners, choosing instead to
follow a traditional "arms length" strategy. This mode of behavior has
proven to serve as a disincentive to potential contractors to invest in
programs where there is insufficient data to inform a valid return on
investment calculation. In addition, it has bred an environment of
mistrust, the antithesis of the type of relationship that is needed to
successfully implement SiS contracting.

Until recently, the only application of the SiS concept for a major
system was accomplished by the Department of Education. In this now
famous case study, Education consolidated several legacy systems under
their Student Financial Aid program. The success of this program
validates the findings of GAO and ITAA that in order to successfully
apply the SiS concept, agencies need to have engaged and enlightened
senior leadership, a willingness to share detailed program information
with the contractor, and a culture that accepts the contractor(s) as an
equal partner with a voice in making difficult program related
decisions.

At Education, the contractor agreed to finance the development and
implementation of a new and complex system through replacement and
consolidation of antiquated legacy systems. In return, the contractor
was given a seat at the Steering Committee table, which traditionally is
comprised only of senior government executives that oversee the
management of a program. As a member of the Steering Committee, the
contractor was given access to government baseline data and budget
information that traditionally is not shared with industry.

The end result was that the contractor recovered its costs through the
savings realized by more efficient processes, plus a profit commensurate
with the high risk. This concept proved to be a natural incentive for
the contractor to manage its costs and produce a quality solution in the
shortest possible time. In essence, this particular situation has proven
to support the premise that SiS is a prime example of performance based
contracting.

Because of recent changes in leadership at OMB in the procurement and
E-Gov areas, limits in funding by Congress to key programs, and the
creation of supporting e-tools and policy by GSA, the concept of SiS is
gaining more support and interest. OMB has taken an active role in the
promotion of the concept through the development of a proposed FAR Rule
for SiS Contracting. Further, GSA's Office of Governmentwide Policy has
established a Share-in-Savings (SiS) Program to conduct additional
research, develop tools, and promote the concept governmentwide.

In addition to more supportive leadership, OMB's insistence on
performance based budgeting through the A-11 process has resulted in
more rigorous management and reporting of program costs by agencies. An
unforeseen byproduct of this process, which has been in effect since FY
2000, is that historical data is now available to help establish
credible baseline data. Having a credible baseline against which to
measure results is a key factor in attracting investment dollars from
industry.

ITAA is a leading trade association representing the broad spectrum of
the world-leading U.S. IT industry.

*Mr. Buck can be reached via email at kenneth.buck@gsa.gov.*

**Enterprise Procurement**

*By Simone Marstiller*

*State Chief Information Officer*

*Florida State Technology Office*

Until recently, the State of Florida employed a decentralized process
for purchasing information technology (IT) products and services and
each agency was responsible for its own technology procurement. As a
result of this practice, the state was not fully leveraging its buying
power on hardware and software purchases.

Through enterprise procurement, the Florida State Technology Office
(STO) represents the State of Florida as a single customer in the
purchase of IT products and services to obtain the lowest cost and the
highest quality.

The STO provides enterprise purchasing opportunities to state agencies
and eligible cities and counties, resulting in significant cost savings
across state and local agencies.

For each enterprise purchasing opportunity, the STO:

-   Works with agencies to identify standard configurations for selected
    technology;

-   Develops ongoing communications regarding procurement model to
    continuously improve the process;

-   Identifies the preferred frequency of enterprise purchasing of IT
    hardware; and

-   Leverages the buying power of the State of Florida to effectively
    reduce the cost of products and services, while also reducing the
    order cycle time.

The success of the STO's enterprise purchasing opportunities is
determined by the impact on the overall long term goals of each agency,
earning the active support of each state, local and eligible
municipality, and combining people, power and technology.

During the 2003-2004 fiscal year, the STO conducted an enterprise
procurement for personal computers (PC). Through this enterprise
approach, the State realized a savings of \$350 per PC. Agencies
purchased a total of 5,300 PCs, resulting in a total savings to the
State of Florida of \$1.8 million.

The STO continues to develop cost savings initiatives through new
technologies, the negotiation of contracts, and enterprise purchases. In
addition to the enterprise PC purchase, the STO also established an
Enterprise Licensing Agreement with Microsoft that saved the state \$4.2
million in software licensing costs.

In addition, the STO constantly strives to provide the most value to its
customers. Thus, the STO is currently working with state agency and
local government chief information officers to identify the following:

-   How often it should process Enterprise Request for Quotes;

-   Whether its current needs analysis spreadsheet includes sufficient
    criteria to accurately identify each agency's information technology
    needs;

-   Whether the STO provided satisfactory customer service on previous
    Enterprise Request for Quotes;

-   Whether when ordering, the agency experienced any problems with the
    vendor\'s website; and

-   How the STO can streamline the aggregate purchasing process to
    better serve its customers.

The STO was created by Governor Jeb Bush and the Florida Legislature in
2000. Its mission is to collaborate with state and local governments to
optimize existing services and enable new services, new growth, and new
successes for the citizens and businesses of Florida.

*For additional information on the STO and enterprise procurement,
contact Simone Marstiller, State CIO, Florida, at
simone.marstiller@myflorida.com or visit http://sto.MyFlorida.com.*

**Funding Texas Online**

*By Vidhya Sriram*

*Policy Analyst,*

*Department of Information Resources,*

*TexasOnline Division,*

*State of Texas*

In 1999, the state legislature mandated the creation of an e-government
portal for the State of Texas. As a result, TexasOnline was created and
in four short years has grown to become one of the emerging leaders in
e-government in the country. What makes the progress of TexasOnline so
outstanding is the fact that no General Revenue funds were used.
Budget-tight states around the country have used a variety of methods to
fund their state portals, including using tax dollars and selling public
data. TexasOnline is built on a self-supporting model. Our private
partner is investing in the portal infrastructure costs, estimated at
\$26 million, and is recovering these costs through a combination of
user fees, subscription fees, and premium service fees. The state
receives 10% of the gross revenue generated by applications. After the
initial costs are recovered, the state's share will jump to an
additional 50% of net revenues.

Among the funding options that were chosen were the use of user fees --
fees charged to the user on an individual transaction basis,
subscription fees -- fees charged to an entire population of users
regardless of whether they use the online service, and hosting and
service fees -- annual fees charged for application development,
hosting, or ongoing maintenance and support. Funding online applications
using fees enables governments to implement online initiatives without a
significant impact to internal budgets.

In assessing the need to create an online application for a government
entity, TexasOnline works with these entities to develop a business case
for each individual application. Once the business case is developed,
TexasOnline helps the government entity determine an appropriate funding
mechanism for that government entity by anticipating the potential
revenues that can be generated from the online channel.

The benefits to government entities using the TexasOnline model are
numerous. The applications on TexasOnline have been provided without the
use of tax dollars. Government entities are able to provide online
services on TexasOnline at little or no cost. Government entities that
do not have IT staff capable of building and maintaining online
applications can use the skilled TexasOnline staff. Government entities
now have the ability to implement online initiatives with the security
and high quality of service that they would not otherwise be able to
afford. In addition to being able to provide online services, agencies
and local governments participating on TexasOnline are provided a host
of added benefits such as telecommunications services, access to call
center operations, strong web site security, 24x7 availability, a common
payment system, translation services and outreach and marketing
services. Prior to the creation of an e-government portal in Texas, most
government entities in the state were unable to provide online
applications nor the security and level of service that they can now
provide through TexasOnline.

The TexasOnline funding model is designed to generate revenue for the
state, and allows TexasOnline to be self-supporting while providing
additional resources for developing more services online. TexasOnline's
mission is to provide low cost solutions for government entities wanting
to place services and applications online. The self-supporting model
employed by TexasOnline to fund online initiatives has enabled
government entities in the State of Texas to place applications and
services online when no other funding mechanism was available. What has
resulted from this unique funding approach is a state portal that is one
of the emerging leaders in the arena of e-government.

Texas is unique. There is no state income tax so; citizens are often
charged a fee for government services. Therefore, although citizens are
charged a fee for many of the services on TexasOnline, citizen responses
to TexasOnline are overwhelmingly positive. Surveys conducted on
customer satisfaction indicate that over 98% of respondents are
satisfied with the level of service they found on TexasOnline. Indeed
this high level of satisfaction with TexasOnline's services has remained
consistent as is further evidenced by the 96% of respondents who stated
that they would recommend the services on TexasOnline to others.
Government entities are also satisfied with being able to provide online
services on TexasOnline. Surveys of agency and local government
satisfaction with TexasOnline find that as a result of placing services
online, government entities reported increased efficiency in a number of
areas including; faster processing of transactions, improved turnaround
time, improved accuracy of information delivered to the government
entity, and streamlining of operations. As a result of these positive
outcomes, almost 80% of all government entities currently using
TexasOnline are considering expanding the types of services they provide
online. These results are a true testament to the value that TexasOnline
brings to the State of Texas.

*For more information, contact Vidhya Sriram, Policy Analyst Department
of Information Resources, TexasOnline Division at
vidhya.sriram@dir.state.tx.us.*

**New Trends and Approaches for State IT Funding**

*By Mary Gay Whitmer,*

*Issues Coordinator -- Digital Government,*

*National Association of State Chief Information Officers*

The National Association of State Chief Information Officers (NASCIO)
recognizes the need for innovative funding approaches to fund IT
projects and systems that provide citizens with better, quicker, and
more efficient services. To inform its members about new funding
techniques, in

November 2003 NASCIO published *Innovative Funding for Innovative State
IT: New Trends and Approaches for State IT Funding*. The publication
includes the results of a survey conducted by NASCIO's Corporate
Leadership Council (CLC) that asked states what types of innovative
funding models they use for technology projects. Based upon the survey,
one or more states are using the following innovative funding models:

-   Bonds

-   Public-Private Partnerships

-   Performance-Based Contracting

-   Sharing Services

-   Investment Funds

-   Leasing & Financing

-   Certificates of Participation

-   Purchasing & Procurement Strategies

-   Outsourcing & Managed Services

-   Benefits Funding

-   Budgeting & Appropriation Strategies.

Among the survey respondents, the most popular innovative funding models
were Budgeting &

Appropriation Strategies, Purchasing & Procurement Strategies,
Outsourcing & Managed Services, and Leasing & Financing.

In addition to identifying trends in states' use of innovative IT
funding models, NASCIO's publication also describes each funding model
and provides nine illustrative case studies for each model's
implementation.

**Trends in Innovative Funding Models:**

Based upon the survey, one overarching trend became apparent:
**Successful innovative funding models enable states to deliver savings,
improve services to citizens, and, in some cases, generate new revenue
streams.** Other trends NASCIO identified include:

-   **The use of innovative funding models has grown out of a need to
    fund large, multi-year, multi-agency state IT projects.** Based upon
    the nine case studies contained in its publication, NASCIO
    discovered that the implementation of innovative funding models has
    grown out of states' need to pursue large IT projects that could not
    otherwise be adequately funded through state general fund
    appropriations. For example, Tennessee identified a need for
    short-term funding for IT projects that would serve as the
    infrastructure for providing services to citizens. To address that
    need, the state created an investment fund from which short-term
    loans could be made to state agencies to finance large IT projects.

-   **Tight budgetary times drive innovative funding solutions:** During
    times when budgetary resources are limited, states look to fund
    technology through less traditional methods. NASCIO's innovative
    funding publication details how Massachusetts used funding through a
    bond issuance during the recession of the early 1990's in order to
    move technology forward even during difficult economic times.

-   **States are increasingly turning to innovative funding models as an
    alternative to financing projects through state general funds:** By
    focusing on alternative funding methods, state CIOs are seeking to
    take IT projects out of the highly competitive quest for state
    general fund appropriations, while ensuring the vitality of
    multiyear IT projects and, in some cases, creating new revenue
    streams. Arizona's new tax system used the benefits that accrued
    from the system's implementation to fund the project, which actually
    created a new revenue stream for the state.

-   **Many state innovative funding models involve inter-agency
    collaboration as a means of addressing state budgetary challenges:**
    In the face of the many state budgetary crises of the past several
    years, agencies are pursuing inter-agency collaboration as never
    before. Minnesota's use of the sharing services model exemplifies
    this trend. The state is using that model to bring agencies together
    in order to determine how they can share their best practices and
    collaborate on consolidating and integrating state IT
    infrastructure, business processes and applications development.

-   **Business cases are increasingly used to ensure the vitality of
    innovative funding models:** While some funding models outlined in
    NASCIO's publication do not require formal business cases before
    implementation, many of them use business cases to ensure that funds
    are distributed to projects that will benefit the state and its
    citizens. An important point to go along with this trend is that,
    just because a project can obtain funding via an innovative funding
    model, it does not necessarily mean that funding should be devoted
    to that project. State CIOs are tasked with the continuing
    responsibility to ensure that each project initiated through an
    innovative funding solution links back to the state's strategic
    direction as well as enterprise cost savings and/or efficiencies.

-   **Stakeholder trust is a key element for the facilitation of
    innovative funding efforts:** In order to successfully implement
    most innovative funding models, states must forge strong, trusting
    relationships with stakeholders. This is particularly important with
    funding models that provide increased flexibility for the
    distribution of funds. For implementation of the public-private
    partnership model, stakeholder trust is imperative. With Texas'
    public-private partnership to create an Internet portal, the state
    had to trust in the vendor's ability to deliver results, while the
    vendor had to trust in the state's ability to balance agencies'
    Internet portal needs with the vendor's desire to obtain its
    anticipated profit level. Good governance procedures can help to
    build stakeholder trust by facilitating communication, coordination
    and oversight.

-   **An appropriate governance and oversight structure can help to
    foster stakeholder trust by ensuring an innovative funding model's
    integrity:** Regardless of the funding model utilized, states must
    establish a governance process to ensure that communication takes
    place, results are documented, and the anticipated value is
    delivered to the end user. The governance models used by states can
    vary from a separate oversight authority for a particular project to
    oversight by a state IT council or even by the state legislature.

**Key Elements for Pursuing State IT Funding Innovations:**

*NASCIO's Innovative Funding for Innovative State IT* provides case
studies from nine states to illustrate in a realistic way how innovative
funding models can be implemented. The publication also includes
descriptions of each funding model and each model's general
requirements, benefits, and transferability. The appendix includes
implementation checklists for the funding models and the complete
results of the NASCIO survey.

Distilled from case studies and other research, the following are key
elements that factor into the level of project success that can be
achieved through the use of innovative funding models:

-   Fostering a high degree of trust among stakeholders

-   Building better business cases that support IT projects and the
    innovative funding approaches that make them possible

-   Developing good state IT governance and project management practices

-   Adhering to project performance measures

-   Streamlining the state budget process to allow for increased
    flexibility for funding cross-agency projects

-   Improving state accounting systems to provide a clear picture of the
    savings that state IT can create

-   Streamlining the budget appropriations process

-   Encouraging increased flexibility in the use of federal funds to
    avoid the construction of IT systems that are not interoperable

-   Educating state and federal government leaders about the importance
    of funding innovations for facilitating state technology efforts.

*For More Information regarding "Innovative Funding for Innovative State
IT" is available for download by NASCIO members and purchase by
non-members at: http://www.nascio.org/hotIssues/funding/.*

*If you have questions about this NASCIO publication, please contact
NASCIO Issues Coordinator, Mary Gay Whitmer, at mwhitmer@amrinc.net or
(859) 514-9209.*

**Michigan Wi-Fi Funding Model**

*By George Boersma*

*Director of Office of Technology Partnerships*

*Michigan Department of Information Technology*

**Opportunities and Foundation for Innovation**

Michigan Wi-Fi (MI Wi-Fi) is a collaborative project between the
Michigan Department of information Technology, Department of Natural
Resources, Michigan Department of Transportation, Travel Michigan, SBC
and Intel to provide wireless Internet access to business traveler,
truckers, boaters, campers and tourists in Michigan. It is a model for
leveraging leading edge technology capabilities and opportunities to
meet state policy and strategic goals, improve customer services,
minimize demands upon the state budget and other resources, and
potentially bring earnings to the state.

**Leveraging Opportunities for Funding Innovation**

Emerging or new technologies, particularly in a partnership context, are
fertile ground for innovation in project design, management practices,
service potential and also funding mechanisms. Mobile and wireless
services are a prime example. They are among the leading emerging
technologies. Almost half of the 30 dominant technologies assessed in
the 2003 Gartner Hype Cycle are in the mobile or wireless sector. By
their nature, state level public mobile services ultimately cover most
or all of the state, and involve a wide range of customers as well as
service providers. The range of project design, management and funding
options is much broader than for most legacy applications and services.

**Foundation for Innovation**

Additional impetus to innovation is given by a Michigan Department of
Information Technology (MDIT) technology, innovation and management
framework that helps to identify and build solutions based upon existing
strengths as well as partnered opportunities. Some of the strengths and
capabilities that support the MI Wi-Fi project design and its innovative
funding model include:

**Assessment of Funding Model Options** - MDIT budget and planning staff
have been conducting a systematic assessment of funding model options.
This assessment has helped identify some of the mechanisms used for MI
Wi-Fi. In addition, Michigan already has a precedent in innovative
funding approaches in the wireless arena, the Antenna Site Project. This
is a partnership with AAT, with the state receiving fees for leasing
property (State lands, right of ways and buildings) for placement of
wireless antennas.

**Partnerships** - MDIT has created an Office of Technology
Partnerships, which facilitates joint IT strategies and initiatives with
the public and private sectors. This Office helped design, develop and
negotiate the MI Wi-Fi project.

**Wireless** -- Michigan has historically strong commitment to wireless
service, including innovative funding approaches.

-   **Wireless Infrastructure:** Michigan is piloting the deployment of
    wireless infrastructure components to the state telecommunications
    network, providing services to local area networks and to support
    disparate client services like PDA's, tablet PC's, cell phones and
    other mobile devices.

-   **800 MHz:**The Michigan Public Safety Communications System (MPSCS)
    is one of the first and most comprehensive and advanced 800Mhz
    systems. The system is being upgraded to enable transmission of data
    in a mobile environment.

-   **Freedom to Learn (FTL):** FTL is a student, wireless laptop
    project involving a total of 20,000 students in 174 buildings by the
    fall of 2004

**MI Wi-Fi Project Description**

MI Wi-Fi is a collaborative project between the Michigan Department of
information Technology (MDIT), Department of Natural Resources (DNR),
Michigan Department of Transportation (MDOT), Travel Michigan, SBC
(FreedomLink) and Intel to provide wireless Internet access to business
traveler, truckers, boaters, campers and tourists. In addition MDOT will
test the use of Wi-Fi at the rest stop site for management of internal
field construction operations. In MDIT the Office of Technology
Partnerships coordinates the project.

The Michigan Wi-Fi sites will have installed IEEE 802.11b Wireless
Standard networks with "access points" that can be used -- usually
within approximately 300 feet of the actual access point. Users must
have their own equipment, wireless card and software. There is selected
free information that can be accessed on road conditions and other
travel-related information that the state of Michigan provides from its
own public websites. To have complete access to the Internet, users must
be SBC FreedomLink customers.

The first deployment will be at ten sites: five state park campgrounds,
two public marinas, two state welcome centers and one state rest area.
Additional deployment will be determined this fall, based on the
performance at these locations. Future applications and options under
consideration include:

-   Potential revenue share opportunities for the state, with additional
    deployment.

-   Additional agency and public safety applications.

-   Local government collaborative opportunities

**MI Wi-Fi Funding Model**

Michigan is using a hybrid approach, combining several funding
strategies, which collectively have the effect of eliminating GF /GP up
front investment requirements as well as offering potential for future
state earnings. This project is a part of both the Office of Technology
Partnerships project folio as well as the MDIT funding model assessment
and redesign (A systematic assessment of IT funding options, such as
those identified by NASCIO, Center for Digital Government and others).

The basic model is a public / private partnership consisting of the use
of state assets, state in-kind services, grants, one-time donated
equipment and services, and use of fees. Marketing and promotion will be
provided by the state as well as the private sector.

> **State Assets:**The locations (Rest areas, information centers,
> campgrounds, and marinas) are being provided by the state.
>
> **State in-kind Services:**The state will promote the service in
> tandem with the private sector.
>
> **Grant:** Intel has provided a grant to support promotion of the
> services.
>
> **Infrastructure:** SBC will install the infrastructure at each of the
> ten sites at no cost to the state.
>
> **Fees:** Customers have to pay a fee or obtain a subscription in
> order to obtain the full range of Internet services. In the future,
> the state may obtain a portion of these fees.

**Prognosis and Benefits**

MI Wi-Fi is expected to receive strong and rapidly growing customer
support. According to a recent Forrester assessment (April 2004), mobile
technology device ownership is pervasive among both business and leisure
travelers. Nearly all own a mobile phone and three in 10 leisure
travelers own a laptop computer. Travelers make Wi-Fi connectivity
primarily via their laptops, most bearing the cost personally.

In the 2004 Cyber-state 2004 Survey of Michigan Residents\' Use of
Information Technology (May 2004), respondents placed a high or very
high priority on increasing wireless access at businesses (49 percent),
public sites including government offices (50 percent), and at common
travel locations such as airports and rest areas (57 percent).

The MI WI-FI benefits include:

-   State Policies and Priorities: Support state and MDIT goals and
    policies

    -   State IT Plan Goal 1: Expand Michigan services to reach anyone
        at anytime from anywhere

    -   State IT Plan Goal 2: Transform Michigan services through
        sharing and collaboration.

-   Economic Development

    -   Promotes broadband, including wireless, development in the
        state. This supports both the Michigan Broadband Development
        Authority (MBDA) as well as MDIT's goals, part of the link
        Michigan strategy.

    -   Support economic development, tourism, boating industry and
        others. This supports Department of Labor & Economic Growth
        (DLEG) and Michigan Economic Development Authority (MEDC) goals.

-   Citizen Services: Provide mobile services to citizens, including
    tourists, boaters, campers, businesswomen/men. Keep travelers
    connected in their increasingly Web-centric business and personal
    lives.

-   Agency Business Processes: Supports mobile, offsite teleworker
    services for MDOT. Enables workers to download reports and data
    without returning to the office

-   Incentives and Performance: Maximizes incentives and performance,
    producing the greatest benefits possible for all partners.

-   Risk Management: State project funding risk is shifted and reduced.
    Risk is shared with the private sector.

-   Budget and Revenues:

    -   Eliminates GF/GP up front investment requirements

    -   Offers potential for future state earnings, creating a new
        revenue stream.

*For further information, please contact George Boersma, Director of
Office of Technology Partnerships, Michigan Department of Information
Technology, at BoersmaG@michigan.gov.*

**Earth 911**

*By Dan Gillmor*

*San Jose Mercury News, Calif. Knight*

*Ridder/Tribune Business News*

Every Monday morning, volunteers from the Surfrider Foundation, an
environmental group, collect water samples from San Mateo County's
beaches and send them on to a laboratory for testing. By Wednesday,
Carolann Towe, a parttime county employee and foundation volunteer, has
the results.

Towe then logs into a Web site called Earth 911 (www.earth911.com),
where she updates the county\'s beach information, noting when bacteria
counts have risen above or fallen below levels considered risky to
swimmers and surfers. It takes her five or 10 minutes a week, she says.

What's the result of this effort? County residents or visitors can check
the site and, using an interactive map and other tools, quickly check
the status of the beaches.

Across the United States, government workers and volunteers are feeding
all kinds of environment-related information into Earth 911, an
environmental clearinghouse of unparalleled scope and value, serving
both governments and communities.

With the data sent by governments and volunteers, plus its own combing
of databases, Earth 911's staff members massage the data, then arrange
it so the public can use it. The result is a highly centralized core,
yet relying on a thoroughly decentralized data-collection system that
feels utterly local to the person looking for information.

When you visit the site's home page and type in your ZIP code, you'll
find local information for that community from a variety of federal,
state, local and corporate sources -- everything from what to do with
solid waste to beach reports to educational activities for the
environmentally conscious. Think of it as a personal environmental
portal.

Earth 911 is a "public-private partnership that happened unilaterally"
\-- that is, at the instigation of a single motivated citizen. That
citizen is Chris Warner and he has been working on this project for
about 15 years from his base in suburban Phoenix. Warner calls himself
the "chief cat herder" of the operation. He started with data from
Arizona, but has worked tirelessly to get information from and about the
more than 13,000 political jurisdictions --- states, counties, cities
and towns --- in the United States.

Today, with donations from companies and grants from governments, he and
his staff of about 30 have done what governments have not: created a
one-stop shop for people who don't care what agency has responsibility
for something. They just want to get information and live in more
environmentally responsible ways.

Earth 911 isn't the only site providing valuable environmental
information, of course. Scorecard

(www.scorecard.org) collects and shows what pollutants are being
released into a community (sorted by ZIP code) and by whom. Another
great site, the California Coastal Records Project
(www.californiacoastline.org), offers an aerial photographic survey.

When you visit the Earth 911 site and put in your ZIP code, you don't
see a list of agencies. You see a list of topics \-- and only when you
drill deep into the site do you ever learn which, if any, government
agency is providing the service. Earth 911 is far more comprehensive
than many if not most government sites when it comes to telling people
about all waste-disposal options.

Many governments do try to provide relevant information. San Mateo
County, for example, puts the beach data on its site. But for the
citizen, it's much easier to go to a single portal than root around on
various government sites.

That approach has helped Earth 911 curb unnecessary duplication. At one
point, Warner told me: "There were 248 oil recycling hotlines in
California, 52 in Los Angeles County alone. Now there\'s one." And Earth
911 provides it.

The Earth 911 site has been working on a variety of projects that push
the boundaries of environmental service. It offers e-mail and phone
alerts as well as hot lines.

Warner and his team have replicated the system in a pets-oriented site
called Pets 911 (www.pets911.com), again collecting massive amounts of
data and massaging it so that it's locally relevant. News organizations
have started using Pets 911 on their Web sites, a trend Warner is
thrilled to support. They've also just finished an "Amber Alert" support
project to make the new national missing-child system work more
efficiently. The possibilities are almost endless.

"There are hundreds of uses for this medium we\'ve built" Warner said of
the open-source software platform his team has created. "We want it to
be plagiarized. That\'s the best thing that could happen."

*Dan Gillmor's column appears each Sunday and Wednesday. Visit Dan\'s
online column, eJournal (www.dangillmor.com/blog). Email
dgillmor@mercurynews.com; phone (408) 920-5016; fax (408) 920-5917.*

**Service Contract Saves US Government \$140 Million in the**

**Arctic Circle**

*By Dan McMahon and Hannon Armstrong*

On a remote island where polar bears outnumber the people, two
governments are utilizing a unique funding strategy to put their budgets
to better use. By converting expensive annual operating payments for
rented communications satellite capacity into service contract payments
for a next generation data communication system, the US Government was
able to save \$140 million over the 20 year contract term, while it
improved the system capacity and reliability. Hannon Armstrong, an
Annapolis, Maryland, financial services firm structured and funded the
transaction.

Located in the Arctic Circle, more than 600 miles off the northern coast
of Norway, the Svalbard island chain is home to a satellite facility,
called SvalSat, operated by the Norwegian Space Centre (NSC). Through an
Intergovernmental Agreement between the United States and the Kingdom of
Norway, NSC provides critical infrastructure needed for research being
conducted by various U.S. agencies. SvalSat hosts one command and data
acquisition antenna owned by NASA and a new antenna owned by the
National Polar-Orbiting Environmental Satellite System

Integrated Program Office (NPOESS IPO), which includes NOAA/Department
of Commerce and

the Defense Department.

SvalSat plays a vital role for NASA and NOAA weather and earth science
programs by acting as a receiving point for polar-orbiting satellites to
download data collected. SvalSat's importance to

NASA and NOAA is based upon its unique geographic location. Although
there are similar receiving stations in Fairbanks, Alaska and Wallops
Island, VA, these stations have blind spots that prevent them from
seeing the satellites\--and downloading their data---on three of their
fourteen daily orbits. Located just 765 miles from the North Pole,
Svalsat's antennae have direct visibility to polar-orbiting satellites,
allowing them to download data every time they circle the Earth.

Once the data is downloaded to SvalSat, the information needs to be
transmitted to the U.S. Until last year, this was accomplished by
transmitting the data via commercial communications satellite links.
However, this process was inefficient and costly.

NSC developed a plan with the U.S. agencies to provide advanced
telecommunications services from Svalbard to the Norwegian mainland. By
connecting the island to the Norwegian mainland via a 621-mile long
fiber-optic cable, data downloaded from the satellites could be
transmitted to the United States through undersea trans-Atlantic cables.
The new fiber link is being used to transmit half a terabyte of data a
day from the SvalSat antennae to Norway and the U.S.

In addition to boosting data transmission rates, the new fiber optic
cable will help the agencies reduce their costs for using the facility.
Prior to laying the fiber, NASA and NOAA each were scheduled to spend
approximately \$6 million a year to transmit data from Svalbard to the
United States using the communications satellite links.

The challenge was how to pay for this worthwhile project. Neither the
NSC nor any of the U.S. agencies had appropriations to pay for the
approximately \$40 million capital cost required for the service
contract. Conversely, none of the potential contractors were willing to
accept annual payments in exchange for implementing the project. The
solution was to adopt a third-party funding approach to finance the new
asset.

After Tyco Telecommunications won the bid conducted by NSC, it partnered
with Hannon Armstrong, which provided funding for the project. In
exchange for providing the up-front capital for the project, the
financial services firm will receive annual service payments from each
of the U.S. agencies for the next five years. After that time, the
agencies will have basically free use of the service until 2030.

The financing illustrates how the government can utilize private capital
to save the public sector a lot of money while upgrading its service.
NASA and NOAA will each realize an immediate \$1 million per year cost
savings by switching service to the fiber optic cable, instead of
commercial satellite data transmission. After the initial 5-year period,
the agencies will no longer owe service payments and will each be able
to realize full savings for the next 22 years. In total, the unique
financial structure of the service contract will save the U.S.
government at least \$140 million.

The advantages for the U.S. government were clear as agencies are able
to access a critical service without seeking new Congressional
appropriations. *For additional information, contact Dan*

*McMahon at mcmahon@hannonarmstrong.com.*

**The Invest to Save Budget (ISB)**

*Michael Thornton, Head of ISB Unit*

*HM Treasury, United Kingdom*

The United Kingdom's Invest to Save Budget (ISB) (http://www.isb.gov.uk)
aims to transform the delivery of public services by promoting
innovation and encouraging different parts of the public sector to work
together. Since 1998 it has provided funding for projects involving two
or more public bodies that test innovative methods of service delivery,
often at the pilot stage.

The programme is run by Her Majesty's Treasury, working in partnership
with the Cabinet Office.

We noticed that the UK public sector was good at doing traditional
things in a traditional way, but was missing out on some opportunities
to innovate, particularly when they involved working with other
government agencies. Often this was because grasping such opportunities
involved taking risks. We saw that there was a case for supporting
risk-taking on selected projects. If projects were successful they could
be copied, at significantly less risk, to improve efficiency and deliver
better outcomes across the public sector. If they were not, then we
should learn the lessons and not repeat the mistakes. The fact that the
benefits of successful innovation did not just accrue to the original
partners was a strong argument for providing an additional,
cross-government, source of funding.

Since its launch, the ISB has funded over 400 partnership projects at a
cost of some £380 million. Projects range in size from £18,000 to £80
million. The ISB stage of a project lasts for up to 3 years, during
which time it should work to provide evidence of long-term viability.
This means that the projects need strong support locally and at a
national policy level if the full benefits of the initial investment are
to be realised

Although the ISB was not started as a technology fund, its aims have
much in common with the philosophy of e-government. It is not surprising
that Information Technology features heavily in its portfolio: from
smart cards to digital signatures and from opening new electronic
services to the re-engineering of old ones. We have worked closely with
our e-Envoy's office in assessing projects to go forward.

Exemplary e-government projects include:

• **National Land Information Service** (http://www.nlis.org.uk)**:**
House buyers in England and Wales conduct searches, before buying a
property, to ensure that there are no problems with the purchase. The
problem is that land and property information is held by 425 local
authorities and many other agencies. The National Land Information
Service (NLIS) is an online service that provides 'onestop' electronic
access to land and property information in England and Wales. The system
has processed over 2 million searches to date, with a fastest response
time of 9 minutes compared with days, or even weeks, by the traditional
methods. After only two years, over one third of property searches in
England and Wales are done through NLIS. The UK Government has licensed
three private sector 'channels' to develop and operate NLIS web based
front ends. Around half of all legal firms have signed up to these web
based retail channels.

-   **Info4local** (www.info4local.gov.uk)**:** Good communication
    between the tiers of government is essential. Info4local provides a
    gateway for local government employees in over 380 local authorities
    across England to get quick and easy access to information they need
    on things like policy initiatives, new regulations and funding from
    central government departments and agencies. Over 50 departments and
    agencies regularly contribute data to the site. The site has
    searchable archive with summaries of more than 8,000 publications,
    links to over 1,300 related sites and covers the week's press
    notices. 34,000 people subscribe to the twice-daily e-mail alert
    service, which sends requested information straight to their
    desktops. Research has found that people in local authorities are
    saving an average of 45 minutes to 1 hour per week by using
    info4local for their work purposes.

-   **Time for Citizenship** (www.timeforcitizenship.com)**:**
    Technology also enables us to share information about the world and
    our responsibilities towards other people. Timeforcitizenship.com is
    used to teach primary schoolchildren in the UK and Ireland aspects
    of citizenship that will enable them to lead more fulfilling
    civilised lives, educating them to respect themselves, others and
    the environment. It enables teachers in primary schools to share
    exemplars of best practice by discussion on the Internet and builds
    a library of tried and tested lesson plans. The website also offers
    guidelines to Police Liaison Officers for their visits to schools
    and hosts a central bank of excellent initiatives, already in
    existence in many Police Districts. The site has strong support from
    across the political spectrum. It has established links with schools
    in many countries.

E-Pesticides (http://www.pesticides.gov.uk/home.asp): It is important
that pesticides on the market are licensed and controlled. The original
pesticide approval process relied on paper 'Notices of Approval' which
were complex and time consuming. The project aimed to replace this with
a more efficient electronic system. Beside the technical issues, the
project had to tackle the legal issues associated with the admissibility
of electronic records. This was the first attempt to use electronic
records to deliver complex legally admissible regulatory licences.

Electronic licences are now produced routinely for most types of
pesticides approval. The e-pesticides system has provided a faster
service to applicants and has allowed electronic documents to be
integrated into internal systems. Another benefit is that full-published
details of the licenses are made available via the web to citizens. The
new process is made more efficient by issuing digitally signed
electronic licences. There were savings of over 600 staff hours in the
first 6 months.

*Mr. Thornton can be reached via e-mail a
michael.thornton@hmtreasury.x.gsi.gov.uk.*

**IT Innovations at the Heart of Cost-efficiency**

*By Heather Hudson*

*Ontario, Canada*

Thanks to a little ingenuity and a lot of hard work, the province of
Ontario is the proud creator of a number of cost-effective funding
solutions designed to optimally serve its 12 million citizens.

World renowned for its cutting edge approach to delivering government
services online, Ontario has also harnessed the power of technology to
streamline business processes and put in place sophisticated procurement
policies to support its diverse IT innovations.

All of this has resulted in increased efficiencies across the Ontario
public service. From tight internal processes to revolutionary web-based
solutions to groundbreaking multi-jurisdictional partnerships, the
Ontario government is proving itself as a pioneer in providing a
first-rate IT framework for a contemporary public service.

**The power of procurement policy**

Innovative procurement models are an integral component of Ontario's
broader IT strategy. Experts on board developed a risk assessment tool
to help staff in program, legal and procurement departments to identify
key risk factors of an IT proposal and mitigate liability in contracts.
Additionally, a vendor of record program has been put in place to
acquire IT goods, services and software used throughout the government.

"This process allows the government to take advantage of economies of
scale," says Neil Sentance, Director of Procurement Policy and IT
Procurement Branch.

"The vendor of record (VOR) procurement process allows business units to
focus on specific outcomes while we are better positioned to ensure
volume pricing. Plus, we're able to provide significant consulting
advice to business units on large scale IT procurements which take place
outside of the VOR model."

**Reducing duplication**

With a modern, customized procurement policy in place, IT experts are
working to streamline

business processes, further reducing cost by eliminating duplication of
services.

By consolidating the IT functions of nearly 30 ministries into seven key
IT clusters, Ontario has created an environment encouraging innovation
and greater efficiency. Under each cluster's umbrella, a number of like
ministries move toward common I&IT goals that build on shared and unique
information and knowledge management requirements and are enabled by
enterprise-wide, infrastructure platform.

Diverse program areas are discovering groundbreaking ways of their own
to work together to be more efficient and offer their customers new and
innovative solutions.

The Inspections, Investigations and Enforcement (II&E) initiative is a
leading example. More than 5,000 staff across 13 ministries deliver II&E
services that protect Ontarians, such as inspecting food, ensuring the
safety of roads and workplaces and protecting the environment.

The initiative offers more consistent and coordinated services across
government. It's also intended to improve the effectiveness of II&E
through information sharing and establish common supports for more
efficient program delivery.

"Before the project was launched, we operated in silos without
connecting together very often. Now hundreds of staff work together on
pilot projects to test eBusiness solutions, develop

joint learning programs and provide common business tools," explains
Denis Gertler, acting director of the II&E Secretariat.

High-tech solutions are also at the heart of other provincial
initiatives, such as how the Business

Transformation Project has revolutionized the way social assistance is
delivered in Ontario.

Using modern technology, the project has replaced an antiquated
administrative system that was largely paper-based and labor-intensive
with an electronic model. This replacement has created efficiencies and
provided an opportunity to put more staff on the front line, where they
are needed.

The new system processes more than 1.3 million transactions a day and
has generated almost \$200 million in savings above project costs. It's
estimated that annual savings will continue as the system matures.

**Web-based solutions**

Web-based solutions are also taking center stage when it comes to
cutting back on cost. The award winning www.healthyontario.com Web site
is a web portal that allows access to a wealth of information on health
and wellness. Rather than visiting their doctor or the emergency room
for treatments to common ailments or answers to general medical
questions, Ontarians can browse this site to learn about everything from
the health services available in the province to information on hot
medical issues, common conditions, diseases and treatments.

Recently named the best government/law Web site in the world by the
International Academy of

Digital Arts and Sciences, this Web site receives more than 5 million
hits per month. Its success is attributed in part to its exhaustive
expert information, intuitive organization and sheer volume of
resources.

**Groundbreaking interjurisdictional projects**

Solutions to financial pressures have also come through unique funding
partnerships in multi-jurisdictional projects. One unique arrangement
between three levels of government -- federal, provincial and municipal
-- is improving accessibility to information for senior citizens in
Ontario.

Seniors' info, www.seniorsinfo.ca, was created to provide access to
information and services delivered by all levels of government and
community-based agencies serving older adults. Brockville, Ontario is
the pilot city in this new venture.

Now senior citizens can find information on housing options, finding a
doctor, pensions, property taxes and more without leaving the comfort of
their homes. Moreover, the funding for such a project is spread out over
three jurisdictions, saving the costs of creating, maintaining and
staffing three distinct Web sites.

Businesses in Ontario can also reap the benefits of jurisdictional
collaboration. By visiting the Ontario Business Connects
(www.cbs.gov.on.ca/obc) Web site, business owners can submit changes of
business information to programs such as corporate income tax, retail
sales tax and business name registration. With one swift click of a
mouse, information is updated for several ministries across two levels
of government. Implementing a simple online system that clients can
access themselves eliminates long line-ups, cumbersome forms and
unnecessary red tape.

One of Ontario's current goals is to break down barriers across its
organization and focus on results-based planning processes. Clearly,
with an ever-increasing number of improvements continuously taking
place, Ontario will hold onto its title as one of the best places in the
world to live, work and raise a family.

*For more information on Ontario's unique approaches to cost-reduction,
streamlining business processes and IT innovation, visit
www.cio.gov.on.ca*

**S.A.I.L. Public Private Partnership**

*By John Weiler, E.D., ICHnet.org*

The **Solution Architecture Integration Lab** (SAIL) is a private/public
partnership formed to reduce the time, cost and risk of researching,
modeling and validating reusable IT solution frameworks. These
frameworks capture critical data points necessary for making sound
business decisions, security, interoperability, legacy integration and
ROI. SAIL establishes a conflict free zone where government and industry
collaborate in developing viable solution frameworks based on
implementation best practices. The SAIL collaboratory manages risk in
the IT acquisition process through the vetting of IT solution frameworks
among key members of the IT Value Chain; enterprise users (government &
industry), standards bodies, academia, integrators and technology
vendors.

By pooling agency resources, and leveraging industry best practices,
(modeled and pre-validated), SAIL reduces lifecycle cost by sharing
existing implementation/testing results. SAIL provides IT decision
makers with a set of pre-vetted IT solution blueprints that detail
critical attributes required for developing an analysis of alternatives;
services functions, interoperability requirements, security metrics,
ROI, business fits and infrastructure requirements. SAIL domain working
groups use the ICH Architecture Assurance framework and Value Chain
Method to develop re-usable solution frameworks that can be applied by
many users, many times. SAIL's "create once, use many" support key
policy objectives of the E-Gov (including FEA-PMO) and Clinger/Cohen
Act. SAIL is facilitated by the Interoperability Clearing House
(www.ICHnet.org), a not-for-profit, government sanctioned, consortium

This virtual "lab" leverages existing knowledge resources and
implementation best practice data, recognizing that the best "lab" is
the real world, and that the critical decision support information being
sought already exists among within our community. GSA has made this
capability available via a series of Schedule 70 and pre-competed MOBIS
contract vehicles.

**Problem scope;** *A need to leverage existing implementation best
practices*

The need for collaboration among Value Chain partners is overwhelming,
given the broad need to establish secure information infrastructure,
coupled with daunting IT failure rates of major IT program hovering just
over 50% in industry and over 70% in government. The potential benefit
in terms of reduced lifecycle cost, reduced risk and improved alignment
of business needs to IT investments makes SAIL a logical alternative to
the traditional "green fields" approaches to technology research and
validation. Research indicated (IDG, GAO, Gartner), that 34% of these IT
program failures are directly due to the inability for IT decision
makers to effectively align common business needs with commercial IT
solutions offerings. The fast paced IT market, the lack of common terms,
and the growing gap between standards and technology cycles are major
contributors to this problem.

Based on five years of root cause analysis of failed IT programs, and
examining the existing work of some of the worlds most respected
institutions, the ICH identified five critical enablers required to
bridge the gap between enterprise architectures and implementation
reality;

-   **A Shared Solution vetting lab;** that provides a conflict free
    zone where value chain partners (users, standards bodies, vendors,
    integrators) can collaborate in the development of proven solution
    frameworks by leveraging implementation best practices and lessons
    learned.

-   **Common Solution Architecture Views;** to assure accurate
    communications of business needs aligned to commercially available
    IT solution sets (via Component-based Architecture modeling).

-   **Common COTS Assessment Framework;** to enable the sharing of
    disparate implementation, testing and evaluation results (via ICH
    COTS Evaluation Framework) to accelerate the Solution Development
    Life Cycle process while bringing into view critical evaluation
    metrics; security, interoperability, usability, legacy integration,
    ROI.

-   **Knowledge Exchange;** industry enabled domain working groups and
    solution registry that assure information sharing and efficient
    application of solution architectures (via Solution Architecture
    Working Groups and ICH Solution Portal).

-   **Education and Outreach;** combined shared interests groups and
    educational forums (Secure e-Business Summit) that bring together
    common interests www.SecurE-Biz.net.

**Approach;** *Solution Architecture Center of Excellence*

ICH accomplishes these objectives by first evolving standardized
solution set evaluation templates that allow for the
"oranges-to-oranges" comparison of alternative solution based on
relevant, up-to-date, accurate and timely information. Additionally,
SAIL provides a high degree of confidence to evaluations through
utilization of the ICH evidentiary based down select process that has
been recognized as one of the best in the industry.

SAIL owes much of its strength to the thought leadership and breadth of
skills provided by its member organizations. Based on recognition of the
dire need for a true honest broker, leading government, academia and
industry organizations are joining forces to establish the SAIL
public/private partnership to lead the way to positive and substantial
change in the exploration, evaluation and adoption of interoperable
commercial solutions optimized to business needs. The ICH Architecture
Assurance Method, a Value Chain Analysis derivative (first conceived by
Michael Porter), is core to the SAIL vetting process. By using a
business driven approach to making IT investments, and aligning those
decision with core business needs, agencies like GSA, DHS and OSD Health
Affairs have developed some of the few truly actionable architectures.

The ICHnet.org and the SAIL partnership maintain the knowledge exchange
for sharing lessons learned, vetting methods, solution templates, and a
soon to be develop Solution Portal (co-developed with DARPA.). In this
role, ICH will be responsible for guaranteeing evaluation fairness and
elimination of all conflicts of interest both in fact and appearance.
ICH was chartered in 1998 and incorporated on 09-11-00 as a government
sponsored nonprofit (501c6) research and validation collaboratory. The
focus of the collaboratory is advancing IT capital-planning and
architecture mechanisms for achieving business driven actionable
results.

As SAIL evolves and takes hold in the industry, it is expected that SAIL
membership with expand substantially to include all major vendors,
standard bodies and integrators. SAIL is an inclusive standards like
consortium that is uniquely structured to eliminate conflicts of
interests while maximizing information sharing. However, while
membership in SAIL gives organizations the opportunity to positively
influence the basis for which solution sets will be evaluated, it will
in no way influence the evaluation of their products, as all vetting
information is evidentiary based.

**SAIL Outcomes;** *Managing Risk and Conflict of Interests*

**Mitigated Risk**

Managing risk is one of the critical success factors in IT program
planning. SAIL mitigates risk through the leveraging of the best talent
available across the industry through its architecture based research
and validation process. Leading experts in its solution set domain will
vet each solution architecture template. Domain experts will be tasked
from across the wide-ranging talent pool, which is the SAIL consortium.
Additionally, SAIL provides a commenting and petitioning process for
mediating and resolving protests and disagreements in a public forum.

**Managed conflict of interest (COI)**

The ICH consortium operational model is based on accepted international
standards processes that initialize an open process for effectively
managing COI issues. SAIL eliminates perceived and real conflict of
interest through a combination of process design, bylaws, disclosure
policies and openness. These mechanisms are described in the COI section
of the Charter. Like a standards consortia, SAIL works through its
members to help IT decision makers leverage existing knowledge sources
and expertise to assure the planning/architecture lifecycle process.

**Solution Architecture Knowledge Exchange (create once, use many)**

Knowledge repositories developed outside the context of addressing "real
world" issues tend not to provide the usefulness and relevance of
knowledge repositories based on solving actual problems, or addressing
real needs. An evaluation of portals based on general criteria will lack
the very valuable specificity of an evaluation based on real
requirements in the context of an actual implementation. All SAIL
evaluations will be performed in the context of solving a real problem
of a sponsoring Agency. The context of the evaluation will be made
available as part of the evaluation framework so that future users can
ascertain its relevance. Additionally, evaluation templates will be
updated to reflect knowledge obtained from applying the templates in
different contexts.

**A common Service Oriented Architecture language and ontology**

One of the biggest problems in IT today is the misuse of terminology, as
each school of thought or product vendor vies to define popular "buzz
words" to suit their needs. A major part of SAIL is the development of a
solution architecture ontology that provides for clear and concise
communications to better enable the alignment of business models with
commercial technology offerings.

**Education and Collaboration**

The most critical factor to the success of SAIL is to provide a
knowledge exchange t to ensure a broad spectrum of cross-industry
participation. Broad participation requires that ICH establish a strong
community outreach component and promote inclusiveness across the
industry. This will be done through two mechanisms; 1) Domain focused,
Solution Architecture Working Groups and 2) leveraging the existing
Secure E-Business educational Summit that promote the combined efforts
of these communities of interests (www.SecurE-Biz.net)

**Use Case**

Several agencies have benefited by leveraging best practices and lessons
learned including GSA. GSA FMS and GSA FSS both engaged ICH's unique
Value Chain approach to transform their architecture and IT capital
planning process. By focusing on business drivers to develop stake
holder views, GSA senior management were able to improve their ability
to plan and make IT investment decisions, resulting in an upgrade from
OMB Red to OMB Green in five short months. By building business views
into the EA and leveraging commercial best practices, GSA senior
managers were provided a rare view of relative value of on-going IT
investments. No longer was the architecture going to be a tool for the
techies, but a powerful planning tool that would help align business
needs with the GSA IT portfolio. Based on these successes, OMB and GAO
developed a position paper on transforming the Financial Management
Systems acquisition process using the ICH SAIL concept of operation.
This paper, and other industry report are now posted at
www.ICHnet.org/sail.htm. More recently, Homeland Security has also
chosen to adopt this process in building out its enterprise
architecture.

*For more information contact John Weiler at: john@ichnet.org*