The Business of M2M

U.S. Stimulus: Show Me the Money

July/Aug 2009

The $787 billion U.S. Recovery and Reinvestment Act of 2009 should generate significant revenues for M2M and help to thrust the industry into the limelight. U.S. stimulus spending for infrastructure projects includes markets where M2M already shines: smart grid, energy efficiency, water management, and transportation.

Direct spending for M2M will be a fraction of the stimulus spending totals. But a small percentage of $67.3 billion is still a large amount: If M2M consumes 2% of overall project costs in these stimulus categories, this would mean $1.35 billion for M2M.

For example, the U.S. GSA (General Services Admin.), www.gsa.gov, Washington D.C., will spend $4.5 billion to convert federal buildings into “high-efficiency green buildings,” with projects sized from $225 million for the Herbert Hoover office building in Washington, D.C. to $114,000 for the C.F. Haynesworth Federal Courthouse in Greenville, S.C., plus a little more than $1 billion for 17 new buildings, according to information contained at www.gsa.gov/recovery. All of these projects could include M2M: Large facilities need fully automated environmental control systems, while sensor-based environmental controls would suit smaller structures.

Wireless M2M networks, depending on how they are operated, may provide unique advantages for infrastructure communications. Utilities need to know that both the electric grid and its monitoring systems will remain online even when a large-scale event disrupts or overloads other communication networks. Funding private data networks versus purchasing services from wireless operators is a point of debate. The stimulus plan emphasizes infrastructure spending over operating expense, favoring private networks. However, these mission-critical networks must be secure, redundant, and always on: experienced network operators with solid track records can offer service level agreements for critical connections.

Finding the Money
While the GSA beat the other federal departments to the punch by posting its list on March 31, many stimulus funding rules are still being written. Smart-grid funding guidelines were issued on April 16 of this year and transportation guidelines on May 20, but broadband guidelines weren’t expected until mid-June.

Most sources were only willing to talk about their stimulus projects “off the record.” Until all stimulus opportunities and funding guidelines have been posted and understood, accurate and timely information on stimulus programs will be unevenly distributed. Cities, counties, and other prospective beneficiaries are preparing their proposals in advance of final rules, and are working to influence the process in their favor whenever they can. It’s critical that those seeking stimulus funding get into the information loop, both through online sources and direct interaction with the departments and agencies that control the stimulus funds they seek.

Several useful government and industry association stimulus Websites exist today. Many other trade associations, cooperatives, and commissions offer stimulus resources, so check with organizations to which you belong or which regulate your business. Dig through regional, state, and local government stimulus Websites; a significant portion of stimulus funds will be distributed through these entities.

Buy American
Products used for U.S. stimulus projects must be U.S.-made, per the law’s “Buy-American” clause, which requires “… all of the iron, steel, and manufactured goods used in the project are produced in the United States.” Similar rules have applied to highway and mass-transit projects for some time. The stimulus plan extends “Buy-American” requirements to all federal departments receiving stimulus funds. How agencies new to this requirement will implement the rule is not known—some fear a strict interpretation requiring 100% U.S. content including components, sub-assemblies, and software.

U.S. political allies pressured language into the legislation requiring “Buy American” to be “applied in a manner consistent with United States obligations under international agreements.” This means existing trade agreements may supersede “Buy American” for purchases as low as $25,000, but could also exclude content from nations who have not signed the World Trade Organization’s “Agreement on Government Procurement,” notably China and India. Software developers in India have already attributed a drop-off in new contracts to the “Buy-American” clause.

The “Buy-American” requirement can be waived if an insufficient amount of products made in the U.S. exists, U.S. sourcing would increase project costs by more than 25%, or the secretary of the responsible federal department determines domestic sourcing would be “inconsistent with the public interest.” Clearly, the “Buy-American” rule and interacting trade agreements are highly complex, and beyond the scope of this discussion.

Entities seeking U.S. stimulus funding for M2M solutions that include non-U.S. content at any level should clarify how the “Buy-American” rule applies to their solution, including a review from the funding agency, if needed, to understand whether changes should be made to bring the solution into compliance.

Crafting a Winning Proposal
Connecting with local funding representatives who will either approve your proposal or move it upstream to the feds is an important step in creating a winning proposal. Seek to understand the policy objectives that the funding agency is working toward as well as the requirements for the specific project, such as creating sustainable jobs, advancing the environment, and improving personal and community security. Scott McCormick, executive director, the Connected Vehicle Trade Assn., www.connectedvehicle.org, Detroit, Mich., suggests clearly stating “how the proposal creates jobs, and how it creates lasting value to the agency that funded it.” McCormick urges applicants to engage with as many of the people affected by a funding decision as possible, including consumers, regulators, affected business interests, and the media, and to build commitment among these stakeholders. “Ownership,” he added, “has to be with the people who will live with the solution going forward.”

Coleman Bazelon, a principal with the economic consulting firm The Brattle Group www.brattle.com, Cambridge, Mass., suggests these points for preparing stimulus funding applicants:

  • Partner with state and local entities, both for local projects and those funded through federal agencies. State and local agencies may serve as pre-screeners, and their support can differentiate your proposal.
  • Include a solid business plan. Demonstrate that allocated funds will create a project that would not have been done otherwise, and can be sustained going forward without additional federal funding. Highlight the program and policy goals that will be achieved.
  • Pay attention to matching funds requirements. Matching funds range between 20-50% of most projects, and can be partially met through in-kind contributions from vendors, such as engineering talent, hard products, and database tools.

Laurie Lamberth is a wireless strategy, business development, and marketing consultant, with a specialty in M2M. Laurie lead Sprint Nextel’s M2M business development team. She can be reached at laurie.lamberth@gmail.com.

[button link="https://connectedworld.com/subscribe-connected-world/" color="default" size="small" target="_self" title="" gradient_colors="," gradient_hover_colors="," border_width="1px" border_color="" text_color="" shadow="yes" animation_type="0" animation_direction="down" animation_speed="0.1"]Subscribe Now[/button]

Gain access to Connected World magazine departments, features, and this month’s cover story!
By | 2014-10-15T19:18:21+00:00 6/30/2009|

Leave A Comment