For stimulus winners, communications challenges abound

There is a long line winding its way to Washington, DC. State and municipal governments, private corporations and service providers are queuing for their share of the billions ready to be invested, guaranteed and distributed by the federal government under the American Recovery and Reinvestment Act (ARRA).

There is a long line winding its way to Washington, DC. State and municipal governments, private corporations and service providers are queuing for their share of the billions ready to be invested, guaranteed and distributed by the federal government under the American Recovery and Reinvestment Act (ARRA).

The numbers are enticing - $137 billion for infrastructure, $20 billion to modernize health records, $43 billion for energy initiatives. For companies able to provide these services, ARRA represents a lucrative opportunity in an otherwise bleak economy. Along with the funds come an unprecedented level of scrutiny and accountability, creating a unique set of challenges and opportunities that merit dedicated and strategic communications support and resources.

The Obama administration set a high bar for transparency, creating the www.recovery.gov Web site and empowering the Recovery Act Accountability and Transparency Board as overseer. The fact that www.recovery.gov contains details on all ARRA-funded projects, including the names of all participants and subcontractors, as well as weekly and monthly progress reports, is a game changer. By making the information public, the federal agencies responsible for distributing the funds, the state and municipal governments managing the projects and the subcontractors themselves will be under intense scrutiny.

A diverse and motivated group of stakeholders and critics, including watchdogs, unions, the media, the general public and political opponents, will be watching. This scrutiny will have very real implications -- both reputational and financial -- for participating companies.

The good news is that the Memorandum for the Heads of Departments and Agencies provides a clear outline of the type of scrutiny and reporting requirements participants can expect. Understanding the standards allows companies and their counselors to prepare, plan, and manage these to minimize risk and take full advantage of the opportunities. The criteria contained in the Memorandum are meant exclusively for the federal agencies managing the funds but the expectation is that they will apply to all recipients and participants. Companies eager to or already participating in ARRA-funded projects must take into account the following three communications considerations:

Consideration 1: The Procurement Process The federal government is asking agencies to expedite the award process, promote competition to the maximum extent possible, and increase scrutiny for noncompetitive projects. This is an opportunity for new, smaller, and more innovative companies, some of whom may not have government experience, to compete. However, there is also an imperative to select companies with proven track records and an unblemished performance record.

Companies eager to participate must therefore establish credibility in the marketplace and raise their profile among a vast group of stakeholders, beyond just traditional political and procurement personnel. By working with the media, enlisting the support of third-party experts, and engaging with civic and business leaders, companies can showcase their expertise and experience. For foreign providers, it is important to demonstrate their ability to create jobs for Americans in the US, a fundamental objective of ARRA.

Consideration 2: Project Execution For each ARRA-funded project, the agencies responsible are required to: explain the rationale and expected benefits; identify projected and quantifiable outcomes and delivery schedules; provide regular progress reports; and account for how and by whom the money is being spent.

Companies involved in these projects can expect the same level of accountability and should take control of their own message and communicate their involvement and progress.

At the very least, participating companies ought to create a unique section of their Web site, dedicated to tracking their progress and providing updates exclusively on ARRA-funded projects. The site should include companies' own accountability and transparency policies as well as their compliance with all relevant environmental, employment, and procurement requirements, including section 1065 of ARRA - the “Buy American” clause. Further, the site can serve as a forum for answering ARRA-related questions and providing relevant information in partnership with local, state, and federal agencies.

Companies must also communicate clearly and proactively, on their Web site and through the media, around key milestones to demonstrate progress as well as to further position themselves as desirable partners for future projects.

Consideration 3: Managing Risk Given the increased scrutiny and pressure being placed on federal agencies and state and local governments, companies participating in ARRA-funded projects face increased risks. In addition to reporting progress, agencies are required to conduct regular audits and investigations to identify and prevent wasteful spending and minimize fraud, as well as regularly report performance issues with individual recipients. It is not unreasonable to assume that a subcontractor may find itself as the scapegoat, rightly or wrongly, in the event of a major project delay or problem. In light of the highly public nature of ARRA, this could have a significant effect on a company's reputation, business relationships, and, potentially, stock price.

In addition, the federal government has asked agencies to consider alternative forms of contract financing, including structuring agreements to include payment schedules based on defined deliverables and milestones, which, in the event of a delay, could have serious financial repercussions.

Despite the risks, which with the right tools and partners are manageable, ARRA represents a great opportunity for those companies that are able and willing to participate. Companies have a real chance to not just profit in this turbulent economy, but also to create jobs and be a critical participant in a new era of transparency and accountability.

Jack Gutt is a director of Kreab Gavin Anderson Worldwide

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