By Steve Kelman

Blog archive

Recovery Act: Lots of talk, little practice so far

NORFOLK, Va. -- As I drove through Cambridge yesterday, on my way to the Management of Change conference in Norfolk, I saw a big sign along the highway proclaiming that maintenance on the road was being funded by the Recovery Act. I mentioned this to somebody here at the conference, and he told me that these signs are springing up across the country.

The Recovery Act -- and particularly the transparency requirements for Recovery Act spending -- has been a big theme at the conference. There was a panel this morning, with the chief information officers of California and of Houston, titled "American Recovery Act: From Policy to Practice." One of the main messages I got from the panel was that, despite the panel's title, there is still a lot of policy thinking and not very much practice out there.

There is clearly significant worry in state and local government that the financial reporting requirements are going to create quite an IT challenge for data development and standardization. I got, however, little feel for how these problems would be resolved in practice, though I did learn that apparently a bunch of the major IT vendors are swarming around state and local governments offering solutions. This is clearly a work in progress, and one of the panelists cautioned that expectations should, for the beginning, be modest. At the same time, the Houston CIO made the really interesting point that these kinds of transparency requirements are likely to become applied to all federal grants in the future, so this is sort of a dress rehearsal.

I heard something interesting in the corridors about the Recovery Act, involving something entirely different. Somebody told me she was hearing that a number of companies were considering turning down Recovery Act money out of a fear that Congress will at some point impose executive compensation limits for companies receiving Recovery Act funds. I had two reactions to this startling report. On a policy level, we certainly don't want to proliferate requirements on companies that get triggered only if one becomes a government contractor. This discourages commercial firms from entering the federal marketplace, and that's a bad thing for competition and innovation.

At the same time, on a personal level I couldn't help but thinking that any executives thinking this way were considering their own personal interests more than the interests of their company. Yeah, companies do need to worry about competing for talent, but it's hard to avoid the impression that what's driving top executives considering saying no is worry that their own salaries might be cut, rather than concern for the interests of their shareholders or employees.

Posted by Steve Kelman on Jun 01, 2009 at 12:08 PM


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