The Keating Report: IT, Public Works Dominate Public-Sector Spending

“Construction services and building supplies continue to dominate public-sector procurement activity – accounting for as many projects as the next three largest vertical markets combined – and are growing at a rate of 10 percent,” explained Onvia Vice President of Products and Services Michael Balsam. “Within construction, roadway projects comprise 18 percent of the government market activity.”

According to Balsam, the IT telecommunications market is growing at a 20 percent rate, making it the fastest-growing area of state and local government contract activity.

“About 28 percent of IT projects are computer-hardware focused, suggesting major agency investments in IT infrastructure,” Balsam said. “This data may serve as a leading indicator for software upgrades and consulting opportunities across state and local governments.”

To come up with its findings, Onvia examined state and local government contract actions through April 30 for 2006 and 2007. Onvia screens 3,500 new local, state and federal bid announcements each day and tracks 73,000 government purchasing offices in its data collection efforts.

Dirt Will Fly in the Second Half

As the second half of 2007 shifts into high gear, many government agencies are signing on the dotted line for major construction projects. Non-building public works construction, including heavy engineering-highways, water sewers and transportation work, will grow almost 9 percent in all of 2007, predicts Reed Construction Data in its June 2007 forecast update.

One public construction project that is drawing a lot of attention is the Chicago Park District's efforts to reclaim unused land at the district's Stearns Quarry location. The quarry was an active limestone quarry from about 1830 through 1969. After 15 years of use as a landfill, it is being transformed into an attractive 27-acre park. Included in the plans for the development are a fishing pond, interpretive wetlands, preserved quarry walls, an athletic field, a running track and a sledding mound. The park will feature more than a mile of walking paths.

In 2007, crews are placing recycled concrete outcroppings around the Stearns Quarry wetland areas and pond. Three entrance plazas, boardwalks and a pier will be built at the site this year. The Chicago Park District completed large-scale grading and installed retaining walls and geo-membrane linings at the site last year.

A strengthening economy in the final quarter of 2007 should ensure that government entities will continue to be major purchasers of a wide variety of commodities and services. Local, state and federal agencies such as the Chicago Park District also will undertake a sizable number of public works projects in the remaining months of 2007.

This is the third article in a three-part series on government spending trends. To read Part 1, click here. To read Part 2, click here.

About the Author

Michael Keating is research manager for Government Product News and Government Procurement magazines as well as a project manager for Penton Research. Keating has written articles on the government market for nearly 100 publications, including USA Today, Sanitary Maintenance, Industry Week and the Costco Connection. He can be reached at mkeating@penton.com.