Article | May 26, 2021
The COVID-19 pandemic touches every aspect of business, technology, and society. And stable and effective government is at the heart of managing through this crisis. What we do now will have longer-term implications for the health and safety of our families, our citizens, the economy, and even global stability. In the past few weeks, IBM has collaborated with many of our government clients and is driving action across three critical phases of response.
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Cybersecurity
Article | March 23, 2022
Taxpayers, citizens, and industry leaders may not be totally familiar with Public Facility Corporations (PFCs), but that should change, especially now since public funding for critical projects is at an all-time low. PFCs are becoming somewhat common in many regions of the country.
If the legal entity (PFC) is not familiar, here’s a bit of background. A PFC is a nonprofit corporation created by a sponsoring governmental entity — a city, county, school district, housing authority, or special district. PFCs have broad powers over public facilities, including financing, acquisition, construction, rehabilitation, renovation and repair. A PFC, once created, has the authority to issue bonds on behalf of its sponsoring public entity and once the bonds are funded, the money can be used in numerous ways. This type of legal entity has gained attention because public officials with critical projects are being forced to seek alternative funding sources.
In Texas, public facility corporations are allowed the broadest possible powers to finance or provide for the acquisition, construction and rehabilitation of public facilities at the lowest possible borrowing cost. A sponsor — such as a municipality, county, school district or housing authority — may create one or more of nonprofit public facility corporations. Then, the PFC can issue bonds for the construction of public facilities or finance public facilities or even loan the proceeds of the revenue to other entities for specific purposes.
A report that was released by The University of Texas School of Law found that a house bill approved during the 2015 legislative session “expands the authority of public facility corporations and allows the corporation to exercise any power that a nonprofit corporation might exercise and/or grant a leasehold or other possessory interest in a public facility owned by the PFC.” Here’s a bit more background of what is happening in Texas and there are numerous similar examples throughout the country.
The El Paso Independent School District (EPISD) several years ago created the EPISD Public Facility Corporation to fund construction of central offices through non-voter approved bonds. The corporation issued more than $29 million in bonds. The plan called for the EPISD to repay the bonds with general fund dollars from the district's general fund.
The 2019 Texas Legislative Session ended with a $4 million rider added to the state appropriations budget. The money was provided to the city of Port Aransas to build a $36 million apartment complex for affordable housing. Plans call for the 200-unit complex to be operated by the Port Aransas Public Facility Corporation. The corporation will work in partnership with a private company to develop and manage the property. An investment of approximately $14 million came from the private sector partner, and the Texas Department of Housing and Community Affairs provided an additional $18 million in funding. Site work on the project began in July 2020.
Many school districts have created public facility corporations for construction projects for schools, and many municipalities have also used PFCs. The revenue from these types of bonds is sometimes called lease-revenue bonds. They do not require voter approval. Public facility corporations do not have the authority to raise tax rates, but it is possible for a school board to approve a property tax increase to make payments on the bonds sold by a PFC.
The city of Tioga, located in the Sherman/Dennison region of Texas, constructed a new high school with funding from a public facility corporation. A collaborative initiative was launched with a lease-purchase agreement which allowed the PFC to hold title to the land and facility until the investment was repaid. At that time, the agreement calls for everything to transfer back to the district. Because the current campus was reaching its maximum capacity, a new high school campus had been a priority for the district and this was the funding mechanism selected.
The city of Fate in Rockwell County recently embarked on a public-private partnership to develop an affordable seniors housing community. The projected cost is approximately $30 million. To fund the project, the city created a PFC. Plans are for the city to handle the design, construction, and management of the project in collaboration with the PFC. City leaders will appoint board members to the funding corporation which will then operate the development as a nonprofit. The project is anticipated for completion in January 2022.
There are similar types of alternative types of funding options in other parts of the U.S. In Utah, for instance, the Park City Board of Education approved a PFC which will allow the district to secure revenue for a number of master plan projects. The projects have a combined projected cost of $122 million. The school district had considered the funding option of general obligation bonds, which would require voter approval, but elected to create a Local Building Authority (LBA). This funding option will allow them to fund an expansion of a high school facility to accommodate ninth-graders and expand another campus to allow for eighth-grade students.
Public officials, legislators, government contractors, and taxpayers all should have an interest in watching PFCs as well as other alternative funding sources. Until traditional public funding becomes more available for critical public projects, there will be a need for various types of funding solutions.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
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Emerging Technology
Article | July 16, 2022
While congressional leaders work diligently to develop the next COVID recovery bill, other interesting legislation also is being discussed.
Many of the conversations focus on public funding options after COVID-19. There are no disagreements when it comes understanding the critical funding needs that will be front and center for cities, counties, states, schools, and hospitals as the country begins to emerge from a total focus on the coronavirus.
Many public projects and initiatives will have to be addressed. First of all, crumbling, inefficient and unsafe infrastructure, of all types, must be a priority. Secondly, jobs will be a critical component of the successful re-establishment of economic stability.
It is already apparent that a great deal of new funding will flow to long-standing federal programs. That’s a good thing because public officials already are aware of how those programs function. However, a number of new bills under discussion relate to the provision of additional and innovative ways for governmental entities to secure funding for projects that would stimulate the economy, create jobs, and address aging infrastructure. One particularly interesting new concept being evaluated is tax-exempt COVID recovery bonds.
The current discussions focus on a federal COVID recovery bonding program that would be launched with approximately $25 billion. A small number of states have already initiated programs such as this on a smaller scale.
The funding would be allocated to states based on population. From the governor’s office in each state, funding could be disbursed for projects of specific types.
If COVID recovery bonds become a reality, the program would provide another way for public entities to secure funding that does not come solely from public coffers. Individual private sector contractors, investors, and organizations would provide the funding and work collaboratively with public officials.
This program would be somewhat similar to private activity bonds which provide alternative funding for public initiatives. The new COVID recovery bonds would be tax exempt when used for permitted purposes such as financing airport, port, transportation, sewage, water, solid waste disposal, certain facilities, and other projects.
In the following weeks and months, taxpayers and citizens should watch with eager anticipation. Congressional actions will boost America’s economic recovery and stabilize governmental organizations throughout the country. Inaction is a possibility, too, but that would risk missing out on recovery opportunities.
Congressional representatives base their actions and their votes on input from constituents they represent. There are times when citizens, whatever their opinions, should provide input to elected representatives. This is one of those times.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S. Her recently released book, Inside the Infrastructure Revolution: A Roadmap for Building America, is a handbook for contractors, investors and the public at large seeking to explore how public-private partnerships or joint ventures can help finance their infrastructure projects.
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Emerging Technology, Government Business
Article | October 7, 2022
One of the challenges the government faced during the COVID-19 pandemic was keeping operations running. Certain advanced economies and developing nations' business continuity plans gave them an edge over their underdeveloped counterparts. But because of the pandemic, the national economy had suffered the pangs of unemployment to fuel the malicious intents of cyber-attackers, thus, protecting government assets that carried important economic information became a national priority.
National security and staying competitive with other economies worldwide are becoming increasingly crucial in elevating a country’s economy. Keeping all public-sector companies and federal agencies running efficiently is a foundational block for the economy. Companies in public administration, like the Army, Navy, and Marine Corps, as well as different ministries, public sector businesses, and more, need data protection from international cyber-threats. They use disruptive business strategies to make their operations more resilient.
Now, that we know the importance of business continuity in the context of federal government and agencies, let us understand what risks does business continuity management mitigate.
Business Continuity Management in Government Easily Mitigates:
Individuals rely on the government during economic crises and disasters. A crisis or a disaster can be a huge risk to the economy, which can bubble up to an irreversible loss if not handled on a timely basis. Mitigating the risks of crises such as natural disasters, cyber security compromises, power and communication outages, terrorism, wars and military activities, global financial crises and more has become crucial. These crises can cause the loss of physical assets, human safety, and infrastructure that hamper government operations. This is why having a BCM plan in place is the need of the hour.
The government must serve and meet the expectations of economic contributors. If there is a divergence or a timely action constraint, the government must maintain peace and harmony for the common good and economic well-being.
Government Continuity to Support Individuals and Public Organizations:
Resuming operations for public organizations and individuals quickly can be almost impossible without the intervention and support of the government. Government continuity is directly proportional to the level of trust, government reputation, and business resiliency. This is possible because the financial loss can be covered by insurance and financial help, as explained below.
Insurance Policy Claims and Coverage: Making it easy to claim insurance during and after the crisis helps individuals and organizations reclaim their finances, thereby restoring essential functions first and full-fledged functions later. Providing reimbursement of expenses and coverage for losses for public organizations and financial assistance for the public sector remains one of the top priorities as far as resuming business operations is concerned post-disaster. Making sure that the insurance can cover the expenses and losses incurred due to the disaster is a part of the business impact analysis (BIA).
Resiliency: Restoring public sector infrastructure in an operating condition, overcoming operational obstacles such as IT, power, and communication outages in a short span of time, and maintaining due vigilance to keep a check on national security builds business resiliency for the public sector.
Reputation and Recovery Management: Reducing the turn-around time to fix and restore normal operations after a disaster provides operational resiliency through recovery management. This keeps a check on the best interests of the economic contributors and enhances their trust and the government’s reputation in the long run.
Now that we understand the risks that a BCP can help mitigate and the role of government policies to support the economic contributors, let us understand how it improves the overall performance of a public organization.
Business Continuity Management for Better Performing Public Organizations:
The federal governments and public organizations have implemented an agile approach to bounce back from disasters, catastrophes, and crises using BCM. Because of this, the federal government is heavily invested into business continuity plans (BCPs) to improve how well their operations work and keep the economy and government stable.
The factors impacting the performance of public organizations using a BCM are as below:
Public organizations must know how BCM components influence performance in public sector organizations.
They must be aware of BCM and the successful implementation of effective BCM. However, some governments that do not invest in a BCM have a much lower level of awareness due to a lack of human resources, finance, and management.
They are allocating enough budget for disaster prevention, preparedness, management, and relief considering the government's initiatives. But not getting enough help from the government can make people unhappy, which can hurt the ruling party and lead to people protesting for their rights.
Even though there is no direct financial benefit or gain from investing in a BCM, BCM testing helps to improve performance significantly.
For governments to consider investing in the successful implementation of BCM and get funding for it, BCM professionals need to predict and evaluate the potential loss due to idle service time and its results.
Each government entity must identify the likelihood of risks, define the best rescue objectives, and indicate the most cost-effective clarification and knowledge about BCM.
Another challenge is using BCM in organizations that cut across several business groups or completing it with collective business-wide support.
These situations show that old management responsibility and regulation are useful for making sure that all members of an organization prefer BCM actions.
Recognizing the potential impacts of BCM on organizational performance is required in order to provide accurate value to the BCM powers, attract consideration, and, finally, obtain adequate assistance from senior management.
In the journey to optimizing the performance of your public sector company using BCM, there are many hurdles that you need to overcome. Let us discuss them further.
Challenges in Maintaining BCPs and Performance Growth in the Public Sector:
Maintaining a business continuity plan as per the recommended guidelines is crucial to optimize its performance and efficacy. Your public sector organization's BCP will need to overcome some of the challenges to enable their performance growth as follows:
Dedication of time from the top management of the public organizations, the ministry, and leaders towards deciding which functions are essential to maintain the BCP.
Lack of complete understanding of all the business functions and their dependencies on other public sector organizations.
Comparing the business functions on the level of criticality.
Not implementing the BCM approach completely.
Tweaking the BCM approach to show everything is taken care of
Inaccurate assumptions are used to create a business continuity plan.
Business Impact Analysis (BIA) - Determining how long a business process can be rendered inoperable without affecting performance.
The Business Continuity Plan (BCP) takes care of aspects such as:
Who will be affected by the business operations disruption?
How and when will customers be notified?
What issues are to be addressed in the first 48 hours?
From the initial response to restoration, unique access roles and functions are assigned.
Testing of BCP should be done regularly with the help of table-top exercises, walkthroughs, crisis communications, emergency enactments
The importance of a BCP cannot be undermined as it minimizes the cost of business disruptions on the operations of public organizations. Let us discuss them in-depth.
The Cost of Not Having a Crisis Plan like a BCP for All Sizes of Public Organizations:
Although the costs involved during times of crisis may be difficult to calculate, there may be significant infrastructure and data recovery charges that can have a long-term impact on business revenue. Monetary loss, revenue loss due to idle time, reputation loss, productivity loss are some of the consequences that small, medium, and large enterprises have to go through. The major losses among them are as under:
Loss of time and revenue for recovery and resuming operations.
The company's brand image and reputation are at stake.
Financial instability and loss
Productivity loss
Customer satisfaction is hampered.
Some laws and regulations are violated during idle time.
Distrust and loss of faith among investors
Employee safety is at risk with the consequences of injury and death.
Loss of infrastructure
A business continuity plan has four strategies to boost business resilience. These include crisis and risk management; disaster recovery; incident response management; and business continuity planning.
Acting quickly to mitigate the risks of loss as per incident response management during the event of distress is the first step. Crisis and risk management take care of the plan of action during the event of distress. The disaster recovery plan takes care of resuming the business operations to their normal condition after the disaster has subsided, whereas the business continuity plan takes care of all these aspects to minimize loss during distress as well as the time required to resume normal operations with the help of dedicated software.
Conclusion:
Performance optimization for public organizations is the number one priority for economic growth. A business continuity plan can directly boost performance as it encourages organizations to identify essential functions and maintain their operations during uncertain times. It helps save time, money, and safeguards people, processes, and technologies in the long run.
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