In this Expert’s Corner, Michael Keating, senior editor for Government Product News, discusses the future of federal stimulus spending and what businesses can expect from government procurement.

For manufacturers, distributors, government contractors and prospective contractors, 2010 could be the year that the U.S. economy bounces back to solvency and strength.

“Stimulus money will be in the pipeline for 2010 and that which is spent by government (federal, state, local or education) will be spent through existing contracts. This will make 2010 a pretty good year for government contractors,” Mark Amtower, government marketing expert at Highland, Md.-based Amtower & Co. and author of “Government Marketing Best Practices,” predicts.

In 2010, much of the $787 billion in federal stimulus dollars from the American Recovery and Reinvestment Act (ARRA) of 2009 will start to have an impact on the economy, Jeff Belkin, leader of the Government Contracts Practice Group at the Atlanta-based Alston & Bird law firm and author of “The ABCs of Federal Government Contracting,” says.

“We anticipate that approximately $100 billion in stimulus contracts will reach the private sector in 2010, creating about one million jobs, with California, Texas, Florida, New York and Washington state serving as the biggest engines of job growth,” Michael Balsam, chief solutions officer of Onvia, a Seattle-based company that tracks federal stimulus spending, says.

Onvia’s research, Balsam adds, shows that health care technology, clean water and renewable energy projects will be receiving increased amounts of stimulus dollars in 2010 compared to 2009 levels.

“The peak spending of those funds is likely not to be reached until late 2010 or 2011. The myriad of Recovery Act authorizations are likely to result in increased spending by state and federal government agencies, with cash into commerce, well into 2011 and 2012, with a positive impact on those industries (energy, health care, green technology) targeted the most by ARRA,” Belkin explains.

The White House and the Democratic majority in Congress are also looking beyond ARRA stimulus funding. They are packaging “Jobs for Main Street” legislation that would devote as much as $174 billion to job-creation projects in 2010; some of those dollars are earmarked for government projects and workforces, including transportation infrastructure investments and aid for law enforcement jobs. The target date for completion of a 2010 jobs bill is sometime this spring.

There are already signs that an economic recovery is underway. For instance, the U.S. economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter of 2009, according to the U.S. Department of Commerce. That’s the quickest rate of expansion in more than six years.

And the government market remains huge. Purchases of goods and services by all levels of government (local, state and federal) will rise to $3.01 trillion in 2010, up from $2.93 trillion in 2009, a 2.7 percent increase, according to Waltham, Mass.-based economic forecasters IHS Global Insight.

However, there remains a fair amount of pessimism in state governments regarding 2010 budgets.

“The most obvious sign of the times is how many states are going through ‘mid-year’ budget reductions,” John Punzak, Sr., National Sales Director for State & Local Government/Education at open-source solutions firm Red Hat, says.

“The revenue projections they made last spring (and based their 2009-10 budgets upon) were more optimistic than reality. So now we’re seeing state and local governments being more frugal with their budgets and aware about how, where and when they spend their money,” according to Punzak.

“Open source solutions have emerged as high-value options for state and local government IT departments on many fronts, and more are looking at virtualization and cloud computing as options to help extend value as well,” Punzak adds.

Meanwhile, local governments continue to face significant fiscal challenges. In a statement issued on Jan. 27, the Washington-based U.S. Conference of Mayors urged Congress to quickly pass emergency jobs legislation, saying, “With unemployment in many cities in double-digits, mayors know this ‘jobs emergency’ demands decisive and swift action.”

“Investments in roads, bridges, rail and ports in cities — where the majority of the people in this country live — will ease traffic congestion, reduce pollution and create jobs where they are needed most,” the Conference of Mayors explains.

“I think state and local budgets are going to get worse before they get better,” Kim Rueben, senior fellow at the Washington-based Urban Institute, a nonpartisan economic and social policy research organization, tells Industry Market Trends. “Even though the recession may have ended this summer, state and local revenues will lag and still be low. Budgets might be at their most dire in 2011 after federal stimulus (mainly the Federal Medical Assistance Percentage funding and the Education Stabilization Fund) dollars are used up in 2010. Absent more federal assistance, I’m thinking states and localities are going to face hard choices and more spending cuts or tax increases.”

“If you are a government contractor, this is a great time to firm up any and all client relationships,” Amtower says.

Some advice from Amtower on landing stimulus-funded business: “Match your product/service to stimulus spending programs. Then track the programs as they progress through Recovery.gov and Recovery.org. Make certain whichever bid-tracking service you use is fully tracking the stimulus-spending program, and be prepared to bid ASAP once the bid hits the street. Most of the money will be spent through existing contracts, so identify the most likely contracts to be used and have your “A Team” approach the contractor or government entity to see if there is room for you.”

Washington stimulus dollars have started to help shore up the economy, and more help may be on the way. Hopefully, these initiatives will pull the economy out of its doldrums and ensure a more positive 2010 for consumers, manufacturers and governments.

Michael Keating is senior editor for Government Product News and a contributing editor for American City and County, both published by Penton Media Inc. His complete 2010 government budget forecast is available at GovPro.com. Keating has written articles on the government market for more than 100 publications, including USA Today, Sanitary Maintenance, IndustryWeek and the Costco Connection. Mike can be reached through his Web site, MikeKeat.net.