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Your New Customer: The State


As consumer and business demand falls, companies are scrambling to get a piece of government stimulus cash

Five months ago, Willem Houck was working with Starwood Hotels & Resorts (HOT) to put eco-friendly TVs in its inns. Today, Houck, a vice-president for strategy and business development at Philips (PHG)North America, is meeting with admirals who want to make naval bases in the Southwestern U.S. more energy-efficient. "If you'd told me I'd be talking about how to create a sustainable U.S. Navy base," Houck says, "I'd have said you were crazy."

From Beijing to Washington, governments are unleashing billions of dollars of stimulus spending on energy, health care, and infrastructure projects. And with private demand collapsing, executives are scrambling to get a piece of it. George Nolen, CEO of Siemens Corp. (SI), the U.S. subsidiary of the German giant, aims to win $75 billion of Washington's $787 billion stimulus package. "If you're not prepared," says Nolen, "you will not be able to take advantage."

Some companies have been working with the public sector for years. General Electric's (GE) aviation and energy units, for example, have long had federal contracts. But GE is so eager to get in on the new action that it is tracking stimulus money and public-sector contracts in two dozen countries and is encouraging business units with government experience to share information with other divisions.

Siemens is one of 16 companies selected by the U.S. Energy Dept. to overhaul the efficiency of federal buildings by adding lighting controls and temperature sensors. Because Siemens has little experience handling such projects for the feds, Nolen says, the company "will need to build new relationships." To do that, Siemens has beefed up its government affairs team. And in mid-February, 30 sales executives convened in Washington to figure out how to grab the most stimulus money. Also attending were members of the marketing team, who are pitching government agencies that might not be aware of Siemens' products and services. Chances are that Washington bureaucrats already have heard new radio ads promoting Siemens.

Sun Microsystems (JAVA) is also keen to sell its energy-efficient products to the U.S. government. It recently submitted a proposal to persuade the White House to replace PCs with so-called thin-client machines that need neither a disk drive nor a processor. Sun says they use less power and are more secure. The company is in talks with other departments as well. It's also eyeing the $17 billion the government has allocated for cyber security. Bill Vass, who runs Sun's government-business unit, says the company is focusing its pitch largely on midlevel officials who tell the senior people "which technologies to pick."

At Philips North America, the pump-priming has sparked a shift in priorities. In February top executives convened in Boston, where they brainstormed about how to sell to the government. Meanwhile, Philips' lobbyists have been helping managers figure out how and where to get the right information about contracts. Already, says Houck, 1,000 U.S. staffers are tailoring many of their pitches to government agencies.

Working with the government can require adjustments—some subtle. Houck says that while companies tend to focus on brand, the feds are more about functionality. Asked if his meetings with the U.S. Navy involved the wining-and-dining typical of the corporate world, Houck demurred. "They invited us," he said. "And we didn't eat."

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McGregor is BusinessWeek's management editor. Boyle is deputy Corporations editor for BusinessWeek. Burrows is a senior writer for BusinessWeek, based in Silicon Valley.

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