SPRING
EDITION 2015
BOOMING BUSINESS:
Florida’s Middle Market Companies
. MISSION
To provide a one-stop shop for the latest news and
valuable insight on Florida's economy and financial health
RESOURCES
Chief Financial Officer Jeff Atwater is committed to making Florida
more consumer and business friendly by ensuring consumer rights and
protections, reducing regulatory burdens, and fighting fraud.
PARTNERS
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. CFO LETTER
Dear Fellow Floridians:
Middle market companies are a dynamic force within Florida’s economy, but they often fly under the
radar. Defined as a business with annual revenues between $10 million and $1 billion, middle market
companies can be found in most major industries. Florida is home to more than 7,000 middle market
companies that generate $275 billion in total revenue annually. While relatively small in number,
middle market companies pack a mighty punch, employing one in every five Floridians, and oftentimes,
they are the business success stories in our neighborhoods and communities.
A key reason why middle market companies are such an important piece of our economy is the
unique niche that they occupy: middle market companies are large enough to make significant capital
investments, yet small enough to be innovative and flexible in an ever-changing marketplace.
It is also
common for the company’s founders to remain at the helm and guide their business toward continued
growth and success. All of these characteristics make middle market companies a rich source of
economic growth and diversification.
This edition of Florida’s Bottom Line highlights middle market companies, defines their presence,
and shares some of Florida’s homegrown success stories. Inside, you will find insight from the leading
national authority on the middle market sector as well as testimony from a few of Florida’s middle
market companies and the factors that have contributed to their success.
Additionally, you will find
analysis and updates on Florida’s economy, information on the Florida Accountability Contract
Tracking System (FACTS), and insight on a growing trend in technology known as the Internet of
Things.
I invite you to read about the importance of middle market companies in Florida and their impact
on our state’s economy. Florida’s commitment to fostering a competitive business climate through
curbing taxes and reducing regulations provides the opportunity for businesses to expand and flourish,
thus creating jobs and prosperity for families across the state. We will work to continue to create the
environment whereby this vital segment of our economy will continue to thrive and grow.
Sincerely,
Jeff Atwater
Chief Financial Officer
State of Florida
SUBSCRIBE TO FLORIDA’S BOTTOM LINE »
INSIDE
STORIES
Business and Finance:
What are Middle
Market Companies?
SEE PAGE 1
3 Questions with…
Florida’s Homegrown
Middle Market Companies
SEE PAGE 2
Florida's Economy:
Spring has Sprung
SEE PAGE 4
State and Nation:
Federal Finances
a Growing Problem
SEE PAGE 6
Science and Technology:
The Internet of Things
SEE PAGE 7
Business Bulletin:
Sunshine in
State Contracting
SEE PAGE 8
Infographic
SEE BACK COVER
SEND US YOUR COMMENTS!»
.
BUSINESS & FINANCE
What are Middle
Market Companies?
By Thomas A. Stewart,
Executive Director of the National Center for the Middle Market
To hear people talk, you’d think that the American economy
consists of entrepreneurial startups and Fortune 500 giants.
What’s in the middle—the economy’s core and heartbeat—is often
forgotten. The middle third of the private sector consists of about
200,000 companies with annual revenues between $10 million
and $1 billion. Bigger than small, smaller than big, this group
collectively contributes about a third of non-government GDP and
employment.
They’re not startups: Their median age is 31. They’re
in every state and every industry; compared to the economy
as a whole, middle market companies are more likely to be
manufacturers and less likely to be financial services companies.
Many of them are famous: Elmer’s Glue, Tootsie Roll, Callaway
Golf, and every professional sports team, for instance. But
thousands of law firms, logistics companies, franchisers and
dealerships, agribusiness companies, and others are middle
market, too.
Just 15% are publicly traded. Of the rest, about a third
are family owned; another third are owned in whole or part by
private equity; the rest take other forms—sole proprietorships,
partnerships, and so on.
Because they’re private, not much is known about them. Data
about their performance isn’t fed to economic prognosticators.
Their concerns are often not presented to policy makers—small
companies have their small business association, big shops their
lobbyists, but mid-sized companies mostly go about their business.
Yet the middle market is where the growth is.
In 2014, according
to data collected by the National Center for the Middle Market
(NCMM), these companies delivered top-line, year-on-year
growth of 7.2%, while revenues of the S&P 500 grew just 4.9%.
Thomas A. Stewart is the Executive
Director of the National Center for
the Middle Market.
Employment in middle market companies grew 5%; big-company
payrolls increased 2.2%. Among small business, those legendary
job creators, there is also a lot of job destruction because the failure
rate is high.
Net-net, small business job growth last year was the
same as it was among big companies, 2.2%. Strong, sustained
growth happens in the middle—among the unsung heroes of the
American economy.
Mid-sized businesses go to market with characteristic strengths
and constraints. They’re the right size to be closely managed.
The
CEO isn’t remote from the shop floor—she may walk it every day.
When problems crop up, they’re not swept under the rug—there is
no rug. Customers are people, not data sets. NCMM research shows
that middle market companies are likely to measure the impact
of operational improvements first and foremost by how much
they improve customer satisfaction; indeed, they are four times
more likely to emphasize satisfying customers than cutting costs.
CONTINUED ON PAGE 3
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line
1
.
3 QUESTIONS WITH…
Florida's Homegrown
Middle Market Companies
FBL: Mr. Koenig, what factors have contributed to your company’s
success in Florida?
City Furniture had a humble beginning. My brother, Kevin Koenig, saved up a few
thousand dollars while working his way through FAU as a bellman. He used that money
to open a small waterbed store in 1971 and named it Waterbed City.
He sold waterbeds
in the store during the day and after hours he cut wood planks into waterbed frames.
We built a great team and brought what we learned in business school to the crazy
waterbed industry. Then the waterbed industry started to nosedive and we re-invented
our business into City Furniture. Now, we have 15 City Furniture showrooms and
11 Ashley Furniture HomeStores with over 1200 associates and are the #1 seller of
furniture in South Florida.
Many factors have contributed to our success in Florida:
• The basics: we have rule of law, private property rights, a safe and just society, ease
of opening and doing business, and good government.
• We enjoy affordable, quality public education.
• The opportunity for growth has always been a part of Florida.
• Most importantly, we were able to develop a wonderful team.
The biggest strength
of Florida is the wonderful people that live here.
KEITH KOENIG
President of City Furniture
We are blessed to live in Florida.
FBL: Mr. Abascal, what factors have contributed to your company’s
success in Florida?
Several factors play into AVT Simulation’s success in Florida. To start, AVT had the
opportunity to partake in the University of Central Florida Incubator Program.
The
program provided AVT Simulation the opportunity to have its start in a very grounded,
financially stable manner. In addition, AVT Simulation is centrally located in Research
Park—a large modeling and simulation hub in Central Florida. This location has
afforded us the opportunity to network with customers and competitors alike.
There
are also many informational meetings on a monthly basis within Research Park,
providing pivotal business intel on upcoming or ongoing opportunities.
ROBERT ABASCAL
Founder and CEO of
AVT Simulation
By and far, the main reason for AVT’s success in Florida are our people—our customers
and our employees. AVT Simulation has had the opportunity to work on some of the
largest, most influential training programs directly affecting our nation’s soldiers
on the front lines, allowing them to improve and thrive. Behind these programs are
the customers that afford us the opportunity to do so, and our employees who work
tirelessly to ensure the program’s success.
CONTINUED ON PAGE 3
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 2
.
FBL: Mr. Withers, what factors have contributed to your company’s
success in Florida?
As a fifth-generation Floridian, managing a business started by my great grandfather, our
deep roots and ties to the community are certainly among the principal factors of our
success.
In the early days of our company, moving and storage was a fairly uncomplicated business.
Today, however, we manage complex logistics on a world-wide scale. While investing in
technology plays a key role in allowing us to meet the needs and expectations of our clients,
it is our investment in human resources that make us who we are.
Creating a comfortable work environment and reducing stress levels have led to increased
productivity and greater job satisfaction. From tuition programs, to assist employees
seeking to advance their knowledge and skills, to flex-time scheduling in recognition of the
unique challenges dual-income families face when it comes to childcare or other shared
family responsibilities, we are fully committed to our people — a commitment reflected
in our high staff retention rates and customer satisfaction.
And that is a key factor in our
success and our longevity.
CHIP WITHERS
President of Withers
Transportation Systems
Continued from Page 1
BUSINESS & FINANCE
What are Middle Market Companies?
They’re also financially conservative: They tend to hold a lot of cash
and by wide margins prefer to pay for investments from retained
earnings rather than with borrowed money. Three out of five have
a debt-to-assets ratio under 15%. It’s a hypothesis, but perhaps this
combination of customer focus and financial conservatism means
that middle market companies tend to make smart, focused bets
rather than spread investment around.
approximately 2.3 million employees: This is 25% of corporate
revenue statewide and about 21% of jobs.
That’s a lot, but less
than the nationwide percentages. Industry mix probably explains
part of it: Compared to the country as a whole, Florida is light on
manufacturing (16% of companies in the national middle market,
vs. 11% in Florida) and heavy in construction (9% vs 12%).
Tourism,
so important in Florida, may skew the mix, too.
Their conservatism is a mixed blessing, however. Research
conducted by the NCMM in partnership with the Brookings
Institute suggests that middle market companies have been too risk
averse when it comes to exporting and otherwise participating in
global markets. Survey data from our partners at General Electric
reveals that middle market companies lag big companies in using
new innovation tools and technologies (such as open innovation,
3-D printing, and data analytics).
They are closely managed—but
also thinly managed—and lack the resources to deploy teams to
work full time researching new opportunities.
Smaller it may be, but it is mighty: Florida’s middle market is
outperforming the national average. In 2014, the mean revenue
growth of mid-sized companies in Florida was 8.6% (vs. 7.2%
nationally); employment grew 6.7% (vs.
5.0%). And these companies
are poised to keep growing, with 78% saying they’d put an extra
dollar of revenue to work by investing it (vs. 68% nationally).
Given
the influence of tourism and construction, Florida’s middle market
appears more cyclical than most—meaning that these stunning
numbers show the state collecting a disproportionate share of the
national economic upswing, but also warn that it is likely to suffer
more in downturns.
It’s also clear from our studies that these companies are ignorant of
or reluctant to use state and Federal programs that could help them.
Washington—even Tallahassee—seems far away and complicated.
Indeed, complexity—whether of the tax code or regulations—is
a bugbear for middle market companies. They rarely enjoy the
exemptions offered to small firms and cannot employ armies of
lawyers and clerks to lobby for or exploit loopholes.
Florida is among the six states with the largest number of
middle market companies and employees of middle market
companies. (The others: California, Texas, New York, Illinois,
and Pennsylvania.) Florida boasts nearly 7,000 middle market
companies with combined revenue of about $278 billion and
Across the country and in every state we’ve looked at, the middle
market is not just the locus of growth but an engine of it; attention
paid to middle market companies pays off better than attempts to
woo multinational giants (against long odds) or incubate startups
(which are volatile).
Policies that invest in infrastructure, logistics
and distribution, and education (especially of STEM workers), that
clarify regulations, and that encourage global connections and trade
are all likely to drive middle-market growth and with it, growth for
Florida. Above all, however, it’s important for government, business
associations, economic-development groups, the media, and others
to hear from middle-market executives themselves—so that these
heroes remain unsung no longer.
FOR MORE INFORMATION, VISIT WWW.MIDDLEMARKETCENTER.ORG
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 3
. FLORIDA'S ECONOMY
Spring has Sprung
Following the recession, both Florida and the nation began to
see job-growth for the first time in August 2010. Since that time,
Florida’s job-growth rate has been consistently accelerating. After
keeping roughly the same pace with U.S. job-growth between
2010 and early 2012, Florida’s job-growth rate began to exceed
the national average and it has continued to do so without pause.
The resulting gap that has been widening for close to three years
is evidence that Florida’s job market has pulled far ahead of the
national recovery.
This job-growth acceleration has helped to drive down the
unemployment rate despite the upward pressure of a growing labor
force.
As of February, Florida’s unemployment rate has declined
to 5.6 percent, which is 0.1 percentage points above that of the
national rate (5.5%). The last time Florida’s unemployment rate
was this low was in September 2002 during an economic upswing.
Over the year, Florida’s unemployment rate has declined by 0.9
percentage points from 6.5 percent in February 2014. This drop is
significant considering that Florida’s labor force has increased by
183,000, or 1.9 percent during the same time.
Florida
3.0%
2.0%
1.0%
0.0%
0
-1
ug
A
1
-1
b
Fe
1
-1
ug
A
2
-1
b
Fe
2
-1
ug
A
3
-1
b
Fe
3
-1
ug
A
4
-1
b
Fe
4
-1
ug
A
5
-1
b
Fe
Source: U.S.
Bureau of Labor Statistics
Florida's Unemployment Dives as Labor Force Soars
6.8%
9,750
6.6%
9,700
6.4%
9,650
6.2%
9,600
6.0%
9,550
5.8%
9,500
5.6%
9,450
Individuals (in 000s)
Recent job-growth in Florida has also been widespread with all
major industry areas reporting over the year job-growth, with the
exception of the information industry. The four industries that
had the highest growth were Construction (7.7%); Other Services
(4.5%); Leisure and Hospitality (4.4%); and Professional and
Business Services (4.3%).
U.S.
12-Month Job-Growth Rate
Newly revised data from the Bureau of Labor Statistics has shown
Florida’s job market saw an even more impressive and consistent
job-growth rate over 2014 that has continued in 2015. Between
February 2014 and February 2015, 266,600 non-farm jobs were
generated across the state, relating to an annual job-growth rate
of 3.5 percent.
This annual job-growth rate is above that of the
national rate of 2.4 percent and is one of the highest rates of jobgrowth since March 2006.
Florida's Job-Growth Outpaces the Nation's
4.0%
Unemployment Rate
Florida’s economy continues to improve with strong gains in the job
market, a declining unemployment rate, consumer confidence and
business optimism at record highs, and a housing market that has
continued to grow with the traditional homebuyer poised to take
center stage.
9,400
5.4%
Feb-14
U.S.
May-14
Florida
Nov-14
Aug-14
Feb-15
Florida’s Labor Force
Source: U.S. Bureau of Labor Statistics
CONTINUED ON PAGE 5
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 4
. With businesses being more optimistic and seeking to hire more
Floridians, the impact of the growth in jobs is having a direct
influence on consumer’s confidence. According to the University
of Florida’s Bureau of Economic and Business Research, Floridians
are more confident in their current economic situation than at any
time since 2005 with the Consumer Sentiment Index up 21 percent
over the year. While this large increase is partially due to a change in
survey methodology, March’s value is the eighth consecutive
month where a new post-recession peak has been reached.
Floridians felt especially confident in their current financial
situation as compared to last year, with a year-over-year increase
of 20 percent. In addition, consumer’s perception of their financial
standing over the next five years increased 25 percent over-theyear.
As consumers’ continue to find jobs and with wage hikes
expected in the future, the financial optimism of Floridians is
likely to continue, with the result of this optimism spilling over
into Florida’s housing market.
Consumer's Optimism Reflects Economic Prosperity
12-Month Growth Rate
As Housing Prices Rise, Mortgage Rates Fall
$190
4.45%
$180
4.20%
$170
3.95%
$160
3.70%
5
4 4 4
4
4
4
4
4 4
4
4 5
-1 r-1 r-1 y-1 n-1 l-1 g-1 p-1 t-1 v-1 c-1 n-1 b-1
a Ju Ju u
e Ja Fe
o
eb Ma Ap
e Oc
F
S
D
N
M
A
Median Sales Price of Existing Homes
30-Year Fixed Rate Mortgage Average
30%
25%
Going forward, there are clear signs that Florida’s housing market
is due to heat up later this year. With strong job gains over the year
and increasing personal income, traditional homebuyers in Florida
are on a steadfast financial footing, which means more Floridians
are able to afford a home. Additionally, 30-year mortgage rates have
been falling, down 12 percent since February 2014 at the same the
median sales price is increasing, which is helping to keep the real
cost of purchasing a home stable for traditional homebuyers.
Interest Rate
The job openings reading is also one of the highest in 40 years which
indicates that labor markets are tightening and that there will be
more pressure on compensation in the coming months.
Fortunately,
there are signs that compensation-growth has begun to occur. In
2014, personal income in Florida increased 4.6 percent, the highest
annual growth since 2011, and is a higher rate of growth than that of
the U.S. (3.9%).
rising 9.1 percent over the year in February.
Likewise, the number of
closed sales are up 19 percent over the year and new home building
permits in Florida are up 16.4 percent over the same timeframe.
Further, these three key indicators have seen consistent year-overyear growth each February since 2012, and are currently at their
highest levels yet for this time of year.
Home Value (in 000s)
This decline in the unemployment rate is a clear sign of a large
demand for workers in Florida. Business’s desire for workers is
captured in the National Federation of Independent Businesses
(NFIB) Small Business Optimism Index, which has grown 7.2
percent over the year in February. In their February 2015 report,
29 percent of businesses noted having job openings that they could
not fill in the current period, which is the highest reading since
April 2006.
25%
21%
20%
24%
22%
20%
15%
15%
Source: Sales Price-Florida Realtors, Mortgage Rate- Federal
Reserve Economic Database
When considering Florida’s rapid job growth, growing consumer
confidence, and stable housing costs, the trend toward a stronger,
more robust housing market in Florida this year becomes evident
with the traditional homebuyer leading the way.
10%
5%
0%
Consumer
Sentiment
Index
Personal
Current
Finances
Personal
Future
Finances
Short-Term Long-Term
Purchase
National
National
Large
Economy
Economy Ticket Items
Source: Bureau of Economic and Business Research
March 2015
Currently, Florida’s housing market is seeing growth with one of
the main indicators, the median sales price of single-family homes,
Jeff Atwater | Chief Financial Officer
Overall, Florida’s economy continues to show marked
improvements thus far in 2015; however, there are factors that
could cool Florida’s boiling economy.
Negative economic conditions
outside of the U.S. could have an impact on economic activity in
Florida as the economies of the European Union, several South
American Countries, and Asia show slower growth. Additionally,
interest rate hikes by the Federal Reserve later this year will add
short-term volatility to financial markets and also raise the cost of
borrowing.
Accounting for these headwinds though, it is unlikely
that these will have any significant long-term negative impact on
Florida’s economy.
Florida’s Bottom Line 5
. STATE & NATION
Federal Finances
a Growing Problem
Florida’s financial horizon continues to brighten as the economy
thrives. The necessary choices that occurred in the wake of the
recession have resulted in the current financial prosperity of
Florida. Government transparency, disciplined spending, and
targeted investments have allowed for the state to have greater
financial flexibility as revenues strengthen because it is no
longer burdened by rising debt. By doing so, Florida provides the
framework for businesses to focus on the tasks at hand, and for
consumers to keep more money in their wallets.
Unfortunately, the
same cannot be said for the federal government.
costs of these programs are expected to total $3.2 trillion, and will
account for 52 percent of total federal spending in that year.
According to the Congressional Budget Office (CBO), the federal
government continues to spend more money than it takes in. The
federal deficit, or the amount by which the federal government's
spending exceeds its revenues, for the 2015 fiscal year is expected
to be $486 billion, amounting to approximately 2.7 percent of the
nation’s gross domestic product (GDP). To put this into perspective,
the projected federal deficit in 2015 alone is approximately six
times the size of Florida’s total current budget.
The CBO also
expects that this trend in higher spending will continue into the
future with annual federal deficits surpassing the $1 trillion mark
by 2025. Over time, the cumulative federal deficits are projected to
total $7.2 trillion from 2016-2025.
Such high and rising federal debt has serious consequences for
the nation: When interest rates return to their more typical higher
levels, net interest costs will more than triple from $229 billion in
2015 to $808 billion in 2025.
Federal Deï¬cit (Billions)
$0
-$200
-$400
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
16 017 018 019 020 021 022 023 024 025
15
2
2
2
2
20 20
2
2
2
2
2
Source: Congressional Budget Office
-$600
-$800
-$1,000
-$1,200
Net Interest Costs will Triple Between 2015 and 2025
Net Interest Costs (Billions)
Federal Deficits will Double in Size by 2025
The ever increasing size of these government programs and federal
deficits will have long-term implications for the level of federal
debt held by the public (“federal debt”). In 2015, the federal debt
is expected to rise above $13.4 trillion and will be equivalent to
74.2 percent of the nation’s GDP; the highest level since the 1950’s.
By the year 2025, the federal debt will increase by 58.5 percent to
$21.2 trillion, or 77 percent of the nation’s GDP.
16 017 018 019 020 021 022 023 024 025
15
2
2
2
2
20 20
2
2
2
2
2
Source: Congressional Budget Office
Key drivers of the growing federal deficits are increasing healthcare
burdens and larger social security obligations.
The combined
impact of healthcare and social security payments will increase
mandatory spending substantially over the next decade due to the
aging population demographic of the nation. By 2025, the expected
Jeff Atwater | Chief Financial Officer
Moreover, because federal borrowing reduces national saving
over time, the nation’s capital stock would ultimately be smaller
and productivity and total wages would be lower than they would
be if the debt were smaller. In addition, lawmakers would have
less flexibility than otherwise to use tax and spending policies to
respond to unexpected challenges.
Finally, a large federal debt
increases the risk of a fiscal crisis, during which investors would
lose so much confidence in the government's ability to manage
its budget that the government would be unable to borrow at
affordable rates. By comparison, Florida continues to improve its
financial outlook by paying down its long-term debt, keeping its
budget balanced, and storing excess reserves for a rainy day.
Florida’s Bottom Line 6
. SCIENCE & TECHNOLOGY
The Internet of Things
What is the Internet of Things?
Imagine a world where your customers’ lawns decide to water
themselves without intervention or their coffee pots start
brewing because their alarm clocks told them to start. Many
products used today will soon have sensors and the ability to
communicate data to provide convenience, save money, or improve
health. This technological transformation is known as the Internet
of Things (IoT).
The IoT can be defined as the computerization and connection of
devices that have previously not been connected to the internet
and each other. These devices have the ability to sense, monitor,
interact, and report changes in their environment.
The products
becoming connected range from televisions and home appliances
to manufacturing equipment and medical devices.
The IoT’s Opportunities
The IoT’s impact is expected to be significant by all future
estimations. Depending on the source, experts believe anywhere
between 15-50 billion IoT enabled devices will be sold by 2020
and the estimated value of these items will be measured in trillions
of dollars.
Middle market companies will benefit from the IoT through
internal process improvements, which increase their efficiency as
well as the products they produce for their customers. IoT product
developers will enhance their offerings with:
•
•
•
Innovative products for new markets
Enhanced existing products through added capabilities
(many of these products are not currently thought of as
high technology)
Identifying process efficiencies for themselves and
their customers
Current IoT product examples include smart phone applications
which allow for consumers to interact with companies on a more
intimate level.
Firms will benefit from this closer relationship by
gathering customer specific data to better refine products and
marketing strategies.
Jeff Atwater | Chief Financial Officer
The health industry in particular has quickly embraced the IoT
and its capabilities. Health IoT devices have the capability to
record and monitor data in real-time and relay the information
back to the medical office for review. Patients benefit by having key
health indicators monitored (e.g., blood pressure, glucose) by the
physician in between office visits.
In addition, the IoT will provide a number of operating benefits
to businesses.
Manufacturing operations will collect significant
amounts of production line data in real time, highlighting areas for
improvement. Businesses will also be able to monitor high value
assets in real time to better define and predict maintenance, saving
them money. For example, commercial truck manufacturers are
now using sensors and software to diagnose problems with their
vehicles as they run—minimizing down-time.
The IoT Will Create Challenges
For all of the IoT’s promise, there are some challenges and
concerns middle market companies need to be aware of as this
technology becomes more widely available.
For example, one of
the IoT’s anticipated benefits is interaction and communication
between devices. However, there is no current communication
standard for IoT devices. Businesses will have to work together
to determine a common communication standard otherwise, the
IoT’s full benefits may not be realized.
Firms utilizing IoT technologies would also be astute to determine
their ability to secure the data collected by their IoT systems.
In
fact, some of the more significant concerns regarding the IoT
for middle market companies focus on device security and data
privacy. The sheer number of devices available to companies will
also make it difficult for companies to develop security protocols
for each individual device it purchases or an employee brings to
work. Some middle market companies may have the dual problem
of securing the data they generate with their IoT devices and data
they collect with IoT devices they sell to customers.
Like many new technologies, the IoT presents new options for
companies and their consumers while at the same time creates
potential challenges.
It will be up to each firm to decide how they
want to take part in the IoT.
Florida’s Bottom Line 7
. BUSINESS BULLETIN
Sunshine in State
Contracting
Floridians across the state work hard for every dollar they earn.
If they don’t do their job, they don’t get paid. Similarly, businesses
must offer a desirable product or service to generate revenue, or
else they will lose customers. This reality is well understood by
people who run a business, but government plays by a different
set of rules. Government does not “earn” revenue.
The only
money available to government is what it takes or borrows out of
your pocket. This is done under the pretense that government is
spending your money wisely, but this can’t be left to chance.
Making government transparent is not an option, it is an obligation.
Government must be transparent and offer convincing proof
that it is up to the task. It’s your money, and you have a right to
know how every penny of it is spent.
In the past, this would have
required sifting through mountains of paper, but technology has
revolutionized government accountability by enabling the public to
have unprecedented and easy access to government spending.
Florida has taken advantage of this opportunity by publishing
state spending data and contracts online through the Florida
Accountability Contract Tracking System (FACTS). Developed by
the Department of Financial Services, FACTS is a comprehensive
online tool that offers Floridians greater visibility into what their
government is doing. With the click of a mouse, you can find and
download detailed information about active state contracts, grant
agreements, purchase orders, vendor payments, state spending,
and even local government budgets and spending.
Considering
Total State Spending
Salaries & Retirement
21%
Misc. Payments
2%
Public Assistance
2%
Contracted Items
75%
Fiscal Year 2013-2014
Source: FL Dept. of Financial Services
that three-fourths of the state’s budget is spent in the form of a
contract, it is critical that taxpayers can inspect public contracts
and grant agreements.
Launched in 2012, FACTS marked the first time that the state’s
contracting process could be tracked through a centralized,
statewide system.
Today, FACTS is a user-friendly, interactive
portal where the public can easily access and download more
than $80 billion in government contracts and grant agreements.
Through FACTS, users are able to search for state contracts by
agency, vendor, dollar amount, date, and commodity or service type
provided. Further, the contract information in FACTS is regularly
updated and audited with more contracts being added every day.
Since 2012, more than 65,700 contracts and grant agreements have
been made open for public inspection through FACTS, two-thirds
of which include images of the contract’s documents. Roughly
375,000 state agency purchase orders are also readily accessible
through FACTS.
This unprecedented transparency in state contracting has already
saved taxpayers millions of dollars.
When government contracts
and spending is visible and accessible to the public, competition is
stronger. As each contract expires, competition is increased due to
the public and vendor communities’ awareness of the types of work
and services previously performed and the historical costs and
payments associated with those contracts. As a result, Floridians
have saved an estimated $40 million from the renegotiation or
negotiation of state contracts since Fiscal Year 2013-2014.
You are invited to explore the FACTS and Transparency
Florida websites and see for yourself how Florida is striving to
fundamentally change the relationship between the government
and the people it serves.
EXPLORE FACTS & MORE AT: WWW.MYFLORIDACFO.COM/TRANSPARENCY
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 8
.
FLORIDA’S MIGHTY
MIDDLE MARKET COMPANIES
What is the Middle Market?
Companies with Annual
Revenue between
7,000 Businesses
4 in every 5
Employ 1 in every 5
of Florida’s Workforce
- $1B
$10M
Annual Total
Revenues of
$
Middle Market
Companies in
Florida Plan to
Invest Instead
of Save
SPRING 2015
$275 Billion
Employment Growth
Past 12-Months
6.7%
U.S. 5%
Revenue Growth
Past 12-Months
Florida’s Breakdown of Middle Market
Companies By Industry
Transportation,
Communications,
and Utilities
6%
Manufacturing
Retail
Florida
and Real Estate
15% Wholesale
27%
7% Healthcare
Source: National Center for the Middle Market
JEFF ATWATER
Jeff Atwater | Chief OFFICER
CHIEF FINANCIAL Financial Officer
National
Local Economy
Local Economy
National Economy
National Economy
Global Economy
9% Finance, Insurance,
13%
Business
Services
Florida’s Middle Market
Company’s Conï¬dence
11% Construction
12%
8.6%
U.S. 7.2%
Florida
Florida
Global Economy
79%
76%
62%
81%
73%
53%
For more information about Florida’s economy, please visit
Florida’s Bottom Line 9
www.MyFloridaCFO.com/FloridasBottomLine/
.