IBM chief Sam Palmisano gave a speech to the Council on Foreign Relations today in which he proposed a private-public “smart systems”-led recovery for the economy.

Palmisano told the New York audience that “smart infrastructure is becoming the basis of competition between nations, regions, and cities. … [I]nvestment and work flow not only to the places in the world that offer cost advantages, skills, and expertise. It is flowing to countries, regions, and cities that offer smart infrastructure, everything from efficient transportation systems, modern airports, and secure trade lanes to reliable energy grids, transparent and trusted markets, and enhanced quality of life.”

He suggested public and private investment in all of these things, mentioning, for example, Stockholm’s traffic-management system, which has cut traffic by 20 percent, and ActiveCare Network’s initiative to lower healthcare-delivery costs by as much as 90 percent.

As private contracts dry up for companies like IBM in the next few years, those companies inevitably try to gain more public-sector contracts. The hundred-billion-plus stimulus package Congress likely will pass later this year or next could offer many opportunities for such contracts on everything from high-speed rail lines to (hopefully) Medicaid reform.

That’s not necessarily a bad thing for either the public or the private sector. But state and city governments have to realize that they must competently manage contractors like IBM in executing complex infrastructure projects, just as those state and city governments are supposed to competently the manage projects they run themselves.

As the Big Dig proved, assigning a lead contractor to a project doesn’t absolve the government of responsibility for careful oversight. Horribly run projects like Lockheed/Northrop’s failed revamp of the Coast Guard’s fleet have proven that at the federal level, too.

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