Time is running out for federal agencies (defense and civilian) to spend billions of dollars that Congress allocated. According to Nextgov’s Executive Editor, Frank Konkel, Nancy Marshall-Genzer of WESA (90.5 Pittsburgh), and analysis from our partners at The Pulse of GovCon, spending in government agencies has increased in pace.
However, it is estimated that between July and the end of September (2 weeks away as of this article), there remains as much as $200 billion (possibly more) in money that needs to be spent. Here is a Snapshot of Konkel’s article in Nextgov and Marshall-Genzer’s article on WESA.
Authors: Frank Konkel and Nancy Marshall-Genzer
Publications: Nextgov and WESA (90.5 Pittsburgh)
DISCUSS IN THE FORUM: The government is picking up the pace on spending, but the clock is ticking. Can the government spend around $200 billion by September 30th? What opportunities are there for contractors? Click here to discuss.
Here is what you need to know:
Spend It or Lose It: Federal agencies get money to spend. The money is appropriated by Congress. However, regardless of how much or when the money is allocated, agencies need to spend that money (or obligate it) before the end of the fiscal year, otherwise it gets returned to the U.S. Treasury. In 2018, the fiscal year officially ends on Sunday, September 30. However, it is likely an agency will need to officially spend the money a little before that date. Estimates are that close to $200 billion need to be spent in the last quarter, which could mean there are tens of billions that need to be spent in the last couple of weeks.
According to The Pulse of GovCon: Federal agencies have obligated $36 billion more toward contracts since July 1, 2018. The data on what amount of money obligated by government agencies comes from the Federal Procurement Data System (FPDS). There is no way to know more recent trend data, because reporting into FPDS is not immediate, and can take weeks or months. At the start of August, the Defense Department had only obligated $177 billion in contracts of a projected $574 billion in discretionary spending for fiscal 2018.
Is There Confidence The Money Will Get Spent: A Government Business Council, a research organization for Nextgov’s parent company, Government Executive Media Group, surveyed government buyers. 52 percent were either “very confident” or “extremely confident” the money would get spent. Greater than 80 percent of government buyers planned to used existing contract vehicles to complete purchases. That means up to 20 percent could be new / different contract vehicles.
Biggest Challenge: Lack of internal personnel, internal processes, and a lack of time (since the Omnibus was passed in March of 2018)
Most Common Purchases: Professional services (consulting, education, technical and engineer services), human capital products, office management products, and IT (software, hardward, telecommunications services).
Quotes of Note:
“It is not impossible for this to happen, but it is unprecedented for that high of a percentage to be obligated to contracts for a fiscal quarter. You’d have to spend almost 50 percent of the yearly total in three months.”
– David Berteau, President, Professional Services Council
“They have a set of supplies and equipment that they may put off their purchases until the latter half of the fiscal year or the latter part of the fiscal year so that they can increase the order and get more money out the door.”
– Ryan Alexander, President, Taxpayers for Common Sense
“You can buy cars, vehicles, motorcycles, bikes and scooters. You can buy bombs, bulk explosives and grenades. You can buy fidget spinners, snow boarding equipment and booze for your liquor cabinet.”
– Adam Andrzejewski, CEO and Founder, OpenTheBooks.com
“Every year on Sept. 30 at 9 p.m. Pacific he’d get a call from the Pentagon saying, ‘It’s midnight here, so we can’t spend any more of this year’s budget, but you have three hours left.’ For the types of small contracts that you can get out the door really quickly, you do see this spike on Sept. 30 on the West Coast of the United States.”
– Neale Mahoney, an economist at the University of Chicago, discussing what a retired naval officer told him.