Federal agencies rush to spend billions by September 30

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It’s the most wonderful time of year in Washington – if you’re a federal contractor.

The annual “Christmas in September” spending season is well underway, with billions of dollars to be allocated before the government’s fiscal year ends on September 30.

And if the 2022 financial year resembles previous years, the last three months will represent about a third of the total obligations. Large government contractors receive the bulk of that payout, followed by smaller businesses, according to analysis by The Pulse of GovCon, a woman-owned business intelligence consultancy focused on government contracts.

The need to spend may be particularly acute this year, as supply chain issues and Congress’s habit of passing rolling resolutions instead of new budgets, a practice born of political gridlock, tie the hands of agency procurement managers, leaving them with a backlog of applications and less time to complete them.

“I would attribute at least some of that to the fact that we haven’t passed a budget at the start of the fiscal year in who knows how many years,” said Amanda Swanson Goff, director of research and analysis at The Pulse. .

Although agencies tend to spend most of their discretionary dollars before July 1, data shows that the biggest splurges in contract awards in any month of the year occurred in September. What is the precipitation? All unused funds will be returned to the Treasury Department beginning Oct. 1, and the “use it or lose it” shopping bargain has become an annual fall tradition in Washington.

Spending in the fourth quarter of this year on procurement could exceed $200 billion, according to a Bloomberg government analysis.

The September effect is well documented and draws criticism every year from critics who say it encourages waste.

A government spending study by nonprofit watchdog OpenTheBooks found that the federal government spent $97 billion in the last month of fiscal year 2018, including more than $61 billion attributed to the Pentagon. The purchases included guns and ammunition, but also batteries and books – and $2.3 million in lobster tails. Federal agencies also spent $293,245 on steak, including rib eye, top sirloin and flank steak that month.

As agencies look for ways to shell out their coffers, 70 of the 73 agencies surveyed by The Pulse make a purchase in the final quarter of the fiscal year.

Where are the priorities and how they might change

“When you think about these ongoing resolutions that take up most of the first quarter, sometimes extending into the second quarter, you have a complete freeze on any fresh start,” Goff said in an interview. “So the government is really handcuffed in terms of spending money.”

Lawmakers are working on an ongoing resolution that would extend government funding levels through Dec. 16 as current funding for fiscal year 2022.

Agencies that deal with public health emergencies or national security requests that change frequently may also intentionally set aside a portion of their budget for year-end as a cushion.

Yet, as the COVID-19 pandemic has shown, even unforeseen circumstances can shift priorities for the future, as was the case with the transition to remote working.

Experts at The Pulse predict a government-wide commitment to modernization, whether that means further developing telecommuting infrastructure or addressing rapidly evolving cybersecurity threats.

The Department of Defense in particular accounts for half of discretionary spending, so its budget priorities may reflect what is happening at the Pentagon.

Lately, such indices have withdrawn from Afghanistan, funneling aid into Ukraine and restructuring internally to shape peacetime functions and deal with emerging threats.

Perspectives for entrepreneurs

In the last quarter, sole-source awards and single-bid competitions also tended to increase because the government can act quickly on them.

Although agencies that spend their sprint money have been criticized for being frivolous or wasteful, the most popular spending category is professional and administrative services.

The least popular spending category at this point is for physical science programs, which play a bigger role for agencies like the National Institutes of Health.

More broadly, the federal government spends much of its budget on Medicare, Social Security, and defense needs, though funding for Income Security skyrocketed at the onset of the COVID-19 pandemic. .

In total, 2022 discretionary appropriations are 8% higher than last year.

Yet the last-minute purchases of years past have led members of Congress and unions to scrutinize the final transactions of the fiscal year.

“This ‘use-it-or-lose-it’ feature of time-bound budgetary authority has the potential to result in low-value spending, since the opportunity cost to organizations of spending funds on the point to expire is effectively nil,” said a report from Harvard University’s Kennedy School of Government. “This problem is exacerbated by the incentive to set up a rainy day fund early in the budget cycle.”

Members of Congress have proposed legislation to limit an agency’s discretionary spending in the final two months of the fiscal year, but no progress has been made.

Molly Weisner is a reporter for the Federal Times, where she covers government labor, policy and contracts. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as an editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.

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