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Preparing for the 4th-quarter
spending spree
The September surge in particular will test agencies and industry as the trend toward end-of-the-year spending accelerates
BY NICK WAKEMAN
We call it the “fourth-quarter spending spree,” but it is more like an avalanche — and it appears to be growing.
Ten years ago, the fourth quarter wasn’t very different than any other quarter because spending was spread relatively evenly throughout the year, said Kevin Plexico, vice president of information solutions at Deltek.
However, more than 34 percent of civilian agency spending now occurs during the fourth quarter of the gov- ernment’s fiscal year, added Plexico, who spoke at a Washington Technol- ogy/Deltek event in July.
The event also featured leaders in charge of some of the federal gov- ernment’s largest and most popular acquisition vehicles: Darlene Coen, deputy program manager of NASA’s SEWP; Omar Saeb, program manager of the General Services Administra- tion’s Alliant; Jill Thomas, division director in charge of GSA’s Schedule 70; and Jaclyn Smyth, who oversees the Department of Homeland Secu- rity’s EAGLE II and FirstSource II contracts.
They reported some astounding numbers for the fourth quarter, with the volume of business ranging from 60 percent to 80 percent of the year’s total. Industry panelists likewise said their business is heavily weighted toward the fourth quarter.
So what is driving all that activity to the end of each fiscal year? Part of it is the government’s growing reli- ance on continuing resolutions, which limit agencies’ ability to move forward on new projects. CRs are hardly new, but they have traditionally lasted only a few weeks while Congress final- ized appropriations. Rarely did they stretch into the second quarter.
In recent years, CRs have been lasting longer and longer. In fiscal 2017, an omnibus appropriations bill wasn’t passed until the third quar- ter. Plexico said we can expect to see more business than usual in this year’s fourth quarter because of the long-term CR.
Another reason, of course, is that agencies are in a rush to spend their budgets because they will lose any unused funds. And because so many contract awards are made in Sep- tember, the options also often come due in September for the succeed- ing years, adding still more volume to agencies’ spending activities.
Plexico said nearly 17 percent of all contract awards are made in Septem- ber, compared to 9 percent for most other months.
The government is trying to miti- gate the spending spree, said Smyth, who is director of the Strategic Sourcing Program Office at DHS. For
instance, DHS is trying to get agencies to set renewals and options for differ- ent times of the year so they don’t all happen in the fourth quarter.
Michael McHugh, staff vice presi- dent of General Dynamics IT’s GWAC Center, tracks all the task-order con- tracts the company holds. He said offi- cials typically see a spike in solicita- tions in July and August, followed by a drop-off in September. Then it’s a mad scramble to get the actual buy- ing completed by Sept. 30. He added that the shift to more task-order con- tracts has greatly reduced the time from solicitation to award and can make for a frenetic September.
Despite efforts to ease the crush, no one expects the situation to change anytime soon. Part of it is the nature of the business, but many things are beyond the control of agencies and the contractors that serve them. Con- gress’ inability to pass a budget in a timely manner tops that list.
For contractors, the key is to con- tinue to build customer relationships and lay the groundwork throughout the year to serve customers. It is simple and straightforward advice, but that doesn’t mean it’s getting any easier to follow it. n
Nick Wakeman is editor-in-chief of Washington Technology.
WashingtonTechnology, a sister publication to FCW, covers all the ins and outs of the IT contracting community. Learn more at WashingtonTechnology.com.
50 August 2017 FCW.COM