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4th Quarter Federal Government Procurement System

Posted by Mike Anderson on Fri, Jul 18, 2014 @ 11:39 AM

I watched a Bloomberg webinar earlier this week about the fourth quarter spending plans for the US Government.  I’ve always known that there is usually money left over in the budget that ends up being spent in a flurry in the government’s fourth quarter.  The Federal Government procurement system is a very peculiar system for those that are not used to it.  This webinar went into a lot of detail regarding which agencies have money left over, why and how they might spend it.  For any government contractor that is interested in finding opportunities in the fourth quarter, it might already be too late this year but the webinar could provide hints on what to do in order to position a government contractor for future fourth quarter frenzies. 

Some of the interesting data from the research included the agencies with the most of their budget remaining to be spent (the Department of State has 47% of their budget remaining to be spent in the 4th quarter and this represents the largest percentage although the DoD probably has the largest dollar amount even though they only have roughly 32% of the budget unspent thru the second quarter).  Health and Human Services has almost 47% of their budget remaining to be spent in the fourth quarter as well.  On the other end of the spectrum, the Department of Energy has only 14% of their budget remaining.  That doesn’t mean that there may not be opportunities at the DOE as a large part of their budget goes to operation of several large national labs.  Those dollars are already spent but the remaining discretionary spending is probably more in line with the other large agencies. 

What I found interesting though was the analysis from Bloomberg that much of the remaining money will not be awarded in contract vehicles.  The money will most probably be issued on task orders to Multiple Award Contracts (MAC) or IDIQ type awards.  So if a government contractor is not already a holder of a MAC or IDIQ contract, they would not be eligible to receive this excess money in the 4th quarter.  The further explained that each agency has what is called a Procurement Administrative Lead Time (PALT).  Once the agency is within the PALT to the end of the fiscal year, they will be reluctant to issue contracts.  Since most of the Federal Government Agencies have lengthy PALT’s (60-90 days), they will be reluctant to start a new contract cycle for this fiscal year.  Now, if a contractor is already dealing with an agency, their procurement cycle has most likely started and this would not apply to that situation. 

So the bottom line for the 4th quarter spending spree is that there will be a lot of buying but not much contracting.  I think it is important to know what to chase and what to plan ahead on.  That doesn’t mean a government contractor should quit talking to the Contracting Officer.  You just may have to wait a little longer, maybe into the next fiscal year, in order to get the contract.

Topics: Government Spending, Procurement System