Federal contractors are getting ready for the fourth-quarter spending spree, a new tradition in government acquisition which has seen significant spikes in contracting in the last quarter of the year.
Ten years ago, agencies tended to spend most of their budgets in the first two quarters, Today, sequestration, continuing resolutions and other budgetary issues have resulted in large spending spikes, most notably in September.
"The [term] 'Q4 spending spree' is a misnomer," according to Deltek analyst Carey Webster. The spike is concentrated in the last month of the fiscal year, she said.
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While spending in July and August is generally on par with other months throughout the year — between 7 percent and 9 percent of total budgets — September saw spending total an average of 17.6 percent over a five-year average.
Landscaping, interior design and IT professional services are usually the focus of that spending, rather than large programs or O&M, Webster pointed out.
Going by the five-year trend, Deltek analysts expect agencies to spend about $471 billion this September.
"We continue to see this trend," Webster said during a July 21 webinar. "It's definitely important for contractors to understand which agencies are buying in Q4" and be prepared to respond to RFPs on short notice.
Webster added this is especially important for small businesses, which might not have the resources on hand to respond quickly. Those contractors are advised to be prepared for the September spending spree by having quotes ready for the quick turnaround.
The State Department is historically the biggest Q4 spender, dropping 55 percent of its budget on average at the end of the fiscal year. The Social Security Administration and Interior Department round out the top three, both averaging 48 percent over the last five years.
Contractors are less likely to see a lot of late activity from agencies that focus on larger projects, such as the Energy Department, which averages 16 percent, NASA at 25 percent and HUD, DoD and the Air Force, each at 28 percent.
Aaron Boyd is an awarding-winning journalist currently serving as editor of Federal Times — a Washington, D.C. institution covering federal workforce and contracting for more than 50 years — and Fifth Domain — a news and information hub focused on cybersecurity and cyberwar from a civilian, military and international perspective.
