Spending Spree

The government is in the middle of a spending spree.

So what's the news?

Everybody knows that agencies rush to use the money they have been appropriated before the end of the fiscal year. Officials have a "use it or lose it" mindset. As INPUT, the market research firm put it, spending in "the final weeks of the fiscal year is the substance of legend and lore."

What's different, INPUT says in a new report, is that a larger proportion of spending on information technology is occurring in the last quarter. "Over the last ten years there has been a major shift in the timing of federal IT procurements toward favoring four-quarter spending."

INPUT's report, "Federal Fourth Quarter Spending Spree: Where the Money Is and How to Get It," says that more than a third of annual spending will occur now -- perhaps $22 billion -- compared to just over a quarter a decade ago.

Why does this matter? Lots of that spending must occur quickly. In many cases, that means relying on personal relationships between government officials and their favorite vendors. It also means that agencies will be moving quickly to spend a lot of dough.

Is that how government officials ought to be handling taxpayer money?


By Robert O'Harrow |  September 12, 2007; 5:24 AM ET general
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Comments

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Robert,

You are asserting that increased fourth quarter IT spending means federal contracting officials will rely on "personal relationships" with their "favorite vendors," but is there evidence to support this assertion? You provide none.

You also imply that use of "favorite vendors" will result in higher costs and lower quality. Again, no evidence. For the sake of arguement, it is possible that a contractor is a "favorite" not because of some nefarious back-door deals, but because it has a proven record of providing a quality product at a fair cost.

Regardless, Information Technology is such a common government purchase that there are many methods (GSA Schedules, Agency-specific ID/IQs, Inter-agency ID/IQs, 8(a), SDVOSB, etc) of procuring it quickly and easily without resorting to personal relationships. Give federal contracting professionals some credit, please.

To clarify: In asking for evidence, I'm not requesting a research paper, this is a blog after all, but rather a little more sophistication in making your point.

Posted by: Jordan | September 12, 2007 9:49 AM

Robert,

Jordan is correct. Your blog postings often evidence a real lack of understanding of the manner in which government procurement functions, and it often resembles--and seems designed to perpetuate--the wrong-headed characterizations of our procurement system by politicians who use tropes and wail about "no bid contracts" and other non-thinking misnomers. Respect the intelligence of your audience, please. While there are some legitimate concerns with the manner in which the govenrnment obligates money at the end of the fiscal year that you briefly touched upon, you really should explain what you mean--and upon what evidence it is based--that acquisition professionals award contracts to their "favorite vendors" in the end of the FY spending spree. From my experience, Jordan's description is more honest--"favored vendors" are those with a prior course of dealing who have provided a solid product at a resonable price--not some crony who pledged SAE at UT with the contracting officer. This was a lazy post, and your readers deserve better.

Posted by: Thomas Warren | September 12, 2007 10:09 AM

Robert, I think you are a little overboard with the "prove it" comments.

It is a fact that there is a practice of spend it or lose it in the next budget cycle.

As an ex-government employee of 30+ years, I can say that I have seen the procedure in action almost every year!

There are many nice to have, especially IT, items purchased that were not necessarily needed. The only need was spend the money.

In my experience the friend, vendor did not approach Halliburton level, but friendly vendors were often the receivers of the "spend it or lose it" monies.

Posted by: Ron | September 12, 2007 1:57 PM

Robert is 100% correct about the friendly vendors. As a 27+ Federal employee I have seen many former military officers retire from the service, hook up with a Vendor and come back to smooze with the people that used to report to them. You already have "proof" ie: Halliburton, KBR and others. Taxpayers should insist that Federal contracting laws/regs are enforced and put a stop to enriching vendors who get contract awards largely because of their personal relationships with Federal officials/employees.

Posted by: Ellen | September 12, 2007 9:15 PM

Federal acquisitions is much more complicated than a little article like "Spending Spree" can examine. I have been a Federal consultant for over 30 years, about half that time as a "1099 hired gun." I have seen most varieties of Federal IT acquisitions.

The 4th Quarter spending spree is a child of zero-based budgeting. Sometimes the 4th Qtr funds go to favorite vendors, but often they do not. Some of the most competitive projects I have been involved with were 4th Qtr wish-list items that had no incumbent and hadn't been lobbied. This year a large number of procurements were set asides for VETS GWAC, a new initiative to get more Federal business for companies owned by service-disabled veterans.

For the other three quarters, favorite vendor contracts are just as numerous, sometimes for good reason, sometime not. Competitive contracts often do not produce better results. Often the winning bidder submits a low-ball proposal in full knowledge that they cannot do the work. The results are as you would expect.

Of course there are abuses. My reading of history is that there always has been (check military procurement for any US war beginning before 1812). However, the 4th Qtr spending spree is not necessarily a source of bad Federal procurement practices.

Posted by: Bill Perry | September 14, 2007 12:34 PM

I agree with the sentiment of previous posts, but I'd like to suggest that the federal budget process contributes to the appearance of excessive year-end spending. In my large federal civilian department, each year our program managers budget and request funds for a full year's worth of projects. However, the annual federal budget process is so protracted (flawed, in my opinion) that managers don't receive usable funds until late February or March. That leaves only six months in which to do that year's work. In my office (contracting), that results in our awarding 50% of a whole year's procurement actions during the 4th quarter and approximately 30% of the entire year's actions in September alone. It's no wonder there's an appearance of excessive year-end spending.

Posted by: John Busch | September 18, 2007 10:18 AM

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