The End of Fiscal Year 2022 is Fast Approaching — Monument Advocacy’s Julie Dunne, Former Commissioner of the Federal Acquisition Service at GSA, Shares Tips for Contracting Success
Every September, contracting professionals and industry gear up to help the government buy goods and services before the fiscal year ends on September 30. Typically, the government obligates a significant portion of their annual appropriations in the fourth quarter of the fiscal year. In fact, over the last five years, the government has spent about 30 percent of their annual funding in the fourth quarter.
Part of the reason for this rush of activity in the fourth quarter stems from how the annual appropriations process works, or rather, does not work. Congress has not approved all 12 appropriations bills on time since 1996, which means there are funding gaps that must be addressed with continuing resolutions (CR). Without passed annual appropriations bills, CRs passed before the end of the fiscal year ensure there is no gap in funding, and no government shutdowns, as they maintain funding in a new fiscal year at the same level as the prior year. This means agencies are limited in their ability to start new work and cannot increase their spending above the prior fiscal year amount.
The end of the fiscal year provides both a challenge and an opportunity for industry trying to help agencies satisfy their requirements. In order to be most successful as September winds down, industry should keep the following tips in mind: (1) know your customer; (2) know your targets’ specific funding situation; and (3) know what contract vehicle options are most effective.
Know Your Customer
Knowing your customer starts with understanding the larger policy and operational environment for agencies.
- Since January 2021, the Administration has issued several Executive Orders that have had significant impacts on procurement.
- Contracting professionals are being asked to accomplish a variety of policy objectives via procurement and the pressure increases with the end of the fiscal year.
- Some notable policy objectives include:
- expanding the industrial base with more awards to small and nontraditional businesses;
- increasing the resilience of the supply chain;
- buying items with higher domestic content;
- improving cybersecurity;
- addressing climate change with the federal government’s purchasing power; and
- advancing racial equity and support for underserved communities through awards to small/disadvantaged businesses.
- Contracting professionals and program offices have multiple work streams of increasing importance as the fiscal year ends.
- For example, agencies are trying to meet small business goals, and executives with these goals in their performance plans are incentivized to make that happen.
- With activity picking up, Offices of General Counsel and contracting entities team up to ensure awards are meeting all requirements, while working to mitigate protest risks.
- Some agencies that provide assisted acquisition services to other agencies also reach capacity and turn work away.
- As end of the fiscal year activity picks up agencies are also preparing for a CR, thinking about fiscal year 2024 budget formulation process, and engaging with the Office of Management and Budget (OMB).
- Finally, some agencies will unexpectedly have extra funding due to a variety of circumstances and must quickly repurpose that funding or risk funding cuts in the next fiscal year.
Know the Funding Situation
Keeping in close contact with your customer and being aware of specific funding streams available for contracts can be useful in identifying opportunities and knowing how to prioritize.
- Under U.S. fiscal law, government funding money is not fungible and, in fact, there are different “colors” of money.
- One year funding typically expires at the end of the fiscal year and usually is returned to the Treasury if not spent.
- Other funding may be available for multiple years or may even be no-year funding.
- And finally, fee-based agencies do not rely upon annual appropriations, like U.S. Citizenship and Immigration Services (USCIS) at the Department of Homeland Security (DHS).
Know Contract Vehicle Options
As the fiscal year ends, it is important to identify contract options to make agencies’ contracting professionals’ jobs easier.
- Agencies may be more inclined to use particular contract vehicles to simplify their work, including governmentwide acquisition contracts (GWAC). GWACs can provide a sort of “easy” button at the end of the fiscal year as there are pre-vetted vendors.
- Agencies may also be inclined to use the General Services Administration’s (GSA) multiple award schedules (MAS) program. Agencies annually use the MAS program to buy over $35 billion in commercial goods and services.
- The MAS program is a critical tool for agencies as the fiscal year closes since it provides pre-vetted vendors and pricing on goods and services in categories that include professional services, IT goods and services, furniture, and facilities to industrial products and services.
- Finally, do not underestimate the value of the government purchase card for agencies to use as a payment mechanism and to make purchases below the micro-purchase threshold ($10,000).
The pressures of the closing month of the fiscal year are intense. Industry can survive and thrive by knowing your customers, the funding situation, and available contract options. Such an approach will help identify opportunities in a challenging environment.