Six-Month Window to Spend Budget Bonanza Might Super-Size September Spree

Civilian agencies will have just six months to spend an extra $63 billion this fiscal year and they aren’t allowed to plan for it.  Top military leaders have asked Congress to waive use-it-or-lose-it rules to help them manage their $80 billion 2018 gusher by rolling some of it over into fiscal 2019.

As a result of the two-year spending package that President Trump signed into law on Feb. 9, military spending will rise to $700 billion for fiscal 2018 and domestic spending will increase to $591 billion.

Between now and March 23, when the current continuing resolution funding agencies at 2017 levels ends, Congress must come up with legislation instructing agencies how to spend their fiscal 2018 budgets. After that, government organizations will have just six months to spend all the increase or send back to the Treasury what remains unspent on Oct. 1, the beginning of fiscal 2019.

Increasing the pressure on civilian agencies, the Trump administration instructed them not to anticipate what may come from Congress for this fiscal year. Instead, they were to assume they will receive the reduced spending levels proposed under the president’s fiscal 2018 budget request issued last year, Government Executive reported Feb. 20.

The 2018 White House budget request would have cut domestic spending by $54 billion. Civilian agencies will instead be getting a $63 billion increase, so the absence of planning will add to their difficulty in spending the excess.

Agencies will have “precious little amount of time to figure out how to invest that money,” Robert Shea, former Office of Management and Budget associate director for administration and government performance under George W. Bush’s administration, told Government Executive.

“This is going to tax every facet of the agencies just to make sure they’re spending wisely,” added Shea, now a principal at Grant Thornton.

Since agencies spent, on average, 16.3 percent of their total budgets in the last month of each fiscal year between 2003 and 2015, according to a 2016 George Mason University study, it is safe to expect they will cram an even larger chunk of this truncated year’s funds into September.

The Defense Department spent $5.1 billion on IT products and services, or about 17 percent of its fiscal 2017 total, in the last two weeks of the year, Bloomberg Government reported Feb. 7. In the final week of the fiscal year, DOD completed 9,422 IT transactions valued at over $3.2 billion.

The annual September buying binge generally results in lower-quality spending, according to a 2013 National Bureau of Economic Research study.

Using federal chief information officers’ ratings of their agencies’ projects on the IT Dashboard, the authors found that the “data show a sharp drop-off in quality at the end of the year. Projects that originate in the last week of the fiscal year have 2.2 to 5.6 times higher odds of having a lower quality score.”

Splurging in September also changes what agencies acquire. DOD shifts from purchasing IT services to products, BGOV found. In the first 51 weeks of fiscal 2017, DOD spent 38 cents of every IT dollar on products and 62 cents on services. In week 52, however, that ratio shifted to 53 cents on products and 47 cents on services.

Army Vice Chief of Staff Gen. James McConville told a Feb. 14 Senate Armed Services Committee hearing that the rush to issue contracts could increase risk for the Army, Military.com reported Feb. 20.

“We don’t get the same type of rigor we would like to get if we had it sooner,” he said of late funding. “Certainly, we appreciate the authorizations for readiness. We just need to get it in the hands of our units so they can spend it.”

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