The Department of Defense will receive $26.8 billion more in discretionary spending per the six-bill
“minibus” package Congress passed this past weekend. That’s good news for contractors and their DOD customers. The overall measure includes over $1.2 trillion in spending to fund about three quarters of the government. In addition to DOD, the Department of Homeland Security will also see an increase in discretionary spending of $1.1 billion from last year. That is a significant increase with most funds going toward strengthening the US southern border. Not all agencies will see an increase. The Department of State and associated foreign operations spending will see a $3.4 billion cut from FY’23. This reflects Congressional skittishness over sending money overseas, despite what others believe to be compelling needs of US allies. Financial service spending will also decrease by $1.1 billion. Other agencies, such as HHS and Labor, will essentially see modest increases that are more than offset by inflation, making for a net decrease in spending ability. It may take 4-6 weeks for each federal office to receive its final FY’24 spending number once the appropriations measure passes. That means that contractors and their customers will only have 5 months to get available money obligated. Contractors should be prepared to assist agency customers by recommending fast, efficient acquisition methods to ensure that critical programs can progress before midnight September 30th. There will be no extension of the fiscal year regardless of the Congressional delay. Bloomberg Government had estimated earlier this week that the significant delay in funding resulted in 40% fewer acquisition actions. That translates into significant pent-up demand. Be prepared.
A new report from Bloomberg Government estimates that Best-in-Class (BIC) contract spending hit $57.3 billion in FY’23, a new record. The total figure equates to 7.4% of total government contract dollars. The single largest area of BIC use was for IT solutions, with the GSA IT Schedule, GSA Alliant II, and NASA SEWP contracts leading the way. IT BIC contract spending totaled $239.4 billion between FY’15 and FY’24, according to Bloomberg. BIC contracts are specially designated IDIQ contract programs that have been identified by the Office of Federal Procurement Policy as offering competitive pricing and easy ordering capabilities. Although a BIC designation may sometimes seem to be subjective (see the Alliant Read more
A recent Government Accountability Office (GAO) report finding that federal agencies improperly compensate hourly rate, “blue collar” workers 75% of the time is just the latest example of issues that result in agencies getting a slap on the wrist while contractors engaging in the same behavior would be in line for keel hauling. GAO said that agencies sometimes pay more than prevailing wage rates for covered workers, but also sometimes underpay them. Any contractor offering hourly rate services knows well that they would face fines, legal fees, and potentially other sanctions for engaging in the same behavior, yet the impact on agencies seems to be minimal. Another recent case of “do as I say not as I do” comes from GSA where Read more
Work has begun on FY’25 budgeting even as government contractors await passage of FY’24 spending bills to fund 80% of all discretionary spending. Here are three takeaways contractors need to know about what all of this action means for them:
1. Congress appears close to being ready to pass 5 of the 6 remaining FY’24 appropriations bills. The good news is that the DOD spending measure seems to be nearing agreement. The bad news is that the DHS bill is stuck and at least some appropriators are wondering if the gulf between Democrats and Republicans can be bridged. If not, it’s looking more and more Read more
GSA’s Office of Acquisition Policy issued an Acquisition Letter Friday clarifying that, under specific conditions, upfront payment can be made for the acquisition of cloud-based commercial item software. GSA’s guidance should result in lower prices and enhanced competition for covered software acquisitions. There had previously been disagreement among government agencies on whether acquiring cloud-based software on a subscription basis qualified for existing subscription-based exemptions in the FAR. The Acquisition Letter, dated March 15th and titled “Guidance on Payment for Software Licenses Delivered via SaaS” Read more