CONGRESS PASSED THE SPENDING BILL, WHAT HAPPENS NEXT?

Contractors and their federal customers can breathe a sigh of relief as Congress passed an omnibus FY’23 appropriations measure just before Christmas.  This funds all government agencies for the remainder of the fiscal year.  What does this mean for contractors now and over the next few months?  First, it will take some time for each office to get its official FY’23 spending number.  OMB will likely communicate this information to agencies during the first two weeks of February.  While some customers may move ahead on specific projects now, many will wait until they have received official word from OMB.  Second, while no spending can be committed until funds have actually been received, projects that had been stalled due to a lack of funding should be able to move ahead, with actual procurements this year for most of the projects that were scheduled for such action.  Congress provided substantial funding across the board for both military and civilian agencies.  Third, business should continue to accelerate the further we get into FY’23.  This year should now follow the traditional federal business cycle, with procurements happening all year, but accelerating in August and September.  Contractors should plan to have “all systems go” from the start of the calendar year through September 30th.  This year may be the last for increased federal contract spending, however, as the new Congress will likely take steps to reduce appropriations for FY’24, especially in civilian agencies.  Contractors may want to track the FY’24 budget process over the next few months for early signs of which customers may feel the most pain.  As the old adage goes, make hay while the sun shines.