FY’25 BUDGET PROCESS UNDERWAY – WHAT IT MEANS TO CONTRACTORS
Even though some federal customers just received their “final” FY’24 spending numbers, Congress is already working on FY’25 legislation. A stream of executive branch officials are now coming to the Hill to testify on behalf of their money requests. In addition, new faces on the House Appropriations Committee may mean delays and/or shifted priorities. While it’s a given that Congress will not pass FY’25 spending bills on time, contractors still need to pay attention to how the debate on next year’s money is unwinding. First, House and Senate Democrats are insisting on parity between defense and civilian agency spending. If Republicans want to increase DOD spending, they may have to allow for parallel increases in civilian agencies. That could be a real stumbling block toward getting a deal on any spending measure. Second, House appropriators have said that they want to limit earmarks. While some want earmarks, spending that is specifically targeted for a program, others want to narrow eligibility requirements for earmarks so that only government agencies can receive them. This, too, will be a hurdle that must be addressed as the Senate generally has a more lenient view on earmarking. Third, the best-case scenario now for FY’25 appropriations is for passage sometime in December. That is now the “new normal” for appropriations measures. The November elections, however, could push that back if one or both Congressional chambers changes hands. New party control would put considerable pressure on lawmakers to postpone final FY’25 action until the new Congress has a chance to convene in January. While some of this may seem protracted, following the federal appropriations process is essential for government contractors. No one wants to wake up, for instance, and find that their program has been zeroed out in a backdoor deal. Similarly, contractor voices should absolutely be heard during consideration of spending measures. As with other matters, preparing for the future now can head off unwelcome surprises later.