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In conjunction with a recent piece here on the Public Spend Forum about the trends federal buyers will be making in 2017, specifically for technology buys, The Government Accountability Office (GAO) has recently published a comprehensive assessment of governmentwide spending for the last five fiscal years.  
This report is an analysis of contract spending history, and it will be interesting to see if past performance is an indicator of future contracting trends. Putting aside the budget that President Trump intends to submit later this week, which would increase spending at the Pentagon, and create unprecedented cuts at almost every other agency, the spending across government analyzed by GAO is a good place for contractors to glean important market intelligence.

According to the report, GAO found that spending at defense agencies decreased by almost 32 percent, while spending at civilian agencies remained fairly steady from 2011 to 2015, as the cuts via sequestration took hold. GAO also found that contracts awarded through competition stayed steady at about 64 percent, and the use of fixed price contracts stayed steady at over 63 percent.


Defense and Civilian Agency Obligations on Contracts, Fiscal Years 2011-2015

Bar charts showing that defense and civilian contract obligations decreased from 2011 to 2015.
Also reported was that 60% of obligations were for service contracts. However, the breakdown of spending included a little over 50 percent of contract obligations at Defense were for contracted services, while civilian agencies obligated nearly 80 percent for services over the 5-year period.

Further breaking down these numbers, the civilian agencies that obligated more than $10 billion each for service contracts in fiscal year 2015 include:

  • Department of Energy 
  • Department of Health and Human Services
  • National Aeronautics and Space Administration
  • Department of Homeland Security
  • Department of Veteran’s Affairs

Another area of analysis was the level of competition for the products and services procured, which according to the report, held steady at about two-thirds. Competition is a long-standing issue that GAO has noted for many years. In 2010, GAO reported that contracting officials expressed concerns that not enough time was allowed to execute a sufficiently robust acquisition planning process, including defining requirements, which may have hindered opportunities for competition. Further, GAO has also reported on how the government can promote competition and has made many recommendations on how to do so (here and here).
This analysis is important, as educating your customers on how to effectively award a contract, create good requirements, and ensure that your capture strategy is effective was also covered here previously on the Public Spend Forum.
Finally, the range of acquisition strategies varied, but the key observations included:

  • From fiscal year 2011 through 2015, federal agencies obligated nearly two-thirds of total contract obligations on fixed price contracts. The remaining third was on various kinds of cost type contracts.
  • In fiscal year 2015, defense agencies obligated about 14 percent of total obligations on cost-reimbursement, time and materials, or labor-hour contracts awarded noncompetitively. Civilian agencies awarded about 8 percent of total obligations on these kinds of contracts. Over the 5-year period, government-wide spending on these kinds contracts remained between 11 and 12 percent.
  • During fiscal year 2011 through fiscal year 2015, roughly half of total contract obligations were awarded on indefinite delivery vehicles (IDV), such as orders under Federal Supply Schedule (FSS) and Government-wide Acquisition (GWAC) Contracts. In fiscal year 2015, DOD and civilian agencies used IDVs for 47 percent and 55 percent of total contract obligations, respectively.
  • Agencies used commercial item procedures for 25 percent of total contract obligations for products and services in fiscal year 2015. FPDS-NG does not track the obligations spent on commercial items purchased using other procedures.

This GAO report concludes with the agency snapshots, which provide a 2-page profile for the 10 civilian agencies with the highest contract obligations in fiscal year 2015, and the three military departments within the Department of Defense.
These trends, combined with the Market Intelligence report for 2017, also previously posted on the Public Spend Forum, are good barometers of what business development professionals can expect to see moving forward into 2017 and beyond across government.
Questions for industry:

  1. Is your federal sales strategy aligned with this analysis?
  2. Will trump’s proposed budget affect how you approach the market, or is it a wait and see approach?
  3. Are you finding outliers in this data, or something different from your federal sales execution? 
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