Put at end to the dump of "end of year" procurements
Agencies hold funds until the end of the year and make rash, rushed, and poorly planned procurements. The shortened lead time leads to higher cost, inadequate competition, and an inability to coduct procurements in an effective manner. If OMB really wants to improve processes, they should start there, and prohibit agency spending in the fourth quarter that exceeds the spending in the first two quarters. With adequate procurement lead time, procurement processes will improve.
Require an appropriate policy and an appropriate strategy, which understands our law of economy. Then something might happen.this time needs a good budget stategy.
This problem has gone on for years and years, and with the current budget deficit, it is time for Congress to pay attention and save taxpayers millions through better fiscal planning by agencies. Fourth quarter spending is huge, and wastes a lot of money. Agencies deliberately spend their entire budget because they know if they don't they will have to return funds to the Treasury and will not get as large a budget in subsequent years. What can Congress do to stop this fourth quarter dump?
Adding to Lester's comments, then, perhaps the new Congress can do something about this. They obviously are unaware of the impact (or if they were aware we like to think they would do something about it) on Federal spending their delay in passing the budget causes. Taxpayers should insist - No Budget, no Congressional holiday - until the Budget is passed for the fiscal year. If a business was run the way the Federal Budget is handled, it would go broke.
Elizabeth McClure commented
I wish the Budget officers would decide how to divide the funds up in the very begining. and let each division handle there own money.
Lester Diamond commented
The rush to spend in the 4th quarter can cause all sorts of problems if it isn't planned for. While level spending seems to make more sense, there is a reason it doesn't happen that way. Over the past few years very few agencies have had a budget before the 2nd quarter. Congress has simply not been able to pass a budget bill before that time. That means most agencies are working under a continuing resolution at reduced funding level. Once the budget is passed the agencies have to gear up and spend their funds at the higher rate most of these comments refer to. Some of the problem is with the agencies, I'm sure, but not all of it. Whenever a problem looks simple, look out!
Haven't read all the comments, so maybe someone already said this, but before this will stop there must be a better process in place for encouraging and rewarding those who come under projected budget. Currently, we are penalized for not spending our maximum budget each year by receiving less funds the next year based on the previous year's spending. Just because we managed some savings one year does not equate to needing less funding the next year. Fix that dynamic and you will save money all around and not have a need for End of Year "Mad Money" spending.
But GSA does not have any authority over OMB. Can the National Academy of Public Administration or the American Council for Technology-Industry Advisory Council, or ideally, both, make a recommendation to this administration that they do something about end of year spending? An investigation into exactly what the agencies spend funds on at the end of the year that they could not plan to procure in the first three quarters of the year, is needed. So that we can determine if it is truly wasteful. The dollars can be obtained from Federal Procurement Data Center, but to really know what is being purchased you have to look at the nature of the purchases. I would bet that a lot of them are not even approved in the agency budget that went to Congress so how can this be OK and how can it be fair to industry that they are rushed to try to quote on all these services and supplies and equipment and construction in only the fourth quarter? It would be so much better to spread this work out during the year especially since we are in a fiscal crisis and unemployment is so high.
I have seen how poor planning and the mad spending at the end of the fiscal year results in agencies spending money on things that are not required. Who is the watchdog for this? No one, apparently. If these needs are real they could be planned ahead of time. Willing to bet that most of the spending in the fourth quarter is a waste of money.
Be sure to read OMB's B-280218 - In response to the Senate Subcommittee on Oversight of Government Management which held hearings and issued a report, entitled "Hurry-Up Spending." GAO addressed problems with federal spending practices and the award of government contracts. The Subcommittee found that the rush to obligate
expiring funds before the end of the fiscal year frequently resulted in a
lack of competition, poorly defined statements of work, inadequately
negotiated contracts, and the procurement of low-priority items or
services. But has there been any improvement at Government agencies?
It worries me a great deal that contracting offices which are already understaffed, must deal with this rush of contracts at the end of the year. It is very hard to do contracting properly with all of the Government requirements. This makes it extra hard. Isn't this lack of planning and funds management by the agencies tantamount to waste, fraud and abuse if it results in less procurement lead time and therefore possibly higher contracts? If competition has to be limited, or companies just don't want to participate because of the fast response times, doesn't this negate the intent of the Federal Acquisition Regulation to maximize competition? And wouldn't the burden be greatest on the small businesses that we are trying to encourage to participate? This would be extremely hard on them given the economic climate.
Bill Martin commented
Even if Congress were to pass the budget on time, it is up to the agency to manage their funding cycle so that not all buying is done in the fourth quarter. Many years ago, DOD tried to limit 4th quarter spending, but then the country just sort of forgot about it. Not realizing that this is a serious serious serious (and expensive) problem. Unless the Feds force the agencies to do something about it, it will never change.
Mark Lawrence commented
Most of these comments are about Government but commercial businesses are impacted as well. Here's where some of the networking stuff could come in. We are asked to respond to solicitations so quickly at the end of the year that it puts a huge burden on the company pricing and technical staff. It would be better for industry if spending occurred throughout the year and not so much in July August and September with a huge rush.
Jackie Morano commented
The wiki right now is to design a solicitation. But what a great idea! Can we start a website to work with Congress on funding issues? I don't know if we can ever resolve the political situation that the budget is not passed on time because it is so complex. But what can we do as a Budget/Acquisition Community to influence Congress to require agencies to plan spending more equally throughout the fiscal year so that this end of year dump does not happen? Ideas?
David Grouser commented
I noticed that the Better Buy wiki didn't discuss this critical issue at all. Of course, the focus of this project was using collaboration and social media. So how can we use those two things to obtain better spending plans? Well one is to make all taxpayers aware through our own wikis, tweets, facebook, etc. about this end of year spending. I would bet that most taxpayers and members of Congress don't have the slightest idea that this is a problem both from:
1) a huge spending perspective and
2) the impossible burden it places on contracting offices, resulting in rush, higher prices, poor procurements, etc.
We need a collaborative effort with Congress to revise the Budget rules for Federal agencies.
azhar ansari commented
testing the site 1234
David Walsh commented
Agencies project spending two years in advance. There is absolutely no excuse for this dump of funds at the end of the fiscal year. Can OMB propose to limit spending in the fourth quarter to no more than the combined first and second quarter?
David Lorane commented
True, we also need to avoid wasteful spenindg. But procurement offices also need to be adequately funded and staffed. An efficient spending cycle would not require less expenditures, just more efficient and effective ones. "The impact on the market" is not what should be considered when expending taxpayer dollars. What should be considered is saving money for the taxpayers and efficient running of the Government. It is not desirable for the marketplace to benefit from poor planning, waste, and Government inefficiency. I move that we examine and repair the Budget cycle and allow adequate lead times for planned, efficient procurements. Nothing else makes sense.
Nicholas Keune commented
Rushed spending is not an ideal solution at all, but people seem to largely be ignoring the potential ramifications of their statements. Please follow my logic.
Let us assume that much of the spending at the end of the year is wasteful. Thus, a perfectly efficient spending cycle would require less expenditures, resulting in a correspondingly smaller budget for each department.
This sounds like an ideal result, and I personally support it. That is, if the only result were a tighter budget. However, we must consider the longitudinal ramifications, and the impact on the market.
As we should, let us presume that the inertial conditions present in the procurement offices of the government's departments would prevent us from instantaneously becoming more efficient. This would mean that the least efficient departments would receive a disproportionate amount of these budget cuts, and would continue to have their budgets cut until the institutional inertial of the department is solved.
Now, let us consider--- we have the least efficient departments receiving the greatest budget cuts, and thus having the least capital ready for investments into system improvements! ... So, what do I suggest? I am a supporter of avoiding last minuet rushed requisitions, but before we start cutting the funding to the least profitable, we need to implement solutions to improve their ability to be efficient and plan their finances appropriately. Before we throw the whole department to the wolves, let us give them to tools to be ready, so when they are pushed to become efficient, they can! It may mean some people get fired, it may mean we need to invest more in the short term, but if we want a systemic improvement in how we operate, we need to invest in a systemic infrastructure to support it.
Control of federal spending by agencies is an OMB issue. Why have they not dealt with this?
Mr. Tuttle – any ideas on how the Federal Government can limit fourth quarter dumping of funds? Is there any chance that this Better Buy project can result in a suggestion to OMB? How long will this project last and when will GSA review and make decisions about the suggestions we are making under this project? Is it still ongoing and does it have the support of Martha Johnson?
End of year spending occurs for several reasons: 1) Congress fails to pass the budget in a timely manner (see separate Better Buy topic on that subject) and also 2) Because agency financial managers and project officers don't work together to plan how to obligate funds earlier in the fiscal year and 3) Because agencies spend money frivolously at the end of the fourth quarter because they know that if they don't spend their entire budget they may not get an equivalent appropriation in subsequent years. These are all harmful to the American taxpayer. I don't know if we will ever be able to fix Congress. But from an agency financial management solution, where the administration does have control, it should prohibit spending in the fourth quarter that exceeds 1/4 of the annual appropriation for that agency, no matter when the appropriation is really received. Even if agencies receive funding late, this would force them to plan their budgets and spending earlier in the second and third quarters, and not dump in the fourth.