GAO recently released a snapshot of 2018 fiscal year federal spending. Although it is a very high-level review, it provides some interesting information for government contractors. Among the highlights are the fact that federal discretionary spending has increased year over year and competitive contracts are becoming less common among defense agencies. GAO also identified four key high-risk acquisition areas that it is monitoring.
It’s dry stuff, but never fear, we read it for you. Here’s a quick summary of the findings.
Spending has been going up the last few years. GAO notes that about 40% of discretionary contract dollars in the federal government goes towards purchasing goods and services. “In fiscal year 2018, the federal government spent more than $550 billion on these contracts, an increase of more than $100 billion from 2015.” (The 2015 numbers are from GAO’s more in-depth report issued in 2017 that we discussed here)
Defense spending is leading the way. 2018 contract dollars for defense totaled $358 billion, up from $274 billion in 2015. Civilian spending has also gone up a little over the past few years, and for 2018 was at $195 billion, up from $164 billion in 2015. The Navy topped the list of defense agencies, with about $108 billion in 2018 contract dollars.
Fixed Price Contracts are most common. Fixed-price contracts made up about 2/3 of total contract dollars. Cost-reimbursement are at 31%, while time and material and labor contracts are at 4%.
Small business contract rate about the same. Small businesses received about 22% or $124 billion of total discretionary contract dollars in 2018. Small businesses got 20% or $72 billion of defense contracts and 27% or $52 billion of civilian contracts. For comparison’s sake, small businesses received 23% of discretionary federal contracts in 2015. The overall government small business goal is 23%, so the goal was just missed in 2018, although the rate was similar to 2015.
Competitive Contracts Decreasing. Non-competitive contracts are becoming more common, led by defense agencies. The overall government rate of competitive contracts has gone from 66.1% in 2014 to 63.4% in 2018. While the competitive rate for civilian agencies has increased, the percentage of defense contract dollars awarded competitively has gone from 58.2% in 2014 to 53.8% in 2018. The non-competitive contracts for defense are mainly for large weapons systems such as airplanes and ships.
High risk procurement areas. GAO highlighted four procurement areas that it deems high-risk, meaning operations that have “vulnerabilities to fraud, waste, abuse, and mismanagement, or that need transformation.” More information is available about each of these areas in separate reports from GAO in the links below.
- VA Acquisition Management
- Department of Energy’s Contract and Project Management for the National Nuclear Security Administration and Office of Environmental Management
- NASA Acquisition Management
- DOD Contract Management
There you have it. Government spending continued to increase in 2018. Percentage-wise, spending on small businesses remained about the same but was a little lower than 2015. And non-competitive contracts are becoming more common. We’ll continue to update you about federal contract spending and highlight the impacts on small businesses.