End of the Year as We Know IT

Crazy times. Furloughs froze contracting shops and requiring organizations. Last year’s playbook for year-end opportunities is no good. Everybody – inside and outside of government – trying to work out what September will bring. Here’s a take on how the Army will close ranks – from a fella who’s spent some time in the foxhole.

The Army’s never turned money back to the Treasury in any significant amount – and it’s not going to start this year. That said, there will be no new contracts awarded this fiscal year that haven’t already been in the contracting office pipeline. The Army is obligating funds to existing vehicles to the utmost extent, with the exception of those new contracts/TOs/POs that were already in the pipeline. If you’ve got contracts in place, or contracts/POs/TOs in the queue at a contracting office, you’re in good shape. If not – and you can’t find a prime to work with – don’t expect any year-end windfalls.

Like a hard March frost, sequestration froze everything and dammed up the normal steady contracting and subsequent cash flows from the government to industry. Agencies throttled back on obligating money pending analysis of where to take cuts – up to 50 percent was held back once sequestration hit. And funds stayed locked up until agencies figured out how and where to cut, and how to manage the money that remained. One way to do this was to furlough civilian employees. Agencies did – and this choked off funds obligation further through a reduced work week at both contracting offices and requiring organizations that feed contracting offices. That drove a lot of uncertainty, pent-up demand, and frustration.

If organizations cannot spend their money, it’ll roll up the chain of command to their higher headquarters, until what’s left reaches Agency headquarters. It’s the opposite process of what happens at the beginning of a new fiscal year, where money flows down from Agency HQs to subordinate organizations until it reaches the lowest levels. Look up the chain to higher-level organizations in the Agency for end-of-year spending. Primes with existing contracts with HQ organizations are well-positioned to accept this year’s money as it flows back up at year end. Look for the Army to apply any large amount of remaining funds that come up to HQs on infrastructure and omnibus contracts – long-haul communications, professional services, and the like.

In closing, this year-end’s opportunity is all about leveraging existing contracts, with HQs the place to focus – and yes, the money will come that way. I’d like everyone to give a shout out to all hard-working and embattled contracting pros – you’ve been furloughed and now you’re in the firing line and on the critical path to completing miracles at Fiscal Year End. The community recognizes that morale is at a new low, and we appreciate everything you do. We all hope next year will be better, at least from a process perspective, as we know the funding and fiscal challenges will continue for the foreseeable future. Thank you for your service and keep up the superb work for our nation.

 

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