News analysis:

Ready for a busy Fourth Quarter?

July, August and September are most active for fed’l contracts

The fourth quarter of the fiscal year is historically the most active for federal contractors, and the trend looks strong for small business contractors this year as well.

In the fourth quarter, which starts July 1, the government typically spends almost a third of its total contracting budget. That’s the most of any quarter.

Furthermore, the fourth-quarter surge may be even more pronounced for small businesses. Deltek previously has reported that 39% of federal contracting with small businesses occurs in the fourth quarter vs. 32% for all federal contracting.

In addition, Set-Aside Alert’s research shows that small business solicitations, presolicitations, awards and sources sought notices on the Federal Business Opportunities website have reached their highest levels in the fourth quarter in each of the last three fiscal years.

That occurs partially because federal agencies that have not yet met their small business goals may make a special push at the end of the year (see related story below).

It also may be due to small firms proliferating in industries in which government spending tends to occur late in the year.

As of June 18, federal agencies had reported $35 billion spent on small business contracting for fiscal 2015, according to the White House’s Small Business Dashboard. The total is is expected to climb to more than $90 billion by year’s end.

For all contracting, only $120 billion in contract spending has been reported to date for fiscal 2015 on USASpending.gov as of June 18. That is especially low because much defense spending is on a 90-day delay in reporting. Even so, since contract spending is expected to surpass $400 billion for the fiscal year, much remains unspent.

In a typical year, 32% of federal contract spending occurs in the fourth quarter, according to a recent report by Deltek. September alone accounts for 18%.

For small businesses, the delayed spending trend is even more pronounced, Deltek said. For small contractors, 39% of federal spending occurs in the fourth quarter, with 19% in the first quarter, 21% in the second quarter, and 22% in the third quarter.

Deltek said the small business surge at year’s end is likely due to the fact that many small businesses are in industries for which the government tends to have high fourth-quarter spending, including architecture & engineering, in which 50% of federal spending occurs in the fourth quarter; information technology, 39%; and professional services, 34%.

Another contributing factor is that federal agencies that have not yet met their small business goals may be driving hard to do so.

Set-Aside Alert also found evidence of a fourth-quarter boom in small business contracting activity on FBO.gov. We counted the number of solicitations, awards, presolicitations and sources sought notices for small businesses and socio-economic small business groups as activity.

Total small business activity on FBO.gov reached peaks in July, August and September for each of the last three fiscal years.

In each of those three fiscal years, the peak month for small businesses was August, with 9,903 solicitations, presolicitations, awards and sources sought notices in fiscal 2014; 8,983 in August 2013; and 10,358 in August 2012.

July and September had the second or third highest amount of activity for each of the three fiscal years examined by Set-Aside Alert.

In fiscal 2014, 55% of all small business presolicitations, solicitations, sources sought notices and award notices occured in those three months. In fiscal 2013, it was 51%; and in fiscal 2012, 59%.

Average monthly small business activity on FBO.gov has been rising in general, averaging 3,666 in fiscal 2012; 5,558 a month in fiscal 2013; and 5,867 in fiscal 2014.

The monthly average for fiscal 2015 through June 1 is 4,860 small business solicitations, presolicitations, awards and sources sought notices per month.

Ready for a busy Fourth Quarter?

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