Q4 spending share to be high

Deltek is predicting a huge fourth-quarter contract spending rush this year, as a result of delays in appropriations and a slow pace of contracting early in the fiscal year.

The research firm anticipates the government will spend $168.2 billion on contracts in the quarter that ends Sept. 30.

That is 35.4% of the total $489.5 billion in contract spending Deltek has forecasted for the year.

In a more typical year, 32.4% would be spent in the fourth quarter.

There are multiple contracts in the pipeline because the government spent only 17% of its expected outlay on contracts in the first quarter, Carey Webster, director of federal information solutions for Deltek’s GovWin, reported in a recent webinar.

“The fourth quarter of fiscal 2014 is poised to be a record quarter based on [a] dismal first quarter,” Webster said.

Deltek is seeing evidence of a “significant increase in solicitation activity on task/delivery order contracts,” Webster added.

The busiest month ahead is likely to be September. A whopping 18% of all federal government contract spending occurs in that month, on average, Deltek reported. All the other months average from 6% to 9%.

Small businesses receive an even larger share of contract spending in the fourth quarter, in comparison to non-small companies.

Based on a five-year-average, 39% of small business contract spending happens in the fourth quarter; with 19% in the first quarter; 21%, second quarter, and 22%, third quarter, Deltek reported.

That occurs because small businesses tend to be clustered in industries associated with high fourth-quarter spending, Webster said. Those industries include architecture and engineering services, for which 50% of contracting spending occurs in the fourth quarter, on average; information technology, 39%; and professional services, 34%.

Deltek reported that some agencies spend a larger-than-average share of their contracting dollars in the fourth quarter, including the State Department, 56%; Interior, 47%; Health & Human Services, 46%; US AID, 44%; Environmental Protection Agency, 44%; USDA, 40%; Commerce, Homeland Security and US Army, all 38%.

Ongoing contentious budget fights in Congress are likely to continue the trend of delayed contract spending, Webster said.

More information: GSA blog http://goo.gl/CRaLZI

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