FY2020 contracting expected to hit record $645B; $174B in 4thQ

4thQ especially significant for small business: GovWin

      Federal government contracting awards are forecasted to hit a record $645 billion this fiscal year, a 10% increase over last year’s all-time high of $585 billion, according to an analysis by GovWin by Deltek.

     The fiscal 2020 total is expected to have a significant bump estimated at about $40 billion from COVID-19-related procurements, Carey Webster, senior director of research for Deltek, said in a recent webinar.

      A huge boost also is anticipated from record appropriations for defense and civilian agencies, she said.

      While Fourth Quarter contract spending is typically 32.2% of the total for the year, based on a five-year average, GovWin adjusted that percentage downward to 26.7% for fiscal 2020 for several reasons, including agencies spending more earlier in the year and a surge of COVID-19 procurements in the first half of the fiscal year.

      As a result, the so-called “Fourth Quarter Contract Spending Spree” is likely to be less robust this year, totaling $174 billion, Webster said.

      Fourth-quarter contracting “won’t be a record” this year, she said.

Small business contracting

      Small business contracts are “especially sensitive” to being awarded in the Fourth Quarter, Webster said.

      Fourth Quarter small business federal procurements typically represent 41.9% of the year’s total of small business procurements, based on a five-year average, while for “other than small” businesses the Fourth Quarter percentage is 29.4%, she said.

      The drivers of small business contracting in the Fourth Quarter include a high concentration of IT contracts being awarded. For example, the Transportation Dept. typically requests 45% of its quotes from Schedule 70 and SEWP IT contracts in the Fourth Quarter. Other agencies with high proportions of requests for quotes for IT contracts in the Fourth Quarter include USDA, 41%; State Dept., 40%; EPA, 36%; Air Force, 36%; and Energy Dept., 34%.

      In addition, federal agencies purchase 49% of their Architecture, Engineering & Construction services in the Fourth Quarter.

      Both of those trends benefit small businesses, which make up a substantial portion of federal IT, architecture, engineering and construction vendors, Webster said.

      In addition, agencies pushing to meet their small business procurement goals before year’s end also hike up Fourth Quarter small business awards, she said.

More Fourth Quarter trends

• September is typically the busiest month of the year for federal acquisitions, averaging 16.4% of all procurements in the last five years, the GovWin analysis showed. August typically comprised 8.4% of the total, while July comprised 7.3%.
• Civilian agencies typically do a higher percentage of their acquisitions in the Fourth Quarter, averaging 34.8% while defense agencies average 30.6%.
• In the Fourth Quarter, federal agencies buy 57% of their furniture and appliances; 38% of their electrical services; and 38% of their IT services.

More information:
GovWin Spending Spree 2020 report: http://ow.ly/SeZ650AeOIy

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