In the final weeks of the rush of contracting activity that typically ends a federal fiscal year, the mood among small vendors has turned circumspect.

While fourth-quarter spending is surging roughly as anticipated, there are growing concerns that small vendors might be poorly positioned to take full advantage of the boom.

With four weeks to go until the fiscal year’s end on Sept. 30, billions of dollars remain unspent.

Forecasts for fourth quarter spending have been relatively optimistic. However, the impacts of sequestration and furloughs are wild cards.

A troubling scenario being discussed is that federal contracting officers, facing a huge end-of-year workload and limited time, may be forced to prioritize the largest contracts. As a result, some small contracts may be pushed to the back of the line and fall by the wayside.

“There can be a tendency to focus on awarding the larger contracts first,” Molly Brogan, spokeswoman for the National Small Business Association, told Set-Aside Alert. “A $90 million contract takes the same amount of time to complete as does a $5 million contract.”

That trend happens every year to some degree. But this year the time crunch appears to be worse because of time lost to furloughs, and the backlog of work is likely greater, due to delays from sequestration and budget uncertainty, she said

Small vendors, typically last in line for awards anyway, may lose out more, proportionately, Brogan suggested.

Another factor to consider is that agency financial officers are avidly searching for unobligated funds to make up for gaps elsewhere. If money is not obligated by late August, it may be redirected. Since small contracts tend to be awarded last, they may be more vulnerable and non-essential work may be put off.

“When the rush is on, the money needs to be spoken for by mid- to late-August,” Brogan said.

A federal small business contracting executive told Set-Aside Alert she was upset about both trends being strengthened this year.

“I’m really worried about our small business numbers this year,” the executive said. “It is not looking good.”

As of Aug. 26, the government’s Small Business Dashboard showed that $45.5 billion had been spent on small business contractors, about half the amount anticipated for the full fiscal year. The total represented 20.35% of eligible awards, falling short of the government’s 23% goal.

While those numbers are not final, they may portend a trend.

John Shoraka, the SBA’s associate administrator for government contracting and business development, said budget uncertainty, delays and sequestration are expected to reduce small vendor participation in fiscal 2013. Last year, the administration awarded 22.12% of eligible contracts to small vendors.

"We do anticipate fewer contracts and fewer dollars to be allocated to small businesses due to a number of challenges facing federal agencies in planning their procurements, in addition to operating under a Continuing Resolution, and now, forced budget cuts as a result of sequestration,” Shoraka wrote in an email to Set-Aside Alert. “We will not know what the exact impact will be on these small businesses until the end of the fiscal year but, from the beginning, we have been clear that sequestration would have severe impacts across the government and for small business.”

Small vendors also are feeling “moderate anxiety” these days because of the tense anti-spending mood in Washington, Albert Krachman, partner at Blank Rome law firm, told Set-Aside Alert. Some lawmakers have urged a government shutdown and a fight over the national debt ceiling, and the negativity is trickling down, he said.

In such an environment, “the fourth quarter surge is happening, but people do not want to promote it for fear of drawing fire,” he said.

Still, there are reasons for optimism. “The important things are: how easy is it to award to your company, and where does the agency sit in terms of small business goal attainment?” Krachman added.

Agencies falling short of their small business goals for the year can make an extra effort to make up for it in the fourth quarter. Last year, the Veterans Affairs Department made those goals a top priority late in the year, for example.

As of July 30, Deltek predicted $48.6 billion in pending contracts to be awarded to small businesses in the remainder of fiscal 2013. About $39 billion was available from civilian agencies, and $9.4 billion from defense.

The bulk of the civilian work available was at the Homeland Security Department, with $22 billion unspent, and VA, with $12.4 billion unspent, Deltek said.

For all contractors large and small, Deltek predicted $188 billion in awards in the fourth quarter, including $113 billion in August and $64 billion in September.

More information: White House’s Data.gov Small Business Dashboard: http://smallbusiness.data.gov