Federal Fourth Quarter FY 2014 – What Will Agencies Be Buying?

Published: August 20, 2014

BudgetForecasts and Spending

Making the most of the traditional “federal busy season” requires understanding and preparation on the part of federal contractor firms and that includes understanding what is needed and what is typically purchased. Spending in the final weeks of the fiscal year is often viewed as predominantly transactional in nature, with a focus on commodities. But is this actually the case?

This entry continues a series of posts around agency contracted spending in the fourth and final quarter (Q4) of the federal fiscal year (FY), which has increasingly been the busiest quarter of the year, with September being the busiest month of the quarter. Recently, I highlighted which agencies are ramping up for September to spend large sums of money on IT contracts, averaging to more than $17 billion each September over the last five years.

This week I wanted to outline the broad product or service areas that agencies are buying in Q4. When contracts are recorded in the Federal Procurement Data System (FPDS) they are assigned a Product of Service Code (PSC) to designate what is being purchased on that contract transaction.

In keeping with my earlier analysis I looked at the most recent five fiscal years to see what patterns emerge and to minimize outliers. Pulling out the top ten PSCs for reported spending in Q4 for FY 2009 through FY 2013 gave the following areas to consider. (See chart below.)

The most consistently used Q4 Product or Service Codes (PSC) and their assigned descriptions are as follows:

  • R425 = Engineering and Technical Services
  • D399 = IT and Telecom-Other IT and Telecommunications
  • 7030 = ADP Software
  • D307 = IT and Telecom-IT Strategy and Architecture
  • R414 = Systems Engineering Services
  • 5895 = Miscellaneous Communication Equipment
  • D301 = IT and Telecom-Facility Operation and Maintenance Services
  • D302 = IT and Telecom-Systems Development Services
  • 7010 = ADPE System Configuration
  • 7035 = ADP Support Equipment
  • J058 = Maintenance, Repair & Rebuild of Equipment - Communication, Detection, and Coherent Radiation Equipment
  • D318 = IT and Telecom- Integrated Hardware/Software/Services Solutions, Predominantly Services

It is noteworthy that the top three Q4 PSCs over the last five years have been almost uniformly consistent, and if we were to drop FY 2009 from consideration the picture would be thoroughly consistent in both PSCs and relative proportion. On the services side federal agencies overwhelmingly buy Engineering and Technical Services and IT and Telecom services in the fourth quarter. In fact, Q4 spending is well dominated by services spending and the relative proportion of the various codes give a bit of granularity into general priorities, although some work could be categorized under multiple PSCs, depending on who is doing the coding.

On the products end, agencies predominantly purchase software products in Q4 under PSC 7030 ADP Software, but Q4 spending on 5895 Miscellaneous Communication Equipment is rarely very far behind, depending on the individual year. Both of these codes are used for a wide variety of software and hardware needs, so there is only so much we may conclude within the limits of the data.

Like most large organizations, federal agencies appear to be “creatures of habit” when under a time crunch and they need to get time-sensitive contracts signed, sealed and delivered. Savvy federal business development and capture folks know this and will be well prepared to respond to the demand. The rest will lose out.