September – the “Spendingest” Month of the Year

Published: July 30, 2014

BudgetForecasts and Spending

Washington can be a pretty polarized town and August is perhaps the most polarized month of the year in DC. I don’t mean this from a political or policy standpoint, but in the general workaday sense. On one side, many government officials and their staffs – from Congress to the Administration and the bureaucracy – leave town on break. On the other side, the federal contracting community – both inside and outside government – is busy ramping up to close out the fiscal year (FY) before time runs out on authorized budgets. Most of this effort will come to fruition in September, making it the “spendingest” month of the year.

In this series of entries I have been looking at the potential for federal contract spending that could likely come in the final quarter of this fiscal year – the fourth quarter, or Q4 – spanning the months of July, August and September.  Rather than taking any one year as a benchmark, I hope that looking at a 5-year average will help smooth out any outliers that would skew the perspective. In the first week, I looked at total Q4 contract spending for the top 25 departments and agencies across all categories of contracted products and services. Last week, I looked at these same 25 departments specifically from a Q4 information technology contract spending perspective to see which departments should have the largest portion of their FY 2014 IT budgets still on the table for Q4. In this third entry I am digging deeper into the Q4 spending data to see how it breaks out month-to-month.

Total Contract Spending

As mentioned previously, federal departments report spending about 32% of their yearly contract dollars in Q4 across all product and services categories. A deeper look at spending data over the last five fiscal years reveals that, on average, 18% of federal contract dollars are awarded in September alone. (See chart below.)

Information Technology

For IT, however, the percentage of federal fourth quarter contract spending rises to 39% and that translates into $30 billion in IT products and services contracted during the quarter. So does IT’s higher overall Q4 proportion translate into higher September spending as well?  It sure does. Compared to the 18% across all categories of spending, IT contracting in September averages 23%. (See chart below.)

No wonder Q4 gets labeled as a “the busy season” and September is dubbed a “spending spree!” Almost one quarter of all federal IT contract dollars are obligated in the final four weeks of the fiscal year.

Next week, we’ll see how the largest 25 departments and agencies compare in their average September IT spending.  Stay tuned.