GSA Expands its Consulting Contracts Reduction Efforts

The Trump Administration continues its pursuit to reduce federal spending at various levels. Much of this effort has been focused on identifying waste, fraud and abuse, or on shifting away from some areas and toward administration priorities. Federal spending on contracts has not escaped scrutiny. Far from it.

Reducing agency spending on consulting services has been one of the earliest efforts, with the General Services Administration (GSA) directing agencies to review contracts with ten of the largest consulting contractors and pressing these firms to restructure their existing contracts.

Earlier in May, GSA expanded its list of companies whose consulting contracts it is reviewing, building on its government-wide consulting contracts trimming effort. So, the publicly reported list of companies is now up to twenty.

Identifying Federal Spending on Consulting

While GSA has not identified all the work efforts that fit into their definition of “consulting,” in a previous article I looked at federal spending trends on contracts recorded under the North American Industry Classification System (NAICS) codes which most readily align with the broad areas of consulting services. These are:

• 541611 - Administrative Management and General Management Consulting Services
• 541612 - Human Resources Consulting Services
• 541613 - Marketing Consulting Services
• 541614 - Process, Physical Distribution and Logistics Consulting Services
• 541618 - Other Management Consulting Services
• 541620 - Environmental Consulting Services
• 541690 - Other Scientific and Technical Consulting Services

Given the ambiguity of GSA’s definition, others looking at GSA’s efforts have included the following other NAICS in their consideration of where consulting work tends to be categorized:

• 541330 - Engineering Services
• 541511 - Custom Computer Programming Services
• 541512 - Computer Systems Design Services
• 541990 - All Other Professional, Scientific, and Technical Services

While this inclusion is realistic and based on experience, it is important to note that these NAICS may include other, non-consulting work as well.

Federal Spending on Consulting – GSA’s Twenty Companies

The following table presents the FY 2024 contract obligations for the companies currently identified by GSA – their total obligations across all federal work, their obligations reported under the 5416-series consulting NAICS, and those obligations under both the 5416-series and four additional NAICS. The two columns to the right present the proportion of those respective consulting obligation groupings as a percentage of total company obligations.

Expect the list of companies with which GSA engages for contract savings to grow, and for the scope of the contracted work to potentially expand to other areas.

Companies that work in this space, either as a prime contractor or a subcontractor, should consider steps they can take now to prepare to respond to GSA or their host agency if the need arises. Companies that anticipate the eventuality of a contract review may want to engage with their contracting agency representatives to develop mutually beneficial approaches to working through these reviews, if possible.