Most contractors operate on a fiscal year similar to the calendar year but the federal government’s fiscal year begins on 1 October and ends on 30 September. As September looms, agencies still have some remaining funds they must spend, leading to a massive spending spree and causing a significant spike at the end of the fiscal year. They do not want to return unused funds to the treasury as their budget may be reduced in the next budgetary year hence the term—use it or lose it! So how can you make the most of this opportunity?
Understanding the federal government’s spending trends over the fiscal year is essential to how contractors can plan their capture strategy. Specifically, the knowledge that most federal agencies begin significant acquisition planning early in the fiscal year allows contractors to be proactive rather than reactive when pursuing contracting opportunities. If a contractor waits for those planned requirements to drop, as discussed above, they are already behind in the acquisition process. Contractors should understand that those requirements are forecast at the beginning of each fiscal year.
Source: SAM Data Bank collected on 07/26/22
The chart above shows that procurements drop off from end-of-year spending during the first quarter due to new budget funding not being readily available and the need to prioritize requirement needs for the year. Around the beginning of the second quarter, solicitations are posted for the prioritized requirements, and you see a spike at the end of that quarter for those awards. Awards drop again in the third quarter as agencies review the remaining planned requirements to determine what can be acquired based on the remaining budget and time. There is a run-up to the end of the fiscal year to solicit and award these planned requirements before time runs out for delivery or performance.
A Forecasts of Contracting Opportunities by Federal Agency can be found here: https://www.acquisition.gov/procurement-forecasts.
By October 1 of each fiscal year, federal agencies must post contract opportunities exceeding the simplified acquisition threshold, currently $250,000, which can or will be set aside for small businesses and socio-economic programs. This allows small businesses to plan and prepare for upcoming solicitations. The posted opportunities are what an agency intends to acquire over that fiscal year. However, priorities and funding may change, which will cause the requirement to be canceled for that year.
Posted opportunities describe the requirement, the magnitude of the effort, the FY Quarter for solicitation release, the proposed set-aside, and points of contact. The posted opportunity should have enough detail to determine if it is a requirement a contractor should pursue. This is the time to reach out to the point of contact to find out more about the requirement and conduct market research to review the requirement history, incumbent contractor, and other details needed to prepare a winning proposal. The beginning of the fiscal year is also an excellent time to build relationships with federal agencies that buy what you sell. Build your relationship throughout the year and ensure they know you are ready to support them during the fourth quarter with their last-minute buying needs. The end of the fiscal year is too late to establish these kinds of relationships; start in October to have a winning September!
Reach out to your Procurement Specialist to help you strategize for the next fiscal year or apply to be a client today!
Nanci Pigeon, Norcal PTAC Procurment Specialist