CBO: Professional services spending soars

Despite the recent trends we’ve all heard about time and time again—lack of clarity, sequestration, etc.— its good to remember that the government contracting industry has grown tremendously since 2000.

An new analysis by the Congressional Budget Office, requested by rep. Chris Van Hollen (D-Md.), shows that spending on federal contracts grew from 11 percent of total federal spending in 2000 to 15 percent in 2012.

CBO found that federal spending on contracts grew by 87 percent (adjusted for inflation with the gross domestic product price index) from 2000 to 2012, an average of about 5 percent per year.

In 2012 alone, the government spent $500 billion on contracted products and services.

The Defense Department accounted for around 62 percent of spending on contracts in 2000 and 70 percent in 2012, the report said.

Looking at NAICS codes, the CBO found that the most growth in terms of dollars came in the professional, administrative and management services categories.

CBO found that in 2012, the Defense Department spent 42 percent of its contract funds on services, 49 percent on products and 9 percent on research and development. The department spends more on contracts for professional, administrative and management services than it does on aircraft.

The Defense Department was not alone in seeing its contract spending soar. CBO named the Energy Department, Veteran Affairs, NASA, State Department, USAID, CDC, FAA, CMS and NIH as some of the top civilian spenders. In fact, with 69 percent of their contract funds being spent on services, they spent a higher percentage of their contract dollars on services than does the Defense Department.

The rest of the civilian contract spending goes to products (22 percent) and research and development (9 percent).

Defense spending from 2000 to 2012 grew more than twice as fast as civilian contracting spending—111 percent versus 48 percent—likely due to the wars fought in Afghanistan and Iraq, the report said.