Do agencies still have year-end spending sprees?

OMB management efforts seek to encourage mindful spending

The end-of-year spending spree, a time-honored tradition in the federal government, appears to show no sign of abating.

Although in theory agencies take a more strategic approach to information technology spending than they did, say, a decade ago, most still end the fiscal with a flurry spending in effort to use the last of their appropriated funds. As always, they fear having their budgets reduced in the next fiscal year if they do not use all the money available in the current one. In other words, use or lose it.

In a recent FCW Insider post asking whether "use it or lose it" is still the operative philosophy, editor-at-large John Monroe reminisced: "When I was a cub reporter at Federal Computer Week in the early 1990s, the 'use-it-or-lose-it' mentality provided a good opportunity to track technology trends. A team of reporters would check in with execs in government and industry to see what products topped that year’s shopping list.

"In theory, that wouldn’t work now. Ideally, agencies are planning out their purchases carefully, based on some sort of IT master plan and acquisition strategy. But I can’t help but wonder if that’s the case."

Readers responded, saying, basically, yes it is.

"Based on all the contract requests that I see needing to be filled by October 1, I think the end-of-year feeding frenzy is alive and well," wrote consultant Jaime Gracia.

"Definitely alive and well in our contracting shop," an anonymous reader wrote. "There are no rewards for spending money wisely. If you don't use it, not only do you lose it for the current FY, your future budget is dinged as well."

 Related coverage:

OMB wants to know how agencies manage risky IT projects
 IT projects at high risk of paperwork 

However, we tried to do it old-school -- assigning reporters to talk to agencies about their year-end acquisitions and priorities for the coming fiscal year -- and only a few responded.

Susannah Schiller, chief information officer at the National Institute of Standards and Technology, said she has been working closely with the NIST acquisitions team to complete planned IT acquisitions.

“Of the highest priority are IT acquisitions funded from the American Recovery and Reinvestment Act to improve NIST measurements and research,” Schiller said.

NIST received a total of $610 million in funding through the Act, and is spending it on several projects including $20 million in funds transferred from the Health and Human Services Department for standards-related research supporting the security and interoperability of electronic medical records, and $10 million from the Energy Department to help develop a comprehensive framework for a nationwide smart grid for the U.S. electric power system.

Prioritization of acquisitions for fiscal 2011 will depend on the still-to-be-determined appropriations to NIST, Schiller said.

“We expect to replace and upgrade our IT Service Management software, strengthen our continuous monitoring and intrusion prevention capabilities, acquire Trusted Internet Connection networking services and invest in an identity management system that is HSPD-12 compliant,” she said.

The Defense Information Systems Agency will be spending the last of its yearly funding according to its budgetary process. DISA spokesperson Tracy Sharpe said that among the agency’s fiscal priorities for fiscal 2010 were support for overseas contingency operations, cyber security and DISA’s congressionally mandated move to Fort Meade, Md.

Some of DISA’s fiscal priorities for fiscal 2011 include plans to deploy the host-based security system across DOD and isolate military networks from the public Internet. The HBSS monitors, detects and counters known cyber threats to defense networks. DISA also plans to complete work on what it refers to as a “demilitarized zone,” or DMZ, for its unclassified networks. The DMZ would eliminate the need for most defense agencies to connect to the commercial Internet, reducing the change of cyberattack.

Some agencies are prepping for expected budget cuts. The Obama administration is seeking to save $250 billion during the next decade through a three-year freeze on non-security discretionary spending, and has asked non-security agencies to provide plans for reducing their budgets by 5 percent.

In a speech to the Center for American Progress on June 8, Budget Director Peter Orszag said the 5 percent reductions would give agencies to ability to maintain the freeze while "meeting inevitable new needs and priorities."

The Homeland Security Department has not updated its official strategic plan since 2008. With the White House requesting cuts in spending, there are likely to be cuts in non-mission-critical programs in 2012. The National Flood Insurance Program initiative, Homeland Security Information Network and the Automated Commercial Environment are all on a list of 26 high-priority projects that OMB has targeted for potential cuts.

The Justice Department has cancelled its Litigation Case Management System as a result of an Office of Management and Budget efficiency review, and has reconfigured the FBI Sentinel case management system development program to bring it in-house. Both programs would expect to have shrinking budgets in 2012 as a consequence.

Another commenter on the FCW Insider blog summed it up this way: "Year-end 'dump money' is legendary in DOD and I've seen it every year since I started in 1980... Hey, whoever started the 'use it or lose it this year AND next' is the cause of these shopping sprees, not those who take advantage."

About the Authors

Technology journalist Michael Hardy is a former FCW editor.

William Jackson is a Maryland-based freelance writer.

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

Reader Comments

Sun, Dec 5, 2010 DoD Worker DC/MD

We have the same wasteful policies in my office. Although I've searched I've never found a satisfactory answer for the need for the use-it-or-lose-it policy. Why aren't On-the-spot awards available for saving money and for returning end of year money? Does anyone understand this reasoning (if there is indeed a reason)?

Thu, Sep 30, 2010

This is the time of the year when mgmt. favorites suddenly get some sort of cash award even if it's for a project that the rest of staff haven't heard of.

Thu, Sep 30, 2010 Random govt IT worker

Another issue is the impact of procurement planning (or the lack thereof) external to the IT department. Managers in other departments frequently set aside significant portions of their operating budget throughout the FY as "emergency funds" - then, when their "use or lose" Jones kicks in, look to IT as one avenue to quickly liquidate these funds before EOFY.

Thu, Sep 30, 2010 government worker Washington DC

When agency budgets and spend plans aren't released until the 2nd qtr, if that, and contracts aren't let until the 3rd to 4th qtr, is it any wonder there's major spending in the 4th qtr? As one of the other writers said, it's actually prudent to have your prioritized list of spending projects ready to go for the 3rd and 4th qtr. And then in the 4th qtr is only when you know what money you're going to have left after higher piority projects may or may not get processed and spent. It's really the only way any significant things not at the top of the food chain can get bought, and the little stuff has to wait for that as we "nickel and dime it" while waiting for the budget to be approved. It has to be fixed from the top, meaning Congress.

Thu, Sep 30, 2010

One of the big downsides to the continuing resolution game is the no new start rule. Regardless of how important a new project is it will start only after the budget is signed. There have been some gamesmanship of calling things ECPs to link them to a current project, but unless the linked project plays along it doesn't work. The late start often causes fourth quarter buys. There is also a tendency to ignore early submissions to contracts even though required advertising delays and award approval delays mean that it must be acted on promptly. Then it becomes a race to the Oct. 1 deadline.

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