Contract Spending down 3.1% in FY14

From the Friday Flash (June 12, 2015) – Coalition for Government Procurement
Selected by Nick Economou, PTAC Counselor at UNC-Charlotte

According to analysis from Bloomberg Government, federal contract spending decreased by $14.5 billion or 3.1 percent to $447.6 billion from $462.1 billion in fiscal year 2013. Despite the drop there may be a silver lining for contractors. Bloomberg Government’s analysts noted that last year “may have represented the dawn of a new normal in the federal marketplace: contract spending was down following the drawdown in Afghanistan and Iraq, but greater budget certainties allowed greater planning and projections.”

While the Army, Navy and Defense-wide agencies endured large spending cuts in fiscal year 2014, a number of civilian agencies increased their contract spending. The departments of Energy, State, and Health and Human Services all increased spending by a billion dollars or more. The analysis also notes that nine of the 20 purchasing categories explored in the BGOV200 analysis had more contract dollars in fiscal 2014. Some key takeaways from the analysis are below.

  • Multiple-award contracts (MACs) were a key to success in FY14, as agencies continued their shift from single-award contracts to MACs. Agencies awarded several long-awaited mega-MACs and announced major contract consolidation initiatives, while federal procurement through MACs totaled $115 billion in 2014
  • Information technology had a successful year: Both technology services and technology equipment funding increased in 2014.
  • The largest category increase was in facility-related services, which increased by $3.7 billion to $65.2 billion in fiscal year 2014
  • Medical services had a $2 billion increase in 2014, while medical services and technology services supporting health continue to be significant growth markets for federal contractors.
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