Budgets cuts, contracting reforms and the military drawdown in Afghanistan have pushed government contract spending to its lowest level in more than seven years.
Government spending on contracts plunged almost $58 billion – 11 percent – to about $460 billion in fiscal 2013, according to the Office of Management and Budget and preliminary estimates from the Government Accountability Office.
Spending has fallen three of the past four years, from a peak of $550 billion in fiscal 2009 — and administration officials say more declines lie ahead.
“For fiscal 2014, we expect agencies to continue these smarter buying practices to deliver even more value to the taxpayers,” said Office of Management and Budget spokesman Frank Benenati.
Rob Burton, former deputy administrator of the Office of Federal Procurement Policy at OMB and a government contracts attorney at Venable, said the steep drop in procurement spending is the result of numerous factors and policies.
Sequestration, the continued drawdown of military operations in Afghanistan, along with OMB policies to encourage spending cuts such as strategic sourcing, all played a role, he said.
“During the budget battles of last year, agencies simply did not award some contracts or delayed others. Everything was put on hold,” Burton said.
He said the administration has also been working to reduce the overall number of contractors through tools such as strategic sourcing and governmentwide contracts.
Burton said he expects contract spending to continue dropping as agencies consolidate their operations and respond to continued pressure from OMB.
Dan Gordon, former administrator of the Office of Federal Procurement Policy and associate dean for government procurement law at George Washington University, agreed government spending will either remain flat or continue to fall.
He said government spending was still extremely high in comparison to historic numbers and could drop up to another 10 percent. He added that businesses across the country — especially in the Washington area — are going to feel the impacts of reduced spending.
“The fact is we have heard anecdotes over the past year about decreases in spending but we now have firm data, Gordon said. ■