Thought Leadership

Four recommendations for contractors in response to the president’s FY 2022 discretionary budget request

On Friday, April 9, the Office of Management and Budget released the Biden administration’s initial fiscal year (FY) 2022 Discretionary Budget Request. The new administration’s initial budget proposal includes a total of $1.5 trillion in top-line discretionary budget requests for federal departments and agencies, plus the administration’s policy and budget priorities in broad strokes. Some of those key priority areas include climate change, healthcare, equity in business, R&D and IT.

The Federal Market Analysis team at GovWin from Deltek has dug into the available budget detail in order to provide their first impressions of what they found noteworthy in the discretionary budget request in their recent report, First Look: FY 2022 Federal Budget Blueprint.

As shown in the graphic below, the Department of Defense budget takes up the lion’s share of proposed FY 2022 funding.

(courtesy: Deltek)
(courtesy: Deltek)

Although President Biden has noted a need to reassess and redirect Department of Defense spending, his first budget proposal requests a modest increase. The president’s budget request provides $715 billion in discretionary funding for the DoD, 1.6 percent more than the $703.7 billion the DoD enacted for Fiscal Year 2021.

While the DoD budget increase is modest, the Biden Administration requests a nearly 16 percent increase in funding for civilian agencies. Under this proposal, nearly every reported agency would receive an increase, with several positioned for more than 20 percent growth over FY 2021 enacted budgets, including a potential 40.8 percent growth in funding for Education, 28.1 percent for Commerce, 23.1 percent for Health and Human Services, 21.7 percent for the EPA and an even 20 percent for the National Science Foundation.

As a whole, the budget outline appears to demonstrate an appetite for continued growth in spending to help spur the economy, even following a wave of unprecedented stimulus spending. In particular, government efforts to increase contract awards to Small Disadvantaged Businesses and programs that support women, people of color and other underserved entrepreneurs are top priorities.

Here are four recommendations for federal government contractors to keep in mind as they take stock of President Biden’s first 100 days in office, evaluate the FY 2022 budget and prepare their strategies to take advantage of continued spending growth.

  • Prepare for some potential pushback to select budgetary proposals from Congress, which may prefer to be somewhat more conservative in funding following the numerous stimulus bills.
  • Keep in mind that although discretionary increases at many civilian agencies will flow to grant programs not addressable by contractors, it is possible that the associated program management and administrative support could represent additional opportunities for well-positioned contractors.
  • Stay alert for more emerging technology opportunities from the DoD, particularly those surrounding the Internet of Things and artificial intelligence, as cybersecurity will continue to be among the highest of federal priorities across the government.
  • Expect the DoD to redirect resources from legacy systems to priority technologies, including cybersecurity and cloud computing. This could result in more contracts awarded via Other Transaction Authority.

GovWin’s FY 2022 Federal Budget Blueprint report offers more recommendations and insight into relevant strategic analysis in key areas like spending priorities, policy plans and agency-level trends and initiatives in the FY 2022 discretionary budget request.

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