Federal spending fell 11 percent in fiscal 2013.
That’s good news for those who want to cut down on government spending. For government contractors, not so much: Fiscal 2013 federal spending was the lowest since 2006.
The $460 billion in 2013 contract obligations was a drop of more than $57 billion from fiscal 2012, and the fourth year in a row of reduced federal spending. Here are details of some of the affected areas, and a few areas of optimism for contractors.
Down: Boeing, defense and aerospace
The defense and aerospace industry dropped by $11.1 billion in contract obligations from fiscal 2012 to 2013.
At least five major companies in this industry had a decrease of at least $1 billion, including the Boeing Co., which dropped by more than $8.5 billion.
Some of the differences may be attributable to Boeing’s large foreign military sales contracts with Saudi Arabia, which may have irregular obligations, depending on the specific aircraft orders and delivery.
Down: Architecture, engineering and construction
The architecture, engineering and construction industry was also significantly affected in fiscal 2013, with a decrease of $9 billion from 2012.
Most of the difference stems from changes in Army spending, primarily because of budget cuts and the reduction of Recovery Act expenditures. According to the Army’s 2014 and 2015 budgets, the agency’s appropriations for military construction decreased 44 percent from fiscal 2012 to 2013 — not counting mandated sequestration or rescission actions. Budget year 2014 was even lower, and 2015 represents an 82 percent drop in military construction appropriations since 2012.
Contract obligations using Recovery Act funding peaked in fiscal 2010 for Army commercial and institutional building construction, at $1.4 billion, and have steadily declined ever since. Fiscal 2012 reported $28.4 million, with fiscal 2013 only $4.3 million.
Up: Lockheed Martin
Despite the downward trend of fiscal 2013 contract obligations, there were some increases. Lockheed Martin’s contract obligations increased from $37.2 billion in 2012 to $44.1 billion in 2013.
This change can be largely attributed to the company’s defense and aerospace contracts, especially a $5.6 billion increase to the Navy for a Joint Strike Fighter aircraft contract.
Up: Woman-owned small businesses
Programs for economically disadvantaged and other woman-owned small businesses increased contract obligations in fiscal 2013 by 53.4 percent and 20.4 percent, respectively.
Up: Near-future contracting
Deltek has identified more than 8,000 federal opportunities anticipated for release within the next 18 months that have a combined total value of $736.6 billion. More than 2,700 of these include requirements in the defense and aerospace and architecture, engineering and construction industries.
Kathleen Sievers is a research manager at Herndon-based Deltek, which conducts analysis on the government contracting market and can be found at www.deltek.com.