Federal IT contractors typically count on an annual federal spending spree in the fourth quarter, which ends Sept. 30. This time around, sequestration raises some concerns for contractors, but Deltek is projecting a busy period.
One-third of all federal spending takes place in the fourth quarter, mostly in September. When averaged over the past five years, twice as much spending takes place in September as in any other month.
The top industries for this rush of federal spending include professional services; land vehicles and equipment; information technology; and architecture, engineering and construction.
The majority of task order and delivery order spending also takes place in the last quarter of the year. In fact, for a subset of high-volume task order contracts, 53 percent of spending takes place in this period.
IT hardware and services contracts are prone to this final-quarter spending spree. For example, the Enterprise Acquisition Gateway for Leading Edge Solutions, a Department of Homeland Security contract better known as EAGLE, has historically made 78 percent of its reported spending in the last quarter.
DHS spending for its First Source contract, which covers hardware and software, shows a similar last-minute rush at 70 percent.
Other IT contracts such as NASA’s Solutions for Enterprise-Wide Procurement and the General Services Administration’s Schedule 70 have similarly high levels of last-quarter spending.
Despite sequestration, federal contractors selling IT services and commodities should expect a busy final quarter. Deltek projects that this period will bring the highest level of spending since fiscal 2010.
Deltek identified over 27,000 task orders anticipated to expire in the last quarter of fiscal 2013; roughly half are for information technology-related services and equipment.
Contractors can use these expiring orders to identify potential leads, particularly for Schedule 70 and NASA’s SEWP program, which lead in numbers of expiring task orders.
Jennifer Sakole is principal research analyst at Herndon-based Deltek, which analyzes the government contracting market and can be found at www.deltek.com.