“At the request of its technology and services company members, PSC registered irritation with the balky system in a Feb. 7 letter to Julie Dunne, commissioner of GSA’s Federal Acquisition Service.
Alan Chvotkin, PSC’s executive vice president and general counsel, told Dunne that some initial start-up pains for the system still nag users.
“Regrettably, initial ‘bumps in the road’ have continued beyond the functionality that GSA announced would not be carried over from the old system, and our members asked that we bring their views to your attention,” said Chvotkin in the letter.
The FedBizOpps contract notification and tracking website was moved to beta.SAM.gov late last year. From the beginning, contractors complained the new site frustrating to search and ineffective. GSA is consolidating several of its legacy awards systems into SAM.
PSC has heard from vendors large and small who said they are having continued trouble with accessing and searching the site, as well difficulties in how search results are displayed, which can have different font sizes and no copy or print functions. The vendors also said email alerts and updates from the site have been uneven. Those problems have been issues since the cutover the new beta.SAM system last November.
“GSA appreciates that the Professional Services Council shared the views of some members regarding the migration of FBO.gov to beta.SAM.gov, as we take the feedback of all users seriously,” a GSA spokesperson told FCW in an email on Feb. 12. “The agency’s Integrated Award Environment team welcomes the opportunity to work with the Council as it conducts a careful review of the input shared with GSA in early February.”
Chvotkin has been talking to GSA about the portal since development began. He told FCW in an interview that some of the issues nagging the system were anticipated by GSA, and the agency has been working to smooth them out. Still, he said, PSC members have been lodging detailed complaints with his organization about the system.
The level of detail in the complaints was surprising, he said. Suggestions from users — including adding saved-search functions, limiting requests for authentication as well offering NAICs-code search functions — could be considered by GSA to modify the system.
“They’re still in a transition phase where they can make fixes,” said Chvotkin.
That transition could continue for the foreseeable future, according to Chvotkin. GSA plans to add some reporting functionality to the Federal Procurement Data System, better known as FPDS, in the fall.”
“Margaret Weichert, the deputy director of management at the Office of Management and Budget, teed up the effort in a document released Jan. 27 after the White House Summit on Federal Acquisition and Supply Chain Management.
“We want to hear from private sector organizations, researchers, academic institutions, good government groups, the public, and others on the vision and concept for a mechanism to facilitate curated conversations between the federal government and external supply chain and acquisition experts on a variety of issues and questions that support the government’s acquisition modernization effort,” said Weichert in a statement following the summit.”
“The Office of Federal Procurement Policy (OFPP) wants to nail down language on exactly when federal procurements begin and end to help eliminate delays.
OFPP proposed a rule change and is seeking comments on redefining the term “Procurement Administrative Lead Time” (PALT) and on a plan for measuring and publicly reporting governmentwide data on PALT for contracts and orders above the simplified acquisition threshold.“
“The agency wants to adopt the definition from section 878 of the 2019 National Defense Authorization Act. That language defines PALT as “the time between the date on which an initial solicitation for a contract or order is issued by a federal department or agency and the date of the award of the contract or order.”
Establishing a common PALT definition, said OFPP, as well as a plan to measure and report it can help the government pin down delays in the procurement process. Equipped with a common definition, it said, agencies can then use common data to make improvements.
Alan Chvotkin, executive vice president and counsel of the Professional Services Council, said he was “pleased” with OFPP’s proposed use of the NDAA definition.
“Time is money” for both federal agencies and contractors involved in an acquisition, he told FCW, adding that a revised PALT definition would help measure both.
Others want to tweak it a bit.
“I propose that PALT be defined as the cycle time between the solicitation response and the date award,” said Dave Zvenyach, former executive director of GSA’s 18F and former deputy commissioner for the agency’s Technology Transformation Service.
“PALT is the sort of topic that drives procurement nerds to drink,” said Zvenyach in a blog post on the issue. Defining it has been traditionally hard to do, since pinning down the “initial moment of requirement identification is notoriously difficult.”
Comments on the PALT language are due in 30 days.”
“The Defense Department issued updates to mid-tier and urgent acquisition policies that allow the military to quickly develop prototypes and field systems. The policies took effect in the last days of 2019.“
“Reworking the DOD 5000 series instructions that govern acquisition practices has been a top priority for DOD acquisition chief Ellen Lord, who told reporters Dec. 10 the changes “the most transformational change to acquisition policy in decades.”
The Pentagon has said it expects to publish the adaptive acquisition framework in January, which will include acquisition pathways specific to “the unique characteristics of the capability being acquired,” Lord said.
The mid-tier acquisition instructions address rapid prototyping and fielding and are meant to serve as a path to “accelerate capability maturation before transitioning to another acquisition pathway or may be used to minimally develop a capability before rapidly fielding.”
Lord said the new mid-tier instructions under an 18-month pilot facilitated a dramatic increase in the number of programs.
“Since our pilot started 18 months ago, we have gone from zero middle-tier programs in November 2018 to over 50 middle-tier programs today delivering military utility to warfighters years faster than the traditional acquisition system,” Lord said in the media briefing.
The urgent instructions focus on capabilities needed during conflict that can be fielded in less than two years but cost less than $525 million in research and development funds or $3 billion for fiscal 2020 procurements.
Lord said the department’s changes to the acquisition would make it easier for professionals to match programs with acquisition pathways as well as reduce lead time for pathfinder projects.
The rewrites for major capability, software, defense business systems and services acquisition are pending release.”
“Consumption-based solutions. A consumption-based acquisition provision was originally recommended by the Section 809 panel’s suite of acquisition reforms. And while most of the panel’s suggestions weren’t expected to make it into the NDAA for 2020, this one did. Doing the study, which is due in March, allows DOD to evaluate how consumption-based solutions, which involve an agency getting billed for how much it uses, would affect its contracts.
Space Force acquisition challenges. Since the 2020 NDAA authorizes the standing up of Space Force, there could be new acquisition changes needed. The bill mandates a report due in March on whether there needs to be a new acquisition assistant secretary for space policy.
Report on edge computing technology. DOD’s acquisition chief will have to report to Congress on commercial edge computing technologies and best practices for warfighting systems.
More cybersecurity oversight is coming to DOD, starting with a mandatory cyber review every four years. This requirement begins in 2022 and includes an assessment of costs, benefits, and whether, possibly like Space Force, a cyber force should be a separate uniformed service. There will also be quarterly reviews on cyber mission force readiness.
Zero-based review for IT and cyber personnel. The Defense Department has until Jan. 1, 2021, to complete a zero-based review of cyber and information technology contractors, military, and civilian personnel.
The review will assess staffing needs and effectiveness and also evaluate whether job descriptions, duties, and “whether cybersecurity service provider positions and personnel fit coherently into the enterprise-wide cybersecurity architecture and with the Department’s cyber protection teams.”
Information operations. The military services have increasinglyemphasized the importance of information warfare and operations in the wake of the 2016 presidential election and the aftermath of public and Congressional scrutiny.
The 2020 NDAA affirms this by requesting DOD appoint a “principal information operations advisor” to the secretary on “all aspects of information operations conducted by the Department.” In a separate but somewhat related provision, the bill authorizes research for “foreign malign influence.”
“The Pentagon is launching a new initiative that will shape its long-term plans for integrating 5G networks into U.S. military operations. The emerging technology is viewed as a potential gamechanger as the United States squares off against China in great power competition.
The term 5G refers to the oncoming fifth generation of wireless networks and technologies that will yield a major improvement in data speed, volume and latency over today’s fourth generation networks, known as 4G. 5G networks are expected to be up to 20 times as fast, according to a Defense Innovation Board study published earlier this year titled, “The 5G Ecosystem: Risks & Opportunities for DoD.”
“The shift from 4G to 5G will drastically impact the future of global communication networks and fundamentally change the environment in which DoD operates,” the report said. “5G has the ability to enhance DoD decision-making and strategic capabilities from the enterprise network to the tactical edge of the battlefield.
“5G will increase DoD’s ability to link multiple systems into a broader network while sharing information in real-time [and] improving communication across services, geographies and domains while developing a common picture of the battlefield to improve situational awareness,” it added.
The improved connectivity may enable a slew of new technologies, such as hypersonic weapons, resilient satellite constellations and mesh networks, it noted.
5G is a top priority for the office of the undersecretary of defense for research and engineering, and the Pentagon is kicking off a new effort to experiment with the technology for various mission sets.
The Defense Department has selected four bases as the first U.S. military installations to host testing and experimentation for 5G technology: Joint Base Lewis-McChord, Washington; Hill Air Force Base, Utah; Naval Base San Diego, California; and Marine Corps Logistics Base Albany, Georgia.
The first round of opportunities will focus on three areas: integrating augmented reality and virtual reality into mission planning and training in both virtual and live environments on training ranges; developing “smart” warehouses to leverage 5G’s ability to enhance logistics operations and maximize throughput; and establishing a dynamic spectrum sharing testbed to demonstrate the capability to use 5G in congested environments with high-power, mid-band radars.
5G could enable the next-generation training paradigm that the services are pursuing, which includes linking virtual and augmented reality systems on a global scale, officials say.
“It’s going to give you better bandwidth, lower latency — so a better, more realistic experience,” Lisa Porter, deputy undersecretary of defense for research and engineering, said in an interview. Porter is overseeing the Pentagon’s 5G efforts.
“For mission training and planning and all of those activities … it has to be as realistic as possible or it’s just not going to be very useful,” she added.
5G could also help drive down the costs of linking systems around the world, enabling them to be more widely deployed, she noted.
“Everybody should be able to have access to this capability … and you’d like them to be able to talk to each other” and experience collective immersion during training events, Porter said. “To do that, of course you have to have the cost low enough that we can afford that.”
Augmented reality, or AR, could have many military uses, said Joe Evans, the Pentagon’s technical director for 5G. The technology transposes data or other digitally created images on top of a real-world field of view.
“We already see that sort of thing at the high end in things like the F-35 helmets,” he said. “This is an opportunity … with the technology getting cheaper to start to be able to push that out to the broader force.”
AR combined with high-speed 5G networks also offers new possibilities for sustainment and maintenance, said a senior defense official who spoke to National Defense on condition of anonymity.
“The ability to assist our technicians in the field and understanding what they’re doing and the complex issues that they’re often involved in in fixing advanced fighter aircraft or cargo aircraft … is a major industrial inflection point,” the official said.
“Now all of a sudden because of the latency [reduction] … we both can test and verify the repair as it’s occurring,” he added. That could help keep cutting edge systems such as the joint strike fighter in the air rather than sitting in a maintenance depot.
The Defense Department envisions 5G streamlining the military’s massive logistics enterprise and improving inventory management if it is employed in “smart” warehouses filled with a variety of sensors that are used for monitoring parts and equipment.
“You want to be able to … have high confidence that you know what is there, where it is going, whether it’s come in or not. You want to make sure it hasn’t been tampered with.
All of these things are further enabled when you have high confidence in the connectivity and your ability to manage it,” Porter said.
Evans said increasing materiel throughput and the speed at which it moves is critical for supplying warfighters with the products they need.
“One of the problems with 4G and even WiFi types of technologies is they really weren’t designed to be having tens of thousands of individual wireless devices talking to the cell site or the access point,” he said. “What 5G is doing is essentially increasing that scale. And so from a single access point, you can now track greater volume of individual items in the warehouse [and do] the finer grain tracking.”
As 5G technology is rolled out, the Pentagon wants to pursue what it calls dynamic spectrum sharing between the military and industry, especially as it relates to the mid-band part of the electromagnetic spectrum that the Defense Department uses for radars and other systems.
Portions of the mid-band are a “sweet spot” for 5G because the frequency enables more bandwidth and greater range, Porter explained.
“The Department of Defense and other federal agencies and then industry, particularly the carriers … are all clamoring for access to a very limited amount of what you might call real estate” on the spectrum, she said.
Today, the military is assigned a certain number of frequencies to operate in the United States. Companies are granted licenses by the Federal Communications Commission and parts of the electromagnetic spectrum are auctioned off for their use. But at any given time, much of the spectrum is not being used, she noted.
“There’s actually a lot of opportunity here,” Porter said. “When I’m not using my spectrum, can someone else use it? Can we develop some sharing rules that allow [the military and the private sector] to use each other’s spectrum … in an efficient way?”
Opening up the spectrum would create greater capacity for users. But the challenge is to do it in a way that military and commercial systems don’t interfere with each other, she said. “It requires some kind of agreements about how we’re going to operate.”
Artificial intelligence will be a critical component of dynamic spectrum sharing, she noted.
“Artificial intelligence allows you to speed this up because if you rely on a person trying to figure this out, it’s too slow,” she said.
The Defense Advanced Research Projects Agency recently held a Spectrum Collaboration Challenge with industry that involved AI. The results will help shape the Pentagon’s 5G initiatives.
“The DARPA Spectrum Collaboration Challenge provided some of the technology underpinnings to make those decisions on how you share those spectrum bands,” Evans said.
“What we want to do is take some of those capabilities and then apply it to this mid-band types of spectrum.”
Defense officials will be going out to test ranges at Hill Air Force Base to explore how a 5G system could operate effectively in coexistence or in coordination with mid-band radars.
Dynamic spectrum sharing could give the military a leg up over its competitors such as China, which is rolling out its own 5G networks, Porter said.
“If the United States figures this out especially with our allies and partners, this puts us in a very strong competitive posture globally,” she said. “We’re going to be able to do things with far more capacity and far more efficiency.”
Dynamic spectrum sharing won’t just have implications for military operations. It will also affect acquisitions, the senior defense official noted.
“By understanding and getting down to the science required, the policies required, it helps then inform and postures us for the next generation of systems that we’re researching and then acquiring,” the official said.
As it builds out its 5G capabilities, the Pentagon wants to leverage the hundreds of billions of dollars that the commercial sector is investing in the technology to enable ubiquitous connectivity, lower latency, higher bandwidth and edge computing. However, that creates security concerns, Porter noted.
“When you start connecting everything to everything else, wow, that’s a lot of complexity,” she said. “We don’t know every vulnerability that’s going to emerge, but we’ve got to try to understand that and then develop an architecture, if you will, that allows us to mitigate and to do risk management smartly.”
The Pentagon, the defense industrial base and the commercial companies building the nation’s 5G networks need to work together to develop protocols for protecting networks, she said.
Meanwhile, the Defense Department plans to use other transaction authority agreements for its upcoming 5G initiatives. The RPPs will go through the National Spectrum Consortium. Companies that aren’t a member of the consortium can still participate as a subcontractor for members that win a contract award, Porter noted.
The number and timing of contract awards will depend on congressional funding and the quality of the proposal submissions, she said.
The Defense Department plans to add new 5G opportunities roughly every quarter. As of press time, the focus areas for the next round had yet to be determined.
Porter declined to say how much money the department plans to invest in these initiatives.
“I don’t like folks to try to game to a number,” she said. “I want them to give us their best ideas and a realistic execution plan against that idea … and we will work to make sure that the best of those get funded.”
While the Pentagon has ambitious plans for 5G, it plans to take a “crawl, walk, run” approach to rolling out the technology, Porter said.
“We’re going to start here in the U.S because that makes the most sense,” she said. “We’re going to start with four [bases], … learn and then expand.”
“This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.
That $89.2 million does not include procurement funds spent on initial spare parts, flight training simulators, the expensive – and poorly performing – ALIS support system, and more, all unique to the F-35.“
“Pentagon leaders are likely reveling in the news that they have negotiated an agreement with Lockheed Martin that they claim drives down the unit cost of the F-35 joint strike fighter to below $80 million in the next few years. While any reduction in costs for the most expensive weapons program in history is an improvement, all is not as it appears in the industry trade press. A quick perusal of publicly available Pentagon budget documents shows the real cost of the F-35 to be above $100 million per copy for the fiscal year 2020 buy. Given the work that remains, and the way the Pentagon has surrendered many key responsibilities to the manufacturer, the price is likely to be at least that amount or higher for the foreseeable future.
The most commonly mentioned figure is for the F-35A, the Air Force’s conventional takeoff variant and the least expensive model. The current estimate for the lot of aircraft currently in production is $89.2 million apiece. This figure is the unit recurring flyaway cost—the price tag for just the aircraft and engine, which by themselves do not make a fully functioning weapon system.
When we also consider the future modifications necessary to correct both the known and potential design flaws and the aircraft’s $44,000 per-flight-hour cost, it is easy to see why the F-35 program is the most expensive in history.
A handy tool for anyone interested in knowing more about actual costs of military programs and weapons is readily available online. The Pentagon posts budget materials for each fiscal year on the comptroller’s webpage. Included are budget estimates and the justification documents containing more charts and figures than any reasonable person would care to view.
The Air Force’s fiscal year 2020 budget pays for the 48 F-35As in Lot 11. The current $89.2 million dollar price the Pentagon uses is calculated by separating out just the costs for the airframe and the engine from the larger total procurement cost that includes ALIS, simulators, initial spare parts, and more to get to the artificially low $89.2 million. That is far from the whole story.
The Pentagon’s own budget documents list the FY 2020 procurement cost for those 48 aircraft as more than $101 million, nearly $12 million more than the figure rolled out for press reports. Using the Navy’s charts and the same math shows that the real costs for each F-35C is more than $123 million, while each F-35B costs in excess of $166 million. But even that figure doesn’t tell the whole story.
None of this factors in the research and development costs of the program. Ellen Lord, the Pentagon’s acquisition chief, announced on October 29 that the program needs more money to complete the developmental and testing phase of the program. The latest publicly available figures show that taxpayers will have spent approximately $55.5 billion for F-35 research and development. If the Pentagon purchases all 2,470 F-35s in the current plan, the true cost of each aircraft goes up by nearly $22.5 million. Program officials had expected to complete development and operational testing by December 2019. But designers and engineers have struggled to complete the Joint Simulation Environment, a highly accurate simulator necessary to complete operational testing. The troubles stem from programming flight data and aircraft performance data gathered during real-world flights into the simulation software. The Joint Strike Fighter program will run out of development money before the simulator and the subsequent operational testing can be completed. The Pentagon expects to announce before the end of 2019 just how much more money beyond the program’s current $406.4 billion budget will be needed to complete this phase of the program.
No matter how the production costs are calculated, that money alone will not buy you a fully functional F-35. Engineers were not able to complete all of the combat capabilities that were supposed to be included as part of the original development phase of the program. This incomplete work, which taxpayers have already paid for, will now be completed in a new development phase and called “follow-on modernization.” Only time will tell how much will ultimately be spent in this effort, but taxpayers are already on the hook for $10.5 billion.
There is also the matter of the cost of maintenance and ownership. Lockheed Martin stands to make most of its money from the F-35 program in annual non-competitive sustainment contracts. As POGO has reported before, the services can’t independently perform many of the most basic maintenance functions on the F-35 and must instead rely on civilian contractors. Lockheed Martin currently receives $2 billion a year to keep the fleet of approximately 400 aircraft flying, meaning the annual operating cost for each F-35 is $5 million.
Pentagon officials had expected to make the long-anticipated full-rate production decision for the F-35 program before the end of this year. Also known as a Milestone C decision, the program must complete all the steps, including operational testing, as required by federal law. No one appears to be letting such trifling details stand in their way, however. The recent cost estimates emerged as part of the announcement of a $34 billion deal for three years’ worth of F-35 production—478 aircraft for the U.S. services and international customers—beginning in 2020. Officials continue to call this “low-rate initial production,” but this is essentially full-rate production in everything but name. The announced 169 F-35s for Lot 14 is the full-rate production figure for the program.
The public shouldn’t fall for the gimmicks the Defense Department constantly uses on aircraft unit cost, but the press, amazingly, seems to fall for it every time. Congress shouldn’t buy these phony cost projections and compound the program’s problems, based on a phony buy-in price by buying more F-35s before testing is complete.”
“Change is hard for everyone, and when something you rely nearly every day changes overnight. That’s really hard.
I heard the reports about slowness and glitches. So I waited a few days. And I gave it a test drive today. I’m not real happy and I’m not alone.
For me, I used FBO.gov to search for new requests for information and sources sought as well as solicitations and awards. I went there to search for specific contracts. For me, the advanced search feature was easy to use and almost intuitive.
Was it perfect? No. I wish it went back more than a year. I wish there were more connections between procurements.
I know all of us have unique information needs. Most of you probably aren’t looking for the same thing I am. I want to look at the last two or three days of postings dealing with IT, professional services and research-and-development. I also want to filter notices based on sources sought, awards, solicitations and justifications.
FBO.gov would generally provide what I was looking for. I’d find some nice news tidbits and I could track developing procurements.
Beta.Sam.Gov seems to have more features, but I can’t figure out why it has so many date choices to filter searches on. There is something called “Inactive Date”, followed by “Published Date” (I think I know what that is.) Then there is “Updated Date” and “Response/Date Offers Due.”
Narrowing my search parameters is difficult. I can’t seem to save my searches. The help function just isn’t, well, very helpful.
I’m not alone in my challenges.
One contractor complained that Beta.Sam.gov changed “Solicitation Number” to “Notification Number.” And what does that mean?
There are no push notifications yet for new opportunities or updates. This contractor called notifications “arguably the most critical feature” of FBO.gov.
That person voiced concern that we’ll see fewer procurements going through Beta.Sam.gov and moving to other means that don’t require public notification because if industry is struggling with it, then government contracting shops are as well.
Market research firm The Pulse GovCon has multiple concerns with the transition. Like Deltek and Bloomberg Government, The Pulse relies on the data from Beta.Sam.gov to track new procurements and contract actions.
Analysts at The Pulse GovCon provided us with a list of problems with the transition:
Lack of communication from the General Services Administration during the transition. “It is unclear who the owner of this is,” they said.
The API, which pulls data from the backend, is limited and doesn’t match information that you see on the front-end page.
Agencies are still being migrated, which makes identifying opportunities disjointed.
Advanced searches and saving searches are a struggle.
Frequent time outs.
I hope GSA is working to improve Beta.Sam.gov. Frankly, it makes me nervous that FBO.gov is gone and is replaced with something called Beta. You don’t replace a tried and true tool with something called Beta.
I’d like to hear what you are experiencing. If you have any tips or tricks, please share.”
Small businesses that receive federal contracts set aside for them may outgrow the size standards the Small Business Administration (SBA) uses to define small businesses. (Size standards vary by industry and generally are based on employees or revenue.) Questions have been raised about the extent to which mid-sized businesses can compete with large businesses for federal contracts. GAO was asked to provide information on federal contracting opportunities for mid-sized businesses. This report analyzes, among other objectives, (1) the extent to which small businesses grew to mid-sized and continued to receive federal contracts and (2) options for increasing contracting opportunities for mid-sized businesses. GAO analyzed federal contracting data for fiscal years 2008–2017 (most recent and complete). In the absence of legal definitions of “mid-sized” and “large,” GAO multiplied relevant size standards for small businesses to arrive at parameters for mid-sized and large businesses for its analysis. GAO reviewed literature to identify options for increasing contracting opportunities and interviewed SBA officials and a nongeneralizable selection of 11 stakeholders—trade association representatives, researchers, and small business directors at three agencies with large obligations for small business contracts in fiscal year 2017—to obtain views on the options. SBA provided comments, which we addressed as appropriate.
What GAO Found
From fiscal year 2008 through 2017, very few small businesses that were awarded limited competition (set-aside) contracts grew to be mid-sized and continued to receive contracts. (GAO defined mid-sized businesses as having revenue or employees up to five times above the small business size standard.)
• Of the 5,339 small businesses awarded set-aside contracts in fiscal year 2008 and awarded any sort of federal contract (including set-aside or competed) in 2013, 104 became mid-sized by fiscal year 2013.
• While a set-aside category for mid-sized businesses would increase opportunities for mid-sized businesses, stakeholders generally believed it could decrease opportunities for small businesses and increase agency burden (time and costs to implement the set-aside).
• Requiring agencies to consider businesses’ past performance as subcontractors or as part of a team would help both mid-sized and growing small businesses by making them more competitive for contracts.
• Stakeholders said raising size standards based on revenue would allow a limited number of mid-sized businesses to be eligible for set-asides again, but not help the vast majority of mid-sized businesses.”
“Driven largely by the Defense Department, the federal government’s discretionary spending spiked to a seven-year high in fiscal 2018, with agencies obligating more than $554 billion for products and services, up $100 billion from 2015.”
“According to official spending data from the Government Accountability Office, the Defense Department accounted for $358 billion in contract obligations while civilian agencies, like the Veterans Affairs and Homeland Security departments, obligated $195 billion.
The government closed the 2018 fiscal year on a massive spending spree—due in part to funding increases after a delayed budget agreement—and early fiscal 2019 spending data indicates the government isn’t slowing down its contract spending.
Spending data tabulated by the Professional Services Council illustrates the spending uptick.
During the largest fourth-quarter spending in recent memory, Defense and civilian agencies raced to spend almost $190 billion. Early receipts show the high-paced spending continued into fiscal 2019, especially at the Defense Department. Defense agencies obligated $111 billion in October, November and December—a 32% increase from the first quarter of fiscal 2018.
That’s a historic level of early spending for the Defense Department, according to David Berteau, president of the Professional Services Council. Over the previous five years, the Defense Department has spent in the $60 to $70 billion range over those same Q1 months, cautiously allocating money during sometimes tense budget negotiations in Congress. Fully appropriated this year with large acquisitions like ships and aircraft on the books, Berteau said the Defense Department hasn’t had to be as cautious.
“The Defense Department obligated almost as many contract dollars in the first quarter of fiscal 2019 as in the fourth quarter of fiscal 2018,” Berteau told Nextgov. “Never in 40 years of following this—I’ve never seen a first quarter in Defense spending that looked like a fourth quarter.”
Civilian spending is up—though to a lesser degree—despite a 35-day government shutdownbeginning the year. Through the first two quarters of fiscal 2019, civilian agencies have allocated about $78 billion, up from $67 billion at the same time last year.
It is unclear whether the government’s current spending trends will continue through fiscal 2019, as the government’s reported spend data lags behind by three to six months. In June, White House officials said they had “every intention” of avoiding a shutdown similar to the one that shuttered several agencies in December, floating a one-year stopgap measure to keep agencies next year at fiscal 2019 levels. However, Berteau said 2018’s uptick in contract spending “is fully expected” given the stable more stable fiscal conditions with which the fiscal year began. Berteau added that contract spending is not increasing at the same pace as overall government spending, so contractors aren’t getting “more than their fair share, but actually less.”
“The reality is the growth we’re seeing in contracts in fiscal 2018 is fully expected, exactly in line with what Congress appropriated and President Trump signed,” Berteau said.
Where did the money go?
According to the analysts at The Pulse of GovCon, the civilian agencies with the largest contract spend last year were the departments of Energy ($32 billion), Veterans Affairs ($31 billion), Health and Human Services ($25 billion), Homeland Security ($18 billion) and NASA ($18 billion).
Agencies across government spent approximately $225 billion on products—including pens, paper and hand grenades—and $340 billion on services, including research and development.
The government’s top contractor, Lockheed Martin, captured $40 billion in revenue over fiscal 2018. Collectively, the government’s top ten contractors—Lockheed Martin, Boeing, Raytheon, General Dynamics, Northrop Grumman, McKesson Corporation, Huntington Ingalls Industries, BAE Systems, Leidos and United Technologies Corporation—captured almost 30% of Defense obligations and 17% of civilian obligations.
Small businesses, according to The Pulse of GovCon, received about 22.5% of the government’s total contract dollars.”