Federal Agencies are Making Wasteful Year-End Buying Decisions

Are you concerned that your agency’s federal year-end spending spree can lead to the wrong buying decisions? Federal CIO, Tony Scott, is.

That’s just a really bad way to run IT,” said Scott at the Digital Government Institute’s 930Gov Conference in Washington, D.C. in late August.

With a background in the commercial sector (VMware, Microsoft and Disney), Scott is just getting used to the busy federal buying season that culminates in September, and he’s not liking it.

Concerned that the pressure to “use it or lose it” drives “exactly the wrong behavior”, Scott stressed the need for less frivolous spending and an emphasis on long-term investments.

The observation and criticism is nothing new. As I discussed in my earlier blog, Is Fiscal Year-End Really a “Use It or Lose It” Crunch Time for Federal Buyers?, spending peaks significantly in September for all major agencies. At the State Department, for example, 38% of the agency’s contracting budget is spent in September.

Where does the money go?

NextGov cites a report by the Government Accountability Office that affirms Tony Scott’s sentiments about short-term spending. According to the GAO, about 73% of the federal government’s total planned annual IT spend of $79 billion is for operations and maintenance, not new projects.

A 2010 report from Harvard researchers reiterated that this spending spree contributes to lower-quality acquisitions, mainly because the volume of contracting leads to inefficiencies in managing those purchases down the line. The report also suggests that “…permitting the rollover of spending into subsequent periods leads to higher quality.”

Although Scott is unhappy with the trend, he was unable to provide an alternate vision of a more flexible IT budget cycle, but the conversation is out there and Scott is open to suggestion.

To quote NextGov who lifted this Tony Scott quote from the 930Gov conference:

"My concern is that it's heading the wrong way, and this will happen naturally when you have an environment . . . where budgets are constrained,” he said. CIOs are told to keep costs down, “and they cut the easiest thing there is to cut, which is spending on new application development and refreshing infrastructure,” Scott explained, adding, “it's just a natural phenomenon."

How to avoid wasteful year-end IT buying decisions

If you’re worried about wasteful IT spending, talk to a DLT Solutions rep about your options for making smart technology choices with your year-end dollars and simplifying the procurement process at this busy time.