Is accelerated fiscal year-end spending old school? (with related video)
Editor’s note: As the federal fiscal year-end draws near on Sept. 30, GPN reached out to federal government contracting expert, Gloria Larkin, for her up-to-the-minute thoughts on the federal marketplace. Larkin is president of TargetGov. Larkin’s views follow.
Decades of federal government contract spending habits have proven to be a direct cause of the dramatic increase in awarded contracts as the September 30 fiscal year-end approaches. Even with a reduced budget and sequestration, the “use it or lose it” mentality is a driving force in government purchasing at this time of the year, whether it is for a $100 credit card purchase or a $10 billion contract. Although not all agencies award their contracts in this way, a large majority of federal agencies do.
The month of May starts the second half of the federal fiscal year, with the year ending on September 30th. In 2016, the federal marketplace has experienced more spending in its first six months than it has in recent years. The projected federal contract spending is on a decidedly upward slant, with Deltek anticipating a $600 billion spend on contracts for all of this current fiscal year. If this number is reached, it will be the highest federal spend since before sequestration began in 2013.
However, there are two issues affecting this year-end spending frenzy, and contractors will be well-served to pay attention to those issues if increased sales are a business goal.
The first issue is a dramatic increase in specific contract vehicles used by the government at the fiscal year-end. These vehicles are trending towards multiple award contracts (MACS), GSA Schedules and other indefinite delivery vehicles (IDVs). This means mid-sized and larger businesses that do a lot of contracting with the federal government will need to focus on forming strategic partnerships with companies that fall into these contract vehicles.
A recent federal government market analysis by Govini, a federal business intelligence platform, states that “almost one-fifth of federal government spending happens in the last month of the fiscal year, and much of that is aided by agency MACs. Half of the federal agencies spend more than one-third of their funds in the last [three months] of the fiscal year. MAC’s ease of use, combined with budget uncertainty, aids contracting officers …as MAC utilization now accounts for 18 percent of annual contract obligations.”
Positioning a company for success is the second issue, which means meeting with the actual decision-makers involved in the purchases well before the fiscal year-end. However, getting those meetings can seem to be virtually impossible unless one has a well-thought-out strategy to understand the needs of the target. Businesses need to create a messaging process that is specific to the needs and interests of those unique decision-makers.
One aspect of this messaging may be using social media as a vehicle to reach government customers, as well as for government to reach constituents.
A recent article in Government Technology focuses on social media messaging. In the article, the author quotes Facebook executive, Katie Harbath, saying that social media tools present a new way to engage constituents who might otherwise not participate in things like public meetings.
In Canada, Harbath said, officials were surprised to see users take an interest in recent budgetary hearings. According to Harbath, roughly 2,000 people watched proceedings using the Facebook Live tool. “Now, that’s not a huge number. It’s not in the millions, it’s not even in the tens of thousands, but that’s 2,000 more people who wanted to participate in this process about the budget that otherwise would have never had a chance to do so,” Harbath said. “Even just broadcasting your press conferences and your speeches, you can reach a lot more people by going live than you could maybe reach those at the event in person.” Harbath is Facebook’s Global Politics and Government Outreach Director. She addressed attendees at the recent 2016 Government Social Media Conference in Reno, Nev.
Focusing on these two main issues may bring success to a company during this end-of-year spending frenzy.
Gloria Larkin is president of TargetGov and a national expert in business development in the government markets. Visit this site or call toll-free 1-866-579-1346 for more information.
In the video, Gloria Larkin discusses tools and techniques that can help businesses win federal contracts. She also talks about the importance of positioning for marketers.