We’re Really Screwed (or why the budget delay is worse than you think)

It’s bad enough that people may not get to collect a paycheck for a while, and that projects will go idle, and people will probably lose money, miss mortgage payments, and maybe even find other work. It’s like Parks & Recreation’s season finale last year on a nationwide scale–maybe we should hold a telethon to keep the government open.

But what makes it even more totally insane is that it’s APRIL, and by the time a budget gets passed and signed at this point, it may be MAY or even, Deity Forbid, JUNE.  And what does that mean?

That means that the government will have, at best, 5 months in which to spend whatever they’re budgeted to on the programs they’ve been waiting to execute since October.

Here are some of the notes from my meeting with Ray Bjorklund, CKO of FedSources last Friday — we were talking about FedSources’ acquisition by Deltek, and then I asked him about the budget:

“The government was anticipating having X dollars to spend, but they know they can only spend a subset of that because they don’t know if they’re going to get all of X ,. or when. and that’s going to have a ripple effect on contractors. That means that, part. since there are some new entrants in this market place , who’ve come here because of the sickly national economy — this happens with every recession, where they come tracking over to the federal government–So there are some new players, and there are existing players, and there will be less dollars spent per contract. Well now you have to figure out how you’re going to compete far more effectively. ”

Small companies are nervous about overextending themselves in the federal market by responding to too many Requests for Information, but they’re afraid if they don’t, they’ll lose their positioning when the actual money gets spent.

Budgetary uncertainty: “We’ve heard about the army throttling back to about 80% of the spending rate — it’s actually higher than that.  Overall, it’s prob about 80%, but the amount that’s norm. set aside for contractors is smaller. It’s really painful.  And I’ve been in the govt. I was in the gov during the 1995-96 shutdown [and this is different]. Continuing Resolution [funding] usually has certain rules of thumb that apply to help agencies figure it out. But this year it’s become really difficult because you can’t apply the same rules of thumb.”
“What’s a little bit scary is that we may be reaching budgetary reconcilliation on the hill, and if the money is suddenly appropriated, how are these agencies within the 4 or 5 months left of the fiscal year going to be able to execute these programs, and do it smoothly, swiftly and accurately enough that no one gets in trouble? You come up to end of year spending and there’s always a risk that you’re going to create some kind of problem. That is going to cause more problems.”

So, as agencies rush to spend what they’ve finally gotten, the chances of administrative error, waste, fraud, abuse, lack of transparency, challengeable contract awards, and just plain major screwups is going to escalate. The chances of that happening will geometrically rise the closer we get to September with a budget.  And then that will be used as an excuse by some to screw with the 2012 budget….