Today marks the end of the federal government’s fiscal year. It’s also the biggest one-day shopping spree of the year-- the day when federal agencies rush to spend the last of their money before October 1, before anything left over is returned to the Treasury.
Since agencies cannot carry over unspent funds, the idea is “use it or lose it.” If they don’t spend the money, Congress may not allocate as much the following year. The system typically creates panic for federal workers scrambling to spend millions of dollars before they run out of time. It also means a huge payday for contractors scoring big awards.
Last year, the government spent about $50 billion the week before October 1, according to NPR’s Shankar Vedantam. That total included apparent impulse buys like artwork worth $562,000 for the Department of Veterans Affairs, and toner cartridges worth $144,000 for the Department of Agriculture, as noted last year by The Washington Post. It also included $178,000 worth of “Cubicle Furniture Rehab” for the U.S. Coast Guard.
The Pentagon alone spent about $5.5 billion on the last day of the fiscal year. DOD officials even sent an email encouraging employees to spend as much as they could.
“It is critical in our efforts to [spend] 100 percent of our available resources this fiscal year,” said budget officer Sannadean Sims and procurement officer Kathleen Miller in the email obtained by The Post. “It is also imperative that your organization meets its projected spending goal for June.”
This is nothing new. An analysis by Harvard’s Jeffrey Liebman and the University of Chicago’s Neale Mahoney using data from 2004 to 2009 found that 8.7 percent of total federal spending occurs in the last week of the fiscal year.
Since the government spends so much money in such a short amount of time, some people have concerns that hasty purchases could result in problems down the road – like poor product selection.
The same researchers tried to answer that question by reviewing contract performances from nearly 700 major federal information technology projects worth a total of $130 billion. After examining them, they concluded that projects awarded in the last week of the fiscal year were 2.2 to 5.6 times more likely to be of lower quality, according to the analysis.
The researchers, along with other budget reformists, say this issue could be resolved if agencies were allowed to roll over their unused funds to the next fiscal year.
The Obama administration actually offered a similar proposal in 2010. The proposal would have allowed agencies to roll over a certain percentage of their unused budgets with the remainder going toward reducing the deficit, though Congress never took it up.
Many who support this idea point to the Justice Department, which has been excused from the rules since 1992 and is able to roll over up to 4 percent of its annual revenue into a special fund for IT projects. Liebman and Mohoney reviewed DOJ’s spending records and found no signs of a jump in spending toward the end of the year, and “no accompanying decline in the quality of year-end projects.”
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