A bipartisan group of prominent senators has put agencies on notice: The “use it or lose it” spending frenzy that traditionally occurs at the end of each fiscal year is not an excuse to waste government money.
Sens. Ron Johnson, R-Wis., Claire McCaskill, D-Mo., Rand Paul, R-Ky., and Gary Peters, D-Mich., sent letters to CFOs at 13 agencies last week warning against the wasteful spending habits and asking for briefing about how they will ensure that “spending in the last quarter of this fiscal year is not wasteful or abusive.”
“Last fiscal year, agencies spent a total of $11.1 billion in the final week of the fiscal year —almost five times higher than the average weekly spending during the rest of the year,” the letters say, adding that the spending tends to bring about lower quality returns of investment. “According to a recent report, with only limited time left in the current fiscal year, eight of the top ten highest-spending federal agencies have not used as much as 40 percent of their budgets. Some observers have raised concerns that this year’s annual spending binge could be the biggest yet.”
It’s no secret that few categories of government procurement see as much end-of-year money spent as IT. According to a study by the American Economic Association, which the senators cite in their letter, “while only accounting for 1.9 percent of the days of the year, the last week accounts for 12.3 percent of spending [on IT] and 14.0 percent of the number of projects.”
And those IT projects paid for in the blitz to spend money during the last month and week of the year are consistently twice as likely or more to be of lower value, according to the study, which based its findings on IT Dashboard data.
The phenomenon has been going on for decades and beyond. The Government Accountability Office produced a report in 1980 finding that “major civilian agencies spent about $336 billion, and spent 21 percent of that in the last 2 months of the fiscal year” and attributing that to the”philosophy that all available funds must be spent before the end of the fiscal year” and a “concern that a manager’s performance is evaluated partly on spending ability.”
The senators, members of the Senate Committee on Homeland Security and Governmental Affairs, held a hearing last year on the topic. Paul, who also introduced legislation to curb the problem, said: “The problem we are going to look at today will not balance the budget, but it would certainly be something that we ought to start somewhere with trying to cut out wasteful spending.”
The senators sent letters to the departments of Defense, the Treasury, Veterans Affairs, Homeland Security, Energy, Justice, State, Transportation, Health and Human Services, the General Services Administration, NASA, the National Science Foundation and the Social Security Administration.