Trends in Government Contracting

1. From fiscal year 2000 to fiscal year 2005, government purchasing increased nearly 75% from $219 billion to more than $380 billion.
2. Services now comprise a greater percentage of the government’s acquisition budget
3. The federal acquisition workforce has declined by nearly 50 percent since personnel reductions in the mid-1990s.
4. Purchases through indefinite delivery contracts have gotten much larger, often exceeding five million dollars. Purchases under the Multiple Award Schedules also have more than doubled in value over the last decade.

See the “REPORT OF THE ACQUISITION ADVISORY PANEL” below for more details.

The Federal government is the single largest buyer in the world. Each year Federal agencies spend nearly $400 billion a year for a range of goods and services to meet their mission needs. Some acquisitions are highly specialized – advanced fighter jets, precision munitions, nuclear submarines – for which there is no non-governmental or commercial demand. Other goods and services are readily available and purchased from the commercial marketplace. From laptop computers and off-the-shelf software to information technology (“IT”) consulting services, software development, and engineering services. Federal agencies rely upon common commercial goods and se rvices to conduct their business. In addition, commercial products may be modified to meet government needs. In all of these circumstances government acquisition process intersects with the private sector and the Federal government can benefit from knowing how commercial buyers approach the acquisition process.


Trends In Acquisition
Since the FASA and FARA reforms were enacted a decade or more ago, a number of events have affected government contracting. For example, the events of September 11, 2001, and subsequent conflicts in Afghanistan and Iraq, as well as the Katrina aftermath, have influenced what the government buys and how much it spends. From fiscal year 2000 to fiscal year 2005, government purchasing increased nearly 75% from $219 billion to more than $380 billion.

Over the last decade, a number of trends have affected government contracting. Services now comprise a greater percentage of the government’s acquisition budget. Between 1990 and 1995 the government began spending more on services than goods.10 Currently, procurement spending on services accounts for more than 60% of total procurement dollars.11 In FY 2005, DOD obligated more than $141 billion on service contracts, a 72% increase since FY 1999.12

While procurement spending has increased, products and services often are purchased through relatively large orders under contracts with broad scopes of work. Contracting agencies often rely on indefinite delivery contracts, such as interagency contracts, under which orders are issued for products or services. Orders under the types of contracts discussed above often can be larger in amount than individual contracts. Orders under such contract vehicles can be significant in terms of size, and may exceed $5 million. Purchases under the Multiple Award Schedules also have more than doubled in value over the last decade.

There also are fewer acquisition professionals in the government to award and administer contracts as the government’s contracting workforce has reduced in size over the last decade. The federal acquisition workforce has declined by nearly 50 percent since personnel reductions in the mid-1990s.14 Despite recent efforts to hire acquisition personnel, there is an acute shortage of federal procurement professionals with between five and 15 years of experience. This shortage will become more pronounced in the near term because roughly half of the current workforce is eligible to retire in the next four years.

Over the last decade or so, consolidation has occurred in certain parts of industry that contract with the government, including but not limited to aerospace and defense. As a result, certain contractors are now performing work that previously was performed by other companies. In sum, a variety of trends and factors have influenced government contracting and continue to do so. Effective and efficient access to the commercial market place, and will continue to play, a major role in helping to enable agencies to purchase the products and services they need.

Source:
http://www.acquisition.gov/comp/aap/documents/DraftFinalReport.pdf