WHY IS SEPTEMBER THE MOST IMPORTANT MONTH OF THE YEAR FOR THE FEDERAL MARKET?
The Federal government spends more money on Information Technology than any other Fortune 500 company in the U.S., with an estimated FY20 IT budget exceeding $85B. Congress is responsible for passing an annual budget that allocates money to each Agency for the fiscal year that runs from October 1st to September 30th. Each Agency is incentivized to spend its entire budget by the end of the Fiscal year or risk receiving less money the next fiscal year from Congress. This tends to trigger a “use it or lose it” mentality within the Federal government each year to spend remaining annual budget by September 30th.
Typically beginning in early Summer, each Agency will analyze its program spending and determine how much money it might have for unfunded requests. The Agency will then ask its Department leadership for a list of purchases or projects in which it would like to request funding. Based upon this list, each Agency will create a prioritized list of items it wants to fund. As this is going on, each program is trying its best to catch up to its annual spend plan and ensure that it has a strong case that all its allocated budget will be spent by September 30th. This creates two significant buying events in August and September: Programs that are accelerating spending to prevent money from being swept up; and programs that have received additional money for unfunded requests that have been approved by Agency leadership. We predict that as much as 40% of Federal IT spending could occur in August and September this year due to the impact of COVID-19 and due to the additional funding received through the stimulus bills. Based upon this, it is critical that market survey pricing and quotes for all existing opportunities are provided, as well as, price options to purchase additional capabilities if additional funding becomes available. This is also the perfect time to submit unsolicited proposals to prospects that could be leveraged for unfunded request.