While your own business may operate on a fiscal year that coincides with the calendar year, many of the government agencies you target operate on their own fiscal year. The federal government operates on a fiscal year ending in September. State and local governments often have fiscal year ends (FYE) in June, September or December.
Understanding the fiscal year of your target agencies can give you an advantage over your competition as it better aligns your outreach efforts to the purchasing cycle of your agency buyers. At the start of the fiscal year, agency contacts are in the planning stages of their upcoming fiscal year – a great time for contractors to engage as an expert who can help educate agency buyers on new trends in the industry and help craft the spending plan for the upcoming year. At the end of the fiscal year, agency contacts are working to spend any remaining budget – creating opportunity for vendors to drive new business revenue at the fiscal year end.
Harvard’s Kennedy School of Government carried out a comprehensive study in 2010 analyzing federal government contract spending by week and quantifying the year-end government spending effect. The study analyzed aggregate spending data from 2004-2009 and found that 16.5 percent of spending by government agencies occurs in the last month of the fiscal year and 8.7 percent of spending occurs in the last week. Overall contract spending by federal agencies was 4.9 times the weekly average during the last week of the fiscal year and, for nearly 700 major federal IT projects that the study tracked in more detail, weekly spending increased to 7.2 times the weekly average during the last week of the fiscal year. Construction, furnishings, office equipment and IT services were the categories with the most dramatic increases in weekly spend at the FYE according to the Harvard research. The study goes on to explain the reason for the year-end surge in spending, stating “For these organizations, unspent funding may not only represent a lost opportunity but can also signal a lack of need to budget-setters, decreasing funding in future budget cycles”. If the budget is not fully utilized during the fiscal year, agencies run the risk of losing that budget in future spending cycles.
How government contractors can utilize agency fiscal year end (FYE) to win more government business:
- Review budget plans for target agencies and identify key agency contacts that may be looking to spend unused budget.
- Review award histories to identify existing vendors and general contractors who may be looking for subcontractors to execute on year-end purchasing decisions.
- Leverage agency relationships to get involved in project planning for the upcoming fiscal year and future spending plans.
Successful government contractors know that the period just before and after fiscal year end is one of the best times of the year to build business with government agencies. Onvia account managers are standing by to help our clients identify fiscal year end dates, current budgets and future spending forecasts for their target agencies.