National Association of Government Contractors

Government Contractors Assess Budget Impact

In recent years, it had become common for a president’s budget request to encounter political resistance.

So, it is not overly surprising to hear pundits declare the impossibility of seeing President Trump's budget proposal being enacted as it has been presented.

But when the budget proposal is examined as it impacts contractors doing business with the federal government, the policy changes outlined in the budget request are of less immediate importance than the discretionary budget  --  the annual appropriations that pay for federal workers, many federal grants and, in fiscal 2016, $476.5 billion in federal contract obligations.

Years of presidential policy differences with Congress have shown us that the discretionary part of the budget usually remains.

While many acknowledge that Trump is unlikely to get the policy changes in his budget proposal enacted. It is also unlikely that he will get the proposed shift of $54 billion in discretionary spending from civilian activities to defense.

While, Congress may ignore or modify many of the individual items proposed in some areas. In other areas, particularly defense, they may go along with much of what’s proposed.

The contractor community should closely monitor budget negotiations  --  from initial debates over spending, to the allocation of funding across the government.

Even when a deal is struck, it is unlikely to be reached by Oct. 1, the start of fiscal 2018. Meaning that large portions of the federal government will be operating under a continuing resolution that bases spending on the previous year’s level, with few exceptions, and presenting a bar to most new contract starts.

Many expect the discretionary appropriations process to be long this year, given a late start due to it being a presidential transition year, leaving little time to complete before Oct. 1.  But, the eyes will remain on the process, with many expecting there will be opportunities to generate significant revenue in fiscal 2018.

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