Every year, some pundits pronounce the president’s budget request dead on arrival. But for many contractors doing business with the government, the fate of major policy changes outlined in the request, such as tax cuts or health care changes, are of less immediate importance than the discretionary budget—the annual appropriations that pay for federal workers, some federal grants and, in fiscal 2016, $476.5 billion in federal contract obligations. Despite policy differences with Congress, a lot of the discretionary part of the budget usually ends up being adopted.
In the broadest terms, the president probably won’t get everything he wants—a proposed shift of $54 billion in discretionary spending from civilian activities to defense, for example.
The individual details may be a different story — some wins and some losses.
The 12 annual appropriations bills will take a position on all the departments, agencies and programs. Congress may ignore or modify many of the individual items, but in some areas, particularly defense, they may go along with much of what’s proposed. It’s important for contractors to monitor budget negotiations—both the debate over how much to spend in total, and how to allocate funding across the government.
Just as important is when a deal is finally made. Odds are that agreement won’t be reached by Oct. 1, the start of fiscal 2018. That means a good chunk of the federal government will be operating under a continuing resolution that bases spending on the previous year’s level, with precious few exceptions, and bars most new contract starts.
The road to completing the discretionary appropriations process will be long this year, even though they’re starting late because it’s a presidential transition year. There just isn’t time to get it all done before Oct. 1. Federal contractors large, small and mid-sized will be scrutinizing both individual programs and the overall process. But ultimately, there will be opportunities to generate significant revenue in fiscal 2018, just as in previous years.