Government Agencies Need Effective Planning To Curb Unnecessary Year-End Spending

PSAD-80-67: Published: Jul 28, 1980. Publicly Released: Aug 6, 1980.

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The problems associated with yearend surges in government spending are of concern to both Congress and the President. In fiscal year 1979, major civilian agencies spent about $336 billion, and spent 21 percent of that in the last 2 months of the fiscal year. A review was undertaken to determine the extent and causes of yearend spending in these agencies and departments, and possible legislative controls to reduce the practice.

Among the reasons given by agencies for yearend spending surges that may adversely affect procurement effectiveness were: the lack of an effective advance procurement system; the philosophy that all available funds must be spent before the end of the fiscal year; concern that a manager's performance is evaluated partly on spending ability; and the appropriation, budgeting, and program planning delays. Techniques and procurement processing shortcuts to quickly spend excess funds at yearend included: noncompetitive or sole source contract awards, contract modifications, incremental funding of existing contracts beyond current needs, and prime contract awards to the Small Business Administration long before the agency was prepared to award the subcontract to the minority firm. Waste is likely to result when the main objective is to spend all available excess funds at the end of the fiscal year. The review disclosed (1) noncompliance with laws and regulations, including recording obligations lacking legal sufficiency; (2) obligating expired appropriations; (3) a top agency official awarding contracts over the objections of contracting personnel; and (4) possible procurements exceeding current bonafide needs. It was noted that the most advantageous costs or services may not result under yearend procurement surges because of premature contract award, delayed price negotiations, and inadequate work statements or specifications. Agency officials expressed concern about the adverse impact of yearend spending on the personnel and operation of the program and contracting offices.

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