Are you currently working with the government or considering joining the ranks of successful businesses that do? In both scenarios, you’re likely curious about how much the agencies spend and how much of that “spending pie” is allocated to your area of service. After all, if there isn’t enough funding for contractors in your category, it’s best not to waste time pursuing those contracts.
How Spending Dollars Are Determined
Understanding how spending is allocated can be eye-opening. Contractors who know the process and how to prepare effectively can access contracts, as mandatory spending requires agencies to utilize their allotted funds within the government’s fiscal year.
Mandatory Spending
This category is allocated annually to programs supporting people, businesses, and state/local governments. Each year, agencies receive a specific amount of money they must spend to meet their basic needs. The Treasury releases these funds for contracts, loans, grants, direct payments, and other programs. Once final decisions are made on which contractors will benefit, the funds are distributed to support the economy.
Discretionary Spending
Discretionary spending is approved annually by Congress and the President. It funds programs such as education, housing, transportation, and social services. The President submits budget recommendations for the following year. Congress reviews, revises, and votes on the budget, which, once signed by the President, is distributed to National Defense and other Federal Agencies. The accounts are then allocated to selected beneficiaries.
CLICK HERE to view the President’s budget for 2022
Breakdown of Contract Dollars
The information below provides a detailed view of which agencies are responsible for the most contract dollars
CLICK HERE to check out the interactive graphic with more information.
Defense
- Navy: $118.7B
- Army: $109.6B
- Air Force: $79.2B
- Other Defense Agencies: $86.5B
Civilian
- Health and Human Services (HHS): $38.9B
- Energy (DOE): $38.6B
- Veterans Affairs (VA): $38.3B
- National Aeronautics and Space Administration (NASA): $20.5B
- Homeland Security (DHS): $19.8B
- General Services Administration (GSA): $18.3B
- State (DOS): $9.8B
- Agriculture (USDA): $9.7B
- Justice (DOJ): $9.6B
- Treasury: $9.6B
- Other: $37.2B
Where Do Agencies Spend Their Allocated Funds?
The chart below provides a clearer idea of how funds are divided.
CLICK HERE to check out the interactive graphic with more information.
In 2021, the Federal Government spent about $637 billion on contracts, a $54 billion decrease from 2020 after adjusting for inflation.
Small Business Procurement Scorecard
The SBA (Small Business Administration) measures agency performance with an annual Scorecard, which assesses how well agencies meet their small business contracting goals. The Scorecard helps:
- Measure federal agencies’ success in reaching their contracting and subcontracting goals.
- Provide accurate and transparent contracting data.
- Report agency-specific progress.
Scorecard Categories
20%: OSDBU Peer Review on Agency Compliance with Section 15(k) of the Small Business Act (currently 21 requirements) in each of the Five Small Business Categories in the agency’s Small Business NAICS Codes Between FY 2017 and FY 2018
50%: Prime Contracting Achievement
20%: Subcontracting Achievement
10%: Comparison of the Number of Small Business Prime Contractors in each of the Five Small Business Categories in the agency’s Small Business NAICS Codes Between FY 2017 and FY 2018.
CLICK HERE to view the Scorecard Grade Calculation Methodology
The SBA aims to ensure that small businesses thrive by creating favorable conditions for their success.
Navigating the Procurement Process
Businesses interested in working with government agencies must navigate the procurement acquisition process. Before pursuing any government contract, ensure you can confidently address and potentially resolve the government’s qualifications and regulations.
Please remember that federal funding may vary each fiscal year due to needs, scenarios, or executive orders. Stay informed about recent changes to remain competitive.
For reference: The U.S. Treasury uses terms such as “government spending,” “federal spending,” “national spending,” and “federal government spending” interchangeably.
You can Get Your Piece of the Big Government Contractors Pie
Read our article “Follow the Money” to learn more about how to take advantage of government spending.
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