Beginner's Guide to Q4 Spending

A government contractor always needs to plan ahead for future opportunities, arguably more so than in the commercial marketplace due to the bureaucracy involved. Given the fact that agencies often start planning future opportunities well in advance of the anticipated award date, you may feel you are keeping well informed of relevant contracting opportunities.

However, you may have noticed that there is always an uptick in federal contracting opportunities in the July – September timeframe. Why does this lead to such an increase in federal contracting opportunities? What do contractors need to know to take advantage of this? Join me as I take you through the ins and outs of government Q4.

What is Government Q4?

While many businesses keep their fiscal year tied to the January 1 through December 31 calendar year, the government fiscal year runs from October 1 through September 30. This means that the time frame from July – September is the fourth and final quarter of the government fiscal year. An agency’s budget for fiscal year 2023, for example, ends on September 30, 2023.

What is Government Q4’s Significance?

Since the annual budget for a fiscal year ends on September 30 every year, this means that agencies must ensure that the funds allocated to them for that government fiscal year are used by September 30. Agencies are worried that if they don’t spend all available funds by the end of the fiscal year that they will receive a smaller budget in the future. In addition, under “use it or lose it” policies, agencies generally aren’t allowed to roll over funds to the next fiscal year. This incentivizes federal agencies to spend their remaining budget during government Q4, meaning increased opportunities for federal contractors.

There are other factors that lead to the heightened spending in government Q4 as well. Since government agency budgets are often delayed, contracting opportunities are often stacked more towards the later quarters of the government fiscal year rather than the beginning. The government also likes to negotiate pricing, as they believe they deserve very favorable pricing due to being the largest volume purchaser of goods and services in the world. This means they can often wait for the right opportunity rather than jumping on a merely satisfactory opportunity.

In addition, new requirements that arise during the fiscal year can delay the award of new contracts. Depending on these and other factors, the exact bump in Q4 spending can vary, but it is consistently the quarter with the highest government spending accounting for around a 1/3 of federal contract dollars. Small businesses in particular may benefit, as federal agencies will be trying to meet their small business set aside goals.

How to Prepare for Government Q4

Unfortunately, there are few guarantees in terms of timelines for government contracting. Ideally, you should start preparing at least by the beginning of the prior quarter, so around April, if you want to be prepared by the time government Q4 rolls around. This is especially true since many employees both at your company and in the government will likely be taking vacation time in government Q4 since it coincides with the summer, leading to delays on contract actions right when you need them most.

Putting this alongside the fact that the timeline for government review of contract modifications can take months even at the best of times and you will want to prepare for government Q4 well in advance. Even if you are starting now, better to start as early in the quarter as you can and plan ahead for next year.

You need to make sure you are marketing to the government as best as you can. You should be keeping your website up to date so that government customers are aware of what you are currently offering, your contract vehicles, business size and type, etc. This is also a good time to review your offerings and determine what you would like to offer to the government.

Take stock of your relevant NAICS codes and search for additional ones that may be applicable. You can search for opportunities under these NAICS codes in SAM.gov. On that note, make sure that your entity has a SAM registration, and it is up to date. Consider potential business partners that you can team up with for contracting opportunities. Ask yourself these questions:

• Does my company have a capabilities statement?
• Are we reviewing and responding to as many relevant RFIs, RFPs, and RFQs within the scope of our offerings as possible?
• Do we have a proposal writer on staff to respond to RFPs/RFQs or outside help, such as from a channel partner?
• Do we have the relevant offerings for any potential opportunity on our contract vehicles?

Answering these questions is a great start to preparing for government Q4.

Updating your GSA Schedule for Government Q4

For GSA Schedule holders, government Q4 presents an incredible opportunity. It is the time of highest spending, and you already have a contract with pre-approved pricing and terms and conditions. However, you may not be prepared if you haven’t been keeping your GSA Schedule up to date. As such, it is important to get ahead of government Q4. You may want to submit an Add Modification for new offerings, increase your pricing, or remove obsolete items. All of these changes require a contract modification, which can take a significant amount of time for your Contracting Officer to approve depending on the type and complexity.

All this being said, if you find yourself needing to make last minute changes to your GSA Schedule in time for Q4 opportunities, you may have some options. GSA Contracting Officers often process modifications faster when they are aware that the modification is tied to a specific opportunity. A “letter to expedite” from the purchasing Contracting Officer to your GSA Contracting Officer may speed up the review process, though this is not guaranteed. If you are under the MAS Information Technology Category, you also may qualify for the FASt Lane program.

As always, you also need to be on top of maintenance and compliance for your contract so that there are no last minute surprises that prevent your eligibility for GSA opportunities during government Q4. Make sure that your SAM registration is up to date and active, your GSA pricelist and catalog are current and visible in GSA eLibrary and GSA Advantage!, and you have submitted any relevant modifications. Once you have compliance under control, make sure you are actively marketing your GSA Schedule, as government opportunities, under most circumstances, will not just come to you.

Are You Ready for Q4?

Government Q4 only comes around once a year, and you want to make sure your firm is poised to take advantage of all relevant opportunities during this period of increased opportunity. Would like help preparing your GSA Schedule for the end of the government fiscal year, through adding new offerings, replacing an outdated pricelist, using GSA’s suite of eTools, or any other area of need? If so, reach out to Winvale today, and we would be happy to set you on the path to success during government Q4.