By: Stephanie Hagan on October 26th, 2022
A Closer Look at Government Fiscal Year (FY) 2023 Funding
Government | 5 Min Read
Now that we are past government Fiscal Year (FY) 2022 and have the opportunity to take a breather and regroup, what’s next? FY 2023 is in full swing and it’s time to start making GSA Schedule goals for the upcoming year. A good place to start is taking a closer look at federal government FY 2023 funding—how much money is allocated, which industries and agencies will be procuring the most, and what trends will we see? Let’s discuss what’s in store for the next year.
An Overview of Government FY 2023
The federal government FY 2023 total budget is $5.8 trillion, including $1.6 trillion for discretionary spending. Discretionary spending applies to federal contracting budgets, and the numbers show it’s up 14.5% from 2022. The discretionary spending is further broken down into $773 billion for defense and $851 for civilian.
The stats above might just seem like a bunch of numbers to you, and that’s ok. What’s important here is to note the increase in spending (14.5%), and to learn how the $1.6 trillion will be allocated.
The Biden Administration has announced they want to focus on several areas in the next year. This includes prioritizing Information Technology (IT) modernization and cybersecurity, veteran care, health equity, infrastructure, and climate change. With the Final Rule of the Buy American Act (BAA) going into effect, the administration also wants to boost domestic manufacturing programs.
IT Modernization and Cybersecurity
IT modernization and cybersecurity is nothing new to the federal government agenda. To keep up with IT modernization, the federal government is investing in cloud adoption and Enterprise Infrastructure Solutions (EIS), which will allow for cloud computing, enable zero-trust architecture, and modernize communication networks. To help accomplish this, the government is allocating $300 million more for the Technology Modernization Funding (TMF).
In line with the May 2021 Executive Order 14028, “Improving the Nation’s Cybersecurity,” the federal government is focused on reducing the cybersecurity risk and heavily adopting zero-trust architecture. This includes $10.9 billion for cybersecurity activities such as zero trust, supply chain risk management, and incident response, and $11.2 billion for cyberspace activities.
Health Care and Health Equity
A big focus of the FY 2023 budget is health care and heath equity. This includes $138 billion for Department of Health and Human Services (HHS) and $81.7 billion over the next 5 years to invest in public health emergency preparedness.
The Biden Administration is also aiming to prioritize veteran care. The House of Appropriations Committee approved the 2023 $314.1 billion Military Construction, Veterans Affairs, and Related Agencies Funding bill, an increase of over 10% from 2022. This bill will focus on supporting veteran’s health care and homeless care, along with rebuilding military infrastructure.
Infrastructure & the Supply Chain
After the Infrastructure Investment and Jobs Act was passed, infrastructure has been a strong focal point in the federal government. This act is carrying well into 2023, funding a good portion of agencies’ projects from the Environmental Protection Agency (EPA) and Department of Energy (DOE) to the Department of Homeland Security (DHS).
A good example of funding going toward infrastructure is the Department of Transportation (DOT) budget. The FY 2023 budget for the Department of Transportation totals $142 billion. This will go toward initiatives such as advancing transit projects, strengthening supply chain infrastructure, and helping urban, rural, and suburban communities implement transformational projects.
Now that the Final Rule of the Buy American Act (BAA) has come out and the domestic content threshold for U.S.-made goods bought with taxpayer money will rise from 55% to 60%, and will eventually become 75% by 2029, the BAA is an important component of government contracting. This rule means that a product must comprise of 60% domestic components for it to qualify as a domestic end product. The goal behind this legislation is to increase domestic employment and encourage the procurement and use of domestic goods.
With the release of the Final Rule and the “Made in America” Executive Order, federal contractors will begin to see a shifting compliance landscape so it’s important you monitor these policies and stay updated on future changes.
Like IT modernization and cybersecurity, climate change is not a new trend. But it’s becoming increasingly relevant, and more funding is being directed toward climate change efforts, so it’s something to watch. The FY 2023 budget allocates $44.9 billion to tackle the climate crisis. This includes $1.4 billion for an Electric Vehicle charging network and another $3 billion for clean energy projects.
Small Business Opportunities in FY 2023
The federal government is always looking for ways to increase small business prioritization. Every year, the federal government and agencies set percentage goals for how much contracting business should be set aside for small businesses. The federal government has a goal to increase Small Disadvantaged Business (SDB) awards to 15% of total federal contract spend by 2025, resulting in an additional $100 billion in awards to small businesses.
With the 380 new size standards, updated in May and October 2022, several mid-sized businesses may now qualify as small. This could open up doors for several contractors.
Are You Prepared for FY 2023?
Now that you hopefully have a better grasp of the FY 2023 landscape, it’s time to check-in and make sure your GSA Schedule is updated and prepared for the next year of sales. The first place to start is compliance—are you keeping up with your Schedule? This includes GSA Schedule modifications, sales reporting, and making sure your SAM registration is updated. Government agencies do not want to see outdated pricing or that your contract is out of compliance. The next step is marketing your GSA Schedule. You want to ensure you are making your contract visible to agencies and you are successfully showcasing your solutions. If you have questions about managing your GSA Schedule so it’s ready for FY 2023, one of our consultants would be happy to speak with you.