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Civilian, Defense, FEATURED ARTICLES, Industry Contributor, Intelligence, Op-Ed/Blog

Impact of Modifications on Federal Spending

GTEach year, our Uncle Sam shells out big dollars for a range of goods and services to fulfill a variety of requirements across the civilian, defense and intelligence domains, respectively. Without fail, quite a few of those dollars hit the street as a full, limited or non-competitive action that results in the issuance of a new contract, contract vehicle, or an order being placed against an existing vehicle. Particularly in recent years this accounts for less than half of fiscal obligations reported to the Federal Procurement Data System.

This is a look at another type obligation made by agencies each fiscal year. 

— Guy Timberlake, The Chief Visionary

Do you understand the difference between obligations resulting from the initial award of a definitive contract, indefinite delivery vehicle, a 32323643_l slice of american dollar piedelivery/task order or purchase order versus contract dollars moving to a vendor as the result of a change made to one of the aforementioned? If not, it would make it challenging (at best) to ‘follow the money’ without understanding the influence and impact of dollar-based modifications to existing contract and contract vehicles.

The information that follows is a summary look at obligations made by civilian, defense and intelligence agencies when those transactions were reported to the Federal Procurement Data System – Next Generation. The point is to shine a light on how contract dollars move at a high level to highlight the need for enhanced focus at the ground-level, in support of company decision-making related to opportunities.

Here’s why.

20160104 FY15 Total Obligations vs Modifications by FY11 - FY15Since FY2011, the number of dollars resulting from a modification contract action is roughly 56% of reported obligations. So more than half of fiscal contract dollars reported to FPDS-NG were off the table so to speak, unless you were the company (or a good friend of the company) getting the modification. This doesn’t account for sole source buys, purchases against single award contract vehicles and buys against multiple award contracts where the field of contenders is limited. That’s another sizable chunk of the spend that many never had a shot at. Now you can start to get an idea of what’s left for those who don’t fall into one of these categories.

As for the modifications and why they happen, there are twenty reason descriptions listed in FPDS-NG of which eighteen had tangible dollars (negative and positive) against them. The three modification buckets accounting for the bulk of the dollars in FY2015 were:

  1. Funding Only Action
  2. Change Order
  3. Exercise An Option

Gross obligations to these modification reasons accounted for nearly $300 billion during the most recently completed fiscal year (emphasis on gross since there were nearly $100 billion in de-obligations the same year).

20160104 FY15 Total Obligations vs Modifications by Award_IDV TypeThis graphic provides a summary breakdown of total spending versus modification spending by the different awards and contract vehicles leveraged by agencies. Take note of obligations to Basic Ordering Agreements (BOA) and Indefinite Delivery Contracts (IDC) which represent changes made at the contract vehicle-level versus at a delivery or task order level. Digging into information like this can sometimes reveal like/love/hate relationships between customers and vendors based on the direction and types of modifications.

20160104 FY15 Total Obligations by IDVContinuing our descent, here’s a look at spending activity based on the type of contract vehicle established by agencies.On average, forty percent of FY15 obligations to Indefinite Delivery Vehicles (IDV) resulted from modifications. In the next two graphics I’ll discern between single and multiple award contract vehicles.

20160104 FY15 Total Obligations vs Modifications MAIDVThe first thing to note is fewer dollars being obligated to multiple award IDVs versus single award IDVs. The second item to note is that the percentage of modifications is higher for multiple award vehicles which come in a little over 51%, whereas single award vehicles come in under 30% of total obligations.

20160104 FY15 Total Obligations vs Modifications SAIDVThis can be very useful information to consider when seeking insight in areas related to contracting culture, relationships and scope, to name a few. Its impact on a company will vary based on customer alignment, offerings and more.

Ultimately, it comes down to understanding the relevance and timeliness of these ‘dots’ and being able to exploit them in support of devising and executing a federal sector strategy.

P.S. Thanks to Mark for the very cool and kind kudos on LinkedIn!

Peace!

Guy Timberlake, The Chief Visionary (bio)
http://www.theasbc.org/visionary

“The person who says it cannot be done should not interrupt the person doing it.”

About Editor-in-Chief Visionary

Guy Timberlake is the Editor-in-Chief Visionary of GovConChannel and oversees the creation and curation of relevant and timely 'News And Information That Matters To Small Government Contractors.'

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