How Agencies Can Calm the Fourth Quarter Spending Frenzy

It’s become an annual September tradition in Washington, D.C.: The locals are disappointed with the football team and agencies are in a frenzy to spend money before the federal fiscal year ends.

This year, however, the tradition of federal spending climbed to even new dizzying heights. It is estimated the government needed to spend nearly $140 billion more than previously thought to close out the fourth quarter of fiscal year 2018.

Much of this was driven by the uncertainty surrounding budgets throughout the year, as agencies spent cautiously in the beginning of the fiscal year with shutdown threats looming. With a new spending omnibus in place, agencies teemed with cash that they had to obligate by the end of September or lose that money to the Treasury Department.

The annual spending frenzy could be potentially great news for industry seeking these valuable contracts, but it puts an inordinate amount of strain on agency’s acquisition departments trying to keep up with the pace of contracting while still ensuring they are delivering value.

Why Spreadsheets Are Flawed

One aspect inhibiting agencies from truly realizing their spending potential during this frenzy is their reliance on spreadsheets, typically created in Microsoft Excel, that are still being used to balance and develop billion-dollar budgets. The evolution of spreadsheets has not gone far enough to offer the complex, real-time capabilities that agencies need to track budgets in real time. Using spreadsheets in 2018 calls accuracy into question, as manual interpretation can be unreliable and drains time, energy and resources from financial staff within agencies.

Today’s agency budget process demands more complex tasks, such as the analyzing and categorizing of budget data points, than the traditional spreadsheet can handle. As merely one example, Excel only allows users to view information in isolated datastreams, which can lead to more frequent inconsistencies or errors.

Instead of getting updates to budgets in real time—especially crucial in the fourth quarter—the data needs to be reconciled continuously before reaching an accurate assessment. This manual effort inhibits the ability of finance departments to quickly and easily provide information critical to spending. Agencies lose sight of what the data is saying because it has no access to instant analytics. It can make even the seemingly simple task of identifying whether specific programs are providing beneficial results hard to determine.

Automation Leads to Analysis

Budget data analysis is compulsory for reporting but can be daunting and complicated. Data entry requirements are now more intricate, which means that agencies without the tools necessary for accurate budget formulation have an exceptionally more difficult time when developing complex, detailed reports.

That’s why a shift is needed to implement automated budget formulation systems that remove tedious tasks and minimizes heavy workloads to allow employees to focus their efforts on analyzing the data to get a better understanding of spend, as opposed to spending time on manual data entry and manipulation.

With that in place, agencies can focus their efforts on pinpointing areas where budgets could be rebalanced and re-allocated in a different manner for projects or programs that would aid in meeting mission goals. By unleashing the full power of automation to analyze data, agencies make a widespread difference and long-lasting impact in determining how funds are allocated to meet mission goals.

For budget formulation processes to generate data, they must have business intelligence, analytics, and scenario modeling tools while incorporating performance management, accountability, strategic planning and financial management. A simple spreadsheet does not possess these capabilities—an automated budget formulation tool does.

When it comes to spending frenzies, automation is the calming force that agencies need, starting with fiscal year 2019.

Jon Hammock is the chief executive officer of KeyLogic Systems.