Agencies bust myth of year-end buying sprees

Some agency officials say they are following a well thought-out approach to spending what's left in their fiscal-year information technology budgets -- a game plan that defies the myth that departments rush to spend funds before they become unavailable after Sept. 30.

The phenomenon of the year-end spending sprees first came to light in 1980, when the Senate Governmental Affairs Subcommittee on Oversight of Government Management issued a report that found the hurry to obligate expiring funds before the end of the fiscal year often led to a lack of competition, inadequately negotiated contracts and the purchase of low-priority items.

In a 1998 follow-up to that study, the Government Accountability Office concluded agencies' spending patterns were hard to assess because quarterly budget data, which could show a spike in fourth-quarter spending, was unreliable. Since then, federal auditors haven't evaluated the issue much, and information on last-minute expenditures can be hard to obtain, according to some academic researchers.

Ramji Balakrishnan, an accounting professor at the University of Iowa who co-wrote a 2007 report on the subject, recently told Federal News Radio that he was able to access figures on year-end spending at U.S. Army hospitals largely because his co-author, a veteran, had contacts inside the military. According to the paper, which was published in the Journal of Management Accounting Research, administrators stockpiled supplies toward the end of a fiscal year, but then saved more money than they spent during the year-end splurge at the start of the next fiscal year.

A trend of precalculated buying seems to be occurring at several agencies with large IT budgets, including the General Services Administration and Veterans Affairs Administration, according to government officials.

In April, Administrator Martha Johnson directed GSA's chief information officer, Casey Coleman, to complete five high-priority IT projects within 18 months -- a feat that Coleman said the agency finished in 10 weeks. The agency's IT budget for fiscal 2010 is $605.9 million. By quickly wrapping up the projects, which included boosting the capacity of GSA's networks and adding remote private networks for teleworkers, Coleman was able to focus late-year spending on supplemental purchases for the agency's increasingly mobile workforce, she said.

"By doing that we really set the foundation for IT modernization for the agency," Coleman said in an interview with Nextgov. "Now we are in Phase 2 of our modernization program."

Phase 2 involves purchasing green products. Johnson this summer challenged GSA to eliminate the federal government's adverse effects on the environment, what's known as creating "a zero environmental footprint."

The agency plans to spend its IT money in September on products and services that support the zero e-emissions goal, Coleman said. GSA will invest in videoconferencing equipment; shared printing workstations to replace individual desktop printers, which are rarely used; and a cloud computing tool for e-mail, scheduling and other interoffice communications. Cloud computing is an arrangement that provides online access to hardware and software, eliminating the need to rely on energy-hungry, in-house data centers for IT services.

A contract for cloud services is expected to be awarded in October using fiscal 2010 money earmarked for spending in September.

GSA was unable to provide information on remaining money the agency returned to the treasury at the end of the last fiscal year.

The thinking is that GSA, as the nation's biggest storefront, can expand the green IT market governmentwide -- and perhaps nationwide -- by purchasing environmentally responsible goods. Experimenting at the departmental level also might enable GSA to eventually offer governmentwide, eco-friendly IT contracting vehicles, agency officials said.

Veterans Affairs, which has a $3.3 billion IT budget, will spend its remaining fiscal 2011 funds on rolling out systems that can quickly exchange patient records via the Web, VA officials said. Such expenditures should increase access to health care, including mental health services, they added. September money also will support upgrades to benefits delivery systems and the department's IT infrastructure.

At the end of fiscal 2009, Veterans Affairs let $462,000 in IT-related funding lapse, or become unavailable for new purchases.

In the past, officials at the Environmental Protection Agency spent all of their IT money by the end of the year, but only after careful planning, they said. Last year, EPA did not return any IT-related funding to the treasury. The agency's enacted IT budget for fiscal 2010 is $465 million.

A significant portion of EPA's technology infrastructure spending is managed under a business model that quantifies IT needs at the beginning of each fiscal year, officials said. "This process promotes spending that is thought-out and forecasted, and minimizes a potential end-of year spending surge," EPA spokeswoman Latisha Petteway said.