Government’s Contract Spending Approaches $600B, Highest Since 2010

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Federal contract spending increased for the third straight year.

The federal government spent $559 billion on contracts for products and services in fiscal 2018, the most the government has doled out in contracts since fiscal 2010, according to an analysis from Bloomberg Government.

Released Thursday, the analysis found federal contracting spending jumped 9% from fiscal 2017—a third straight year of growth—driven largely by a massive uptick in Defense spending. Defense contracts accounted for $372.5 billion in fiscal 2018—a $41 billion jump from the previous year—while civilian agencies accounted for $186.7 billion in total contract spending.

The increased spending is not a fluke, but the result of a delayed budget agreement in 2018 that triggered a spending spree among civilian and defense agencies, and resulted in the largest fourth-quarter spending on record at $190 billion.

According to Donald Thomas, Bloomberg Government’s vice president and general manager, conditions are ripe for the federal spending spree on contracts to continue, with some spending categories, like information technology, trending at an “unprecedented growth rate.”

“Not only is this the third consecutive year of federal contract spending growth, the outlook for federal contractors is promising in the coming year thanks to the multiple spending bills—totaling nearly $1.4 trillion—that Congress passed in fiscal year 2019,” Thomas said.

The analysis calls out technology as a “massive contributor” to the government’s increased spending, with agencies spending $8 billion more in 2018 in 2017. Spending increases also concentrated around professional services, information technology, facility services, and research and development.

The $1.37 trillion spending bill passed Thursday virtually guarantees another consecutive year of increased growth on discretionary spending, according to Bloomberg Government. The report forecasts total fiscal 2019 obligations of $565 billion, “which would be one of the highest amounts ever recorded.”