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Federal spending decline slows, contractors merge, and DoD keeps cutting

April 20, 2016 By Andrew Smith

2016 Federal ScorecardAccording to the 2016 Federal Scorecard, which highlights key federal agency spending trends and top government contractors in FY15, overall agency spending fell by two percent (the smallest annual decline since FY11) — and half of all federal agencies increased spending.

The third-annual ranking of agency spending and contractor performance reveals several insights into the shifting federal market landscape:

  • Shifts in Defense Priorities. The Navy was the only Defense agency to increase its contract obligations, through recapitalization of major weapon system programs, including the F-35 and Virginia-class submarines, which emphasizes the U.S. pivot to Asia. In FY15, the Navy spent 55 percent more on aircraft than on ships and landing vessels, with aircraft contract awards totaling almost $15 billion.
  • Demand Still Strong for Services. Federal agencies were still heavily reliant on professional services, with the top two services categories holding steady with a combined $32 billion in awards. “What we saw was a major restructuring of industry in response to past LPTA measures rather than a disappearance of services contracting,” added Gillespie.
  • Impact of Services Consolidation on Competitive Landscape.Several contractors jumped in rank thanks to M&A (mergers & acquisitions) activity. For example, at the Department of Veterans Affairs (VA), newly formed CSRA jumped six spots in rank to join the top ten vendors with $106 million in capture.
  • Prescription Drug Spending Spikes. Prescription drugs are a growing cost across agencies, with Drugs and Biologicals purchases up 27 percent over the three year average. McKesson gained the most ground with capture, growing by 36 percent to $6 billion at Health & Human Services (HHS) and the VA.

The 2016 Federal Scorecard is published by Govini, a business intelligence provider for companies selling to the public sector.  The full Scorecard report can be downloaded here.

Filed Under: Contracting News Tagged With: budget cuts, consolication, DoD, mergers & acquisitions, spending

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