September 30th is an important date for those of us in the construction industry and, in fact, the last quarter of the Federal fiscal year is when I really begin targeting opportunities. This is when contracting officers and Federal agencies begin seriously considering how money will be spent that is still left in the budget. In my experience, no one ever wants to lose allocated money and it is imperative that they use that money in various projects within a particular agency’s mission. It can become a bit of a feeding frenzy during the final quarter, but it is an opportune time for a small business or a new business to pick up some good contracts.
High Pressure Negotiations Result in Firm Commitments
Our present economy dictates much of how these funds are spent, especially when our elected officials have not passed a comprehensive budget in quite some time now. These same officials continue to push our economy forward as well as the Federal budget. What this means is if a particular agency is allocated a certain amount of funds, they need to be spent this year because next year is such an uncertainty. Important decisions on the allocation of these funds must be made by September 30th, which can mean some very pressured negotiating in the final days before the deadline. I’ve been in situations where contract negotiations continued until 10:30 or 11:00 at night on the 30th. It becomes a case of virtual horse trading in these last minute situations, being willing to give this in exchange for that, or perhaps increasing a service in trade for a drop in price. The bottom line is that although these officials definitely want and need to use these left over funds, they still need to get the best value for those funds.
Sometimes these contracts might be something pre-existing, but in most cases, they are new contracts. Obviously, this is not work that will be completed before the September deadline, but both parties are seeking an obligation. Once the obligation is in place, the actual work can begin at a later date.
This subject is something that can be gone into in much greater detail and in future podcasts we will discuss this further. In the meantime, if you want to discuss this with me feel free to contact me and I will get back to quickly.