Raking It In

Agencies are spending at historic levels-none more than Defense-but a downturn looms.

What happens when a nation fights a war overseas, battles the threat of terrorism around the globe and addresses the unprecedented effects of major natural disasters at home?

It writes checks to contractors for hundreds of billions of dollars, for one thing.

Federal agencies issued $388 billion in contracts in fiscal 2005, up more than 18 percent from the year before. Defense contracts topped $278 billion, a healthy increase from $229 billion in 2004.

The Army alone spent more than $103 billion on procurement in 2005. That's almost as much as the contracts issued by all civilian federal agencies combined ($109 billion). Much of the Army's spending came straight out of emergency appropriations for Iraq operations. Not only has Halli- burton Co. remained among the nation's top 10 contractors due to its logistics work on behalf of U.S. forces in the Middle East, but companies such as Bahrain National Oil Co. and Kuwait National Petroleum Co. have made their way onto the Top 200 list in recent years. Each had more than $300 million in contracts in fiscal 2005.

Other names are brand-new to the list this year. Take Fairmont Homes Inc. Its place among the top contractors was sealed when Hurricane Katrina roared ashore on Aug. 29, 2005. In short order, the company had $521 million in FEMA contracts for its GulfStream travel trailers. Likewise, Morgan Buildings and Spas Inc. was awarded nearly $400 million for trailers and mobile homes. And Circle B Enterprises vaulted onto the list on the strength of a $287.5 million FEMA contract for temporary housing for hurricane victims. Carnival Corp. garnered $236 million in contracts, funneled through the Navy, for providing short-term housing on cruise ships.

That adds up to nearly $1.5 billion in Katrina-related spending for those four companies alone. And keep in mind, the hurricane hit barely a month before the end of fiscal 2005, so these were among the earliest contracts awarded. Further effects of the vicious storms of 2005 certainly will be felt in next year's Top 200 Contractors list. And who knows what the summer of 2006 will bring?

Short term, it's likely that agencies will continue to spend money on contracts at historic levels. But what goes up almost certainly will come down. Emergency spending can't go on forever. And the long-term federal budget outlook is increasingly bleak, as deficits continue to climb and the entitlements bill for aging baby boomers comes due. Soon, the stakes in the federal procurement game could be very different.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.