Uncle Sam Opens His Wallet

f Las Vegas bookies took bets on federal procurement trends, the smart money would undoubtedly ride on a dramatic rise in spending over the next couple of years.

Even if homeland security and the war on terrorism are taken out of the picture, odds are strong that expenditures will increase. Just look at the past couple of years. In fiscal 1998, the government spent $182 billion on contracts exceeding $25,000. That number rose slightly to $185 billion in fiscal 1999 and then significantly to $204 billion in fiscal 2000. Last year saw yet another dramatic spike, with the government spending $219 billion on goods and services.

An inquisitive odds-maker, however, may ask whether agencies are actually spending more or just doing a better job of reporting their purchases. Federal agencies are required by law to submit annual reports on their major acquisitions to the Federal Procurement Data Center, a division of the General Services Administration. Pose the question to three top experts in federal procurement and you'll get three different answers.

Paul Murphy, president of Eagle Eye Publishers, a Fairfax, Va.-based research firm, says much of the increase is due to improved reporting. "In the past, we've had a lot of agencies underreporting," Murphy says. He attributes improved reporting to a variety of factors, including e-government initiatives, which have led to greater automation at agencies. He also points to an increased demand by agency heads for more accurate procurement information. Eagle Eye tabulated data reported to the Federal Procurement Data Center to create the lists in this special issue.

"Reporting is not getting any better," counters Angela Styles, head of the Office of Federal Procurement Policy at the Office of Management and Budget. "People don't take it seriously, and it should be taken seriously. It's our only resource for information."

Styles says she recently checked data on a couple of federal contractors, and found that some agencies had miscalculated how much they paid the firms by more than 40 percent. Other agencies underreported how much business they did with the companies.

"We have no way of knowing if reporting is getting any better," admits Grafton Biglow, chief of the customer liaison branch at FPDC. "No one is able to do an audit of the entire government because of the magnitude of the job. You would have to go to every contracting office and audit their reports."

Still, Biglow believes that a vast majority of agencies and departments are doing a good job of reporting a majority of acquisitions-at least on a macro level. What is less clear, he says, is how well field offices are doing. For instance, Customs as an organization may file its reports, but have all its field offices contributed?

"That is the unknown," he says.

Hoping to improve the situation, the Bush administration is pushing for more automation in procurement offices. Styles says this will lead to less duplication and more accurate information.

Regardless of whether reporting has improved, both Styles and Murphy predict that procurement spending could jump nearly 10 percent in fiscal 2002. A fair amount of the increase-and likely future increases-can be attributed to homeland security spending. The proposed Homeland Security Department would create a new purchasing giant, with an estimated annual contracting budget of $5 billion. It would still be dwarfed, however, by the Defense Department. Defense again tops the list of top federal purchasers, with more than $143 billion in spending on prime contracts in excess of $25,000 in fiscal 2001.