Some agency budgets were dealt cuts while others received increases in the fiscal year 2012 spending deal struck last week. In the mix of ups and downs, contractors came away with more certainty.
In Monday’s Capital Business, Kevin Plexico, vice president of federal information solutions for research firm Deltek, outlined the allocated funds and how much agencies dedicate to private sector contracts.
Funding cuts do not necessarily translate to cuts in contract spending, Plexico wrote, as agencies have varying levels of contract spending.
- The Defense Department‘s discretionary budget increased $5.1 billion, while its funds for the wars in Iraq and Afghanistan were cut by $43 billion. Plexico wrote that contractors expected those cuts and are keenly aware of a potential $600 billion cut to the Pentagon’s budget as a result of a congressional supercommittee’s recent failure to strike a long-term deficit reduction deal.
That $600 billion would come on top of the $450 billion the Pentagon is required to cut over the next decade.
- The Department of Veterans Affairs will have more money for health contracts as it received a $2.1 billion increase in its discretionary budget. Plexico wrote contractors will see some of this money as the VA continues its efforts to modernize health IT.
- The spending deal boosts funding for energy and water by $328 million. These funds will go to the Energy Department, the Army Corps of Engineers and the Bureau of Reclamation. The Energy Department spends nearly 71 percent of its funding on contracts.
- Although HHS spends no more than 2 percent on contracts, the Centers for Disease Control and Prevention and the National Institutes of Health do much of that spending. NIH got a $299 million increase for 2012 and CDC got $38 million more.
- The Transportation Department received $4.1 billion more for 2012, including $500 million for infrastructure improvements. The department spends 8 percent of its budget on contractors.
- The Department of Homeland Security took its first funding cut, $2 billion total, since its formation in 2001. DHS spends more than a third of its budget on contracts.
Plexico expects the Federal Emergency Management Agency‘s base budget to receive much of the cuts. However, FEMA gets more of its funding through the disaster relief budget.
- The State Department, which spends 31 percent of its operations budget on contractors, took a $2.6 billion cut to operations.
- NASA dedicates nearly 79 percent of its budget to contracts, the highest percentage of any agency. NASA’s budget was dealt a $650 million cut, or 4 percent.
- The Agriculture Department‘s budget was reduced 2 percent from its FY 2011 level, but Plexico expects a minimal effect on contractors because USDA spends only 8 percent of its budget on contracts.