The Truth About Federal Year-End Money

By Rita Walston, senior director, marketing programs

The federal government spends upwards of $90 billion every year on IT. By June, a surprising amount of the budget remains unspent and unobligated. And every year around this time, technology vendors hope to cash in on the year-end money the federal government must spend by the end of the fiscal year — September 30.

Is there anything that sales and marketing can do this late in the fiscal year to help bring in additional revenue?

Yes, says a panel of former government executives who debated this topic at the immixGroup Government IT Sales Summit last November — especially if your company has already done a good job building relationships with the customer and positioning your product or service.

Last minute year-end deals do happen — up to the very last minute. Panelist Pete Tseronis, CEO of Dots and Bridges and former CTO of Department of Energy, recounted how he was able to finish working through the procurement process and spend a million dollars with only minutes to go before the funding would disappear! He had received the money at 6:30 a.m. on the last day of the fiscal year.

Understand the Sweep

Around June of every year, the budget office does a sweep of its accounts. It takes back uncommitted funds and reallocates them. Agency executives anticipate the sweep and have compiled lists of priority projects they are eager to match up with the newly available funding that must be spent by midnight on September 30. This begins the mad dash to use it or lose it!

See Their Perspective

The government funding cycle is very predictable. What vendors need to understand is the pressure put upon government employees. The year-end rush stresses everyone. Procurement and contracting personnel are already overloaded. When the CIO or IT project managers try to push through a newly funded request, they need to have everything lined up and make it as streamlined as possible.

It has to be easy for government to buy your product or service. A viable contract vehicle the customer can easily use is essential. This is not the time to ask the customer to go down the open market route!

Fitting Uses for End of Year Money

According to Mr. Tseronis, a fair amount of year-end money still gets spent on hardware and software. Getting pilot projects off the ground and performing assessments are other good ways for government to use these funds.

Expanding your current services contract might also be an option. During the last quarter of the fiscal year, contractors should take advantage of the opportunity to meet with government leaders and present progress reports. This will give them the opportunity for dialog and to position other services and capabilities the government customer might have a need for.

Marketing Best Practices

Among seasoned marketing professionals in the federal space, there is no consensus on what marketing activities to pursue during this critical quarter. But, one thing they all agree on is that their websites have got to be up to date. Marketers can and should review the content on their websites and make changes to help potential buyers find the information they are looking for.

• Will potential customers understand what you do by looking at your website?
• Are marketing messages crisp and clear? Will they resonate with your government audience?
• Are product and company differentiators strong and clearly articulated?
• Are your collateral materials current and appropriate for this audience?
• Do you make case studies and educational materials easily accessible?
• Are contract vehicles clearly visible?

Conclusion

Year-end money is real and will go to those companies that have established a presence in the marketplace. If your company hasn’t planted the seeds and positioned itself well, don’t expect last minute orders to come flooding in. However, it’s never too late to invest in the future.

To view the video, “How and When to Target Marketing for Value and Results,” click here.

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