A word to the wise, it is only going to get worse before it is ever going to get any better…
The Fiscal Year (FY) 2025 Federal budget is likely to be the most drawn-out budgetary process in recent memory. I have discussed this probable reality with several companies in recent weeks, and want to make a more public reminder for everyone else. FY25 will kick off with a Continuing Resolution (CR) like every other FY in the last decade, but it is also an election year. The odds of the presidential election being close if not contested even more than we have seen in last cycle is likely. That will be the highest priority for congressional action overall. Plus, you have potential shifts in the parties as the majority status of either is likely to be and remain razor thin. Thin majorities give party outliers opportunities to be king makers on any number of issues, and we have seen this very thing play out over the few years. I don’t particularly care about politics, but it is important to highlight that the extended political infighting that is very likely on its way in FY25, and will ultimately make next fiscal year operate under CRs for most of the FY. But why does that matter to me, and why am I even talking about this to you?
Operating under a CR means no new starts for the DoD, which means it’s a long wait till any money can even start flowing for new acquisitions. The lesson from previous years to apply to now is twofold. First, any plans you have for purchases via new contracts with the DoD need to get established, if possible, before the FY24 closeout on 30 September 2024. Second, if you are planning on new contract actions in FY25, just should push out those planned start dates till at least July of 2025 as an initial safe estimate. Don’t be too surprised if you still see delays even further due to unforeseen complications from the political fighting in the larger federal government. As a bonus piece of advice, also be aware that with the compression of the time window to execute the fully approved DoD budget within the remaining FY, however short it is, that presents an interesting opportunity for acquisitions that are ready to execute with contracts, but just needing funding. With plenty of other programs running short of planned expenditures for any number of reasons due to the longer CR periods, it always translates to increased opportunities for larger amounts of “fallout funds” at the end of the FY to mop up the unspent budgets before the FY closeout.
Feast and Famine...be prepared for both!
