{"id":28190,"date":"2019-08-01T12:00:47","date_gmt":"2019-08-01T12:00:47","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2019\/08\/01\/government-spent-nearly-560-billion-on-contracts-in-2018\/"},"modified":"2026-08-08T04:51:13","modified_gmt":"2026-08-08T04:51:13","slug":"government-spent-nearly-560-billion-on-contracts-in-2018","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/industry\/2019\/08\/01\/government-spent-nearly-560-billion-on-contracts-in-2018\/","title":{"rendered":"New data shows the soaring cost of government contracts"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Pentagon spending on federal contracts soared in fiscal year 2018, accounting for about $373 billion of $559 billion in overall contracting spend from federal agencies, according to Bloomberg Government\u2019s 8th annual top 200 contractors report.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The spending by the Pentagon is a $40.5 billion increase from the previous fiscal year and over $90 billion rise since FY2015. Total government spending increased 9 percent from the previous fiscal year, from $512 billion in FY2017.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The $559 billion in FY2018 spending is the most since FY2010, when the government spent $562 billion.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The BGOV Top 200 ranks vendors by value of prime, unclassified contracts awarded by 24 different federal agencies. This is distinct from the approach taken for <a href=\"https:\/\/www.defensenews.com\/top-100\/\" target=_blank>the Top 100 <\/a>list of the largest defense companies published by Defense News, which ranks by defense revenue.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Weapons and ammunition saw staggering growth in FY2018, with an overall spending increase of nearly 40 percent and totaling $8.2 billion. Land vehicles, and aircraft and engine components each increased by over 35 percent, thanks largely to the F-35 and Abrams tank, Dan Snyder, director of government contracts research at BGOV said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The top six contractors remained unchanged from last year, with Lockheed Martin, manufacturer of the F-35, receiving the top with $43.4 billion in receipts. It is followed by Boeing with $29.7 billion, General Dynamics, Raytheon, Northrop Grumman and McKesson, respectively.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">United Technologies, which makes the F-35\u2032s engines, jumped up from position 20 to 7, totaling $7.9 billion in FY2018 contracts. <a href=\"https:\/\/www.defensenews.com\/industry\/2019\/06\/09\/raytheon-technologies-corporation-utc-raytheon-make-marriage-official\/\" target=_blank>Raytheon\u2019s merger with United Technologies <\/a>is not reflected in this report, because it is not set to close until next June, the report noted. The combined company will likely surpass General Dynamics next year, Snyder said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Overall, 118 companies improved their rankings, while 68 lost ground. There were 32 new entrants to the rankings.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Federal civilian agencies spent about $187 billion on contracts. The biggest spending increases came from the Department of Energy with gains of $3.1 billion, Homeland Security at $2.1 billion, and Veterans Affairs at $900 million.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV found that large agencies like the State Department, Treasury and Health and Human Services decreased their spending obligations. The State Department decreased its spending by $1.1 billion, BGOV found.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Government efforts to modernize are also reflected in the new report. Federal technology spending reached nearly $82 billion in FY2018, an $18 billion increase from FY2015 and an $8 billion increase since last year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV anticipates that federal IT spend will continue to rise. The Trump administration requested $87.8 billion for unclassified IT spend in FY2020, totaling $51 billion for civilian agencies and about $37 billion for defense agencies.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cMany of those investments are intended for modernizing outdated legacy systems to make the government run more efficiently and effectively, and about $27 billion will be directed toward improving the country\u2019s cybersecurity posture,&#8221; BGOV wrote.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV also estimated that classified IT spending would add about $10 billion more.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">General Dynamics, Leidos and Perspecta were top IT services performers, raking in a combined $7.6 billion, the report found. BGOV credited that with their large portfolios of multiple award contracts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV also identified three trends in government contracting that are affecting government spending. The first, it found, was the increased \u201cmomentum\u201d behind best-in-class contracts \u2014 contracts for solutions that can be used across agencies and must meet certain performance and data management requirements, as well as pricing strategies, according to GSA. The report said that there about 40 BICs, up from around 30 last year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV also reported agencies starting to use other transaction authority agreements, used for prototyping and certain types of technology development, in greater numbers. BGOV found that OTA purchases went up to $4 billion in FY18, up from $2.3 billion the year before.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Finally, BGOV also found continuous growth in agencies\u2019 use of as-a-service contracts for cloud computing, where they essentially buy by the drink. But BGOV also saw the purchasing approach in other areas, such as security operation centers or mobility.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These types of contracts are \u201cbeginning to increase in popularity as the government moves beyond buying a set number of licenses to divvy up and pivots to a more flexible model focused on buying the amount it wants when it needs the service,\u201d it wrote. \u201cThat buying attitude allows agencies to shift from buying capital assets and count costs as operating expenditures, which normalizes their year-to-year ledgers.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">BGOV estimates that the FY2019 obligations could total $565 billion, which would be the most its ever recorded.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Defense contracts lead the way, while IT drives civilian agency spend.<\/p>\n","protected":false},"author":7,"featured_media":60208,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":12,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[160,11,12,36,19,48],"tags":[],"coauthors":[3340],"class_list":["post-28190","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news-roundup","category-global","category-industry","category-newsletters","category-pentagon","category-the-americas"],"acf":{"subheadline":"","legacy_arc_id":"TQ6ZCITUDFGO7F3A3YTVW4WH5Q","arc_canonical_url":"\/newsletters\/acquisition-update\/2019\/08\/01\/government-spent-nearly-560-billion-on-contracts-in-2018\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented 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