WHAT IS SO SPECIAL ABOUT “OCTOBER 1” FOR FEDERAL SALES PEOPLE?
It is the beginning of the new Federal Government Fiscal Year!
DID YOU KNOW?
In 2018 the Federal Government budget for IT spending was approximately $87 Billion.
WOW! That is a lot of money!
Now you know that the Federal Fiscal Year begins October 1 every year and ends September 30 the following year and in FY 2018 the IT spend was approximately $87 Billion.
That is the easy part!
This is the hard part!
For the Federal sales person, this is how we viewed the 2018 IT spend:
- Continuing Resolution: October 1, 2017 – April 26, 2018
- The FY 2018 Federal budget was passed: April 26, 2018
- Seven months of FY 2018 is over
- Seven months of “new project” sales to my customers have been pushed
- My forecast is a wreck
- June 2018:And my customers still have not seen a penny to spend
I have been through the Federal budget process in a sales position for 25 years. Every year I have had to manage the expectations of each company on this process, regardless of how many times I have done this in the past. Everyone is busy, and leadership tend to focus on the here and now, so it can be easy to forget. It is imperative though that leadership understand how this process affects the ability to forecast and close business. It has been exceptionally difficult to correctly forecast the business the last few years because of the partisan stances on Capitol Hill. The Federal sales cycle is controlled by our government. If the government is working in an erratic manner, then the sales cycle will function in an erratic manner.
Let’s review two items: Passing the Budget and Continuing Resolution
According to Pew Research: “Congress has long struggled to pass spending bills on time.” By January 2018, nearly four months into fiscal 2018, Congress had passed none of the dozen spending bills it’s theoretically supposed to enact every year. Instead, lawmakers were on their third stopgap measure, which kept government operations funded until Jan. 19. Failure to enact full-year spending bills by that date – or, failing that, another short-term measure – would have forced big chunks of the federal government to shut down.
If all this sounds familiar, it should. Far from being a new symptom of present-day Washington dysfunction, Congress’ chronic inability to follow its own appropriations process goes back decades. In fact, in the four decades since the current system for budgeting and spending tax dollars has been in effect, Congress has managed to pass all its required appropriations measures on time only four times: in fiscal 1977 (the first full fiscal year under the current system), 1989, 1995 and 1997.
Continuing Resolution (CR)
According to the Congressional Research Service: “Continuing Resolutions: Overview of Components and Recent Practices, 2016,” A Continuing Resolution defined:
Under recent congressional practice, CRs typically include as many as six main components. First, CRs provide funding for certain activities, which are typically specified with reference to the prior fiscal year’s appropriations acts. This is referred to in this report as the CR’s coverage. Second, CRs provide budget authority for a specified duration of time. This duration may be as short as a single day or as long as the remainder of the fiscal year. Third, CRs typically provide funds based on an overall funding rate. Fourth, the use of budget authority provided in the CR is typically prohibited for new activities not funded in the previous fiscal year. Fifth, the duration and amount of funds in the CR, and purposes for which they may be used for specified activities, may be adjusted through anomalies. Sixth, legislative provisions—which create, amend, or extend other laws—have been included in some instances.
- How many CR’s in 41 years: 37
- How many Budgets passed on time in 41 years: 4 (1977, 1989, 1995, 1997)
- How many Government shutdowns in 25 years: 18
As a sales person, I do not really care about the partisan politics associated with either side of the political spectrum. I only care that a budget gets passed quickly and efficiently so my Federal customers can procure my goods and services. My company also is expecting me to close this business, and I want to keep my job. Though without the Congress getting their act together and the President signing the budget, I am in a tough spot.
(NOTE: I am discussing current FY funding not multi-year contracts funding.)
The customers still need to spend their money!
Now this is an interesting situation. The company is upset because everything you had in your forecast has been pushed. They are not happy. You are not happy. You want to make money. Now we are entering Q4 of the government’s FY. As we all call it…. End of year funds.
Hurry up and spend
Now contracting officers have until mid-night September 30 to spend their budgeted requirements. You get an overwhelmed contracting officer who has no funding to begin the procurement processes. A ton of work needs to be completed by the customer and the contracting officer to spend the monies that were budgeted to them. There are only so many hours in a day. These are the effects of Congress not getting its act together. Its actions or inactions effect everyone.
The contracting officers are not just buying my goods and services, they are procuring everything that the customer (all departments) has had in procurement. They have their work cut out for them.
Race to the end
While we hang on to our seats, the customer and contracting officers are extremely busy understanding requirements and using their funding to procure those goods and services that align to their objectives. At one point in this cycle, the contracting shops close their doors to any net new customer requirements to successfully spend all the money that was allotted to them through the budget process and any “fall out” money that may have been sent their way. This is an exciting time, but it can also be extremely stressful on all parties concerned.
This is a very interesting time in the life of every Federal sales person. If prepared and timed correctly, working with customers from the beginning of the current fiscal year, we are waiting for our customers to obtain funding for projects from their organization. This fall out funding is called Unfunded Requests or UFRs. The government agencies try to spend their budgeted funds in a strategic, focused manner to fit the requirements of the organization. For the Federal sales person, we are just in line trying to see if our products and services for that particular Federal customer get funding to procure our products and services. The company we work for is also extremely interested in this process as well.
This process does not end until midnight September 30 each budget year. Federal sales people try to prepare for the best possible scenarios during this very stressful time of year. This can make or break the year for us.
Personally, I have been on the phone with customers, contracting officers, Federal resellers, my company’s order entry, engineering and upper management on weekends (when September 30 falls on a Saturday or Sunday) to get these orders through the entire procurement process. I’ve even waited for contracting shops around the globe to issue contracts to my Federal partners. It can be exhausting and exhilarating all at the same time.
This is NOT all bad news
There is a way to alleviate this situation every year. But that is another article.
What do you think?
Have you ever lost a funded deal because contracting could not award it before Sept. 30? What have you found to be the best way to communicate these challenges to your leadership? Do they listen? What do you do when they don’t care? I love to get feedback, so please leave your comments below.
Every year Federal sales, Federal resellers, Federal partners, Federal customers and companies do not know when the U.S. Federal Government will pass the annual budget. But if the upper management of the company understands the Federal Government processes, they can manage expectations of the forecast revenue stream from their Federal sales personnel. It can be a frustrating and very gratifying sales environment. I am glad I am a part of it every year.
Leadership, planning and knowledge are the keys to ensure you are successful in building this market vertical.
NEXT ARTICLE: I will be directing my attention to the “Building without a Plan. I hope you will join me.
BLOG 10: Building without a Plan.