The fourth quarter: when offices obligate

The calendar and the rule

The federal fiscal year runs from October 1 to September 30 and is named for the year in which it ends. Fiscal 2027 begins on October 1, 2026. The fourth quarter is July, August and September.

Most of the money an office spends on day-to-day buying is appropriated for one year. The rule, at 31 U.S.C. 1502, is that money limited to a period is available only for expenses properly incurred in that period, or to complete contracts properly made within it. An obligation is the signed commitment: the contract, the order, the option exercised. One-year money not obligated by September 30 expires. The office cannot use it for new work the next day.

Why it bunches

• The year starts late. Appropriations are often not enacted by October 1, and the government runs on a continuing resolution. GAO has reported that continuing resolutions in general prohibit new activities and projects, and that agencies delay contracts while one is in force. Work that could have been awarded in the autumn waits.
• Buying takes time. A requirement defined in the winter and competed in the spring is awarded in the summer.
• Money comes loose late. Funds held in reserve through the year, or returned by programs that could not use them, have to be put to use before they expire.
• Congress has noticed. The annual defense appropriations act has long carried a provision that no more than 20 percent of one-year money may be obligated in the last two months of the fiscal year.

Not all money is annual

The pressure is strongest on one-year money. In the defense budget, operation and maintenance funds are generally available for obligation for one year, research and development funds for two, and procurement funds for three. So services, repairs, supplies and small equipment bought from operating accounts feel September most. A production contract funded from a procurement account is on a different clock.

That is worth knowing about your own customers. If what you sell is paid for from operating funds, the end of the fiscal year is a deadline for your buyer. If it is paid for from a procurement account, the dates that matter are in the budget request and the program schedule.

What year end looks like from outside

Response times tend to shorten. Buys are shaped to fit simplified procedures. Offices lean on contracts they already hold, because an order can be placed faster than a new contract can be competed. Options are exercised. Contracting staff have no time to get to know a supplier they have never heard of.

That last point is the one suppliers get wrong. The fourth quarter is when awards are made. It is not when an office learns who you are. The companies that receive a request for a quote in the second week of September are the ones the office already knew in June.

How to see an office's rhythm in the record

Every award has a date. Take an office's awards in your code for the last three fiscal years and count them by month. Look for three things: how sharp the September peak is, whether there is a second peak, and which months are empty. Then look at what the year-end awards are: new contracts, orders against vehicles, or options. An office whose year-end money goes out as orders under a vehicle you are not on has no September for you.

In LastAwarded, Analysis and maps draws the last three years month by month for any code or buying office you filter to.