Beyond the Shutdown: How the Budget Process Kills Innovation and Private Sector Collaboration

This post, written by Jonathan Messinger, originally appeared on Public Spend Forum

The current public panic over the government shutdown, debt ceiling, and bellicose federal budgeting process is old hat to government agencies: For more than a decade now, it’s been their permanent state of affairs. The last time an appropriations bill was passed on time was 1996, which means that for nearly 20 years agencies have entered new fiscal years without the knowledge of what their budgets would look like. It’s only been exacerbated in recent years by the adoption of “continuing resolutions,” bills that keep the lights on for a few months at a time while Congress wrangles with their Constitutionally mandated duty to appropriate funds.

The intransigence of hard-liners has created economic turmoil beyond D.C. that is only now becoming readily apparent because of the shutdown. Fiscal leadership has been missing from Washington for years, and the ripple effect on the economy is becoming quite obvious. In the case of procurement and government contractors, it’s not just the suppliers that work directly with government but their supply chain partners who also suffer.

Put simply: Uncertainty equals cost. And in a broken budgetary process that appropriates in one-year increments, or passes CRs for three months at a time, it makes it nearly impossible for agencies or contractors to make large capital investments. Organizations need to plan for a longer cycle than a year or a few months, and agencies are not able to give accurate forecasts to their supply chain partners. Without a budget to back it up, a strategic plan is worth less than the paper it’s written on.

The result is that the ongoing budgetary uncertainty has made the government an unattractive marketplace for world-class suppliers. If we really want to solve the complex problems the government faces every day, then we need to make it easy for the best suppliers in the world to work with the public sector. There are many ways in which the federal government discourages innovative and nimble contractors from bidding on government contracts, but creating an atmosphere of uncertainty where current staff or equipment go underutilized, and payments for services rendered become unpredictable, is doing enormous harm.

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