Peters, Colleagues Seek Answers from High-Spending Federal Agencies on ‘Use It or Lose It’ Spending

WASHINGTO, D.C. – U.S. Senators Gary Peters (D-MI), Ron Johnson (R-WI), Claire McCaskill (D-MO) and Rand Paul (R-KY) sent letters to the chief financial officers of 13 federal agencies Tuesday raising concerns about potentially wasteful spending in the final weeks before the end of the fiscal year. According to one report, federal agencies spent more than $11 billion during the final week of the fiscal year 2017, almost five times more than average weekly spending during the rest of the year.

Peters and Paul are the Ranking Member and Chairman of the Subcommittee on Federal Spending Oversight and Emergency Management. Johnson and McCaskill are Chairman and Ranking Member of the Senate Homeland Security and Governmental Affairs Committee.

“According to a recent report, with only limited time left in the current fiscal year, eight of the top ten highest-spending federal agencies have not used as much as 40 percent of their budgets,” the Senators wrote. “Some observers have raised concerns that this year’s annual spending binge could be the biggest yet.”

The letters were sent to the CFOs of the Department of Defense, Department of the Treasury, Department of Veterans Affairs, Department of Homeland Security, Department of Energy, Department of Justice, Department of State, Department of Transportation, Department of Health and Human Services, General Services Administration, NASA, National Science Foundation and Social Security Administration.

Full text of the Senators’ letter to the Department of Defense is below:

Mr. David L. Norquist

Chief Financial Officer

Department of Defense

1400 Defense Pentagon

Washington, D.C. 20301

Dear Mr. Norquist:

We respectfully write to request information about the Department of Defense’s plans to address so-called “use it or lose it” spending at the end of the federal fiscal year.  Historically, federal agencies increase spending during the fourth quarter of the fiscal year.[1]  Although not a new phenomenon,[2] use it or lose it spending can lead to waste and abuse of taxpayer dollars.  The Committee has previously raised concerns about the potential for waste and abuse the practice presents.[3]

Last fiscal year, agencies spent a total of $11.1 billion in the final week of the fiscal year[4]—almost five times higher than the average weekly spending during the rest of the year.[5]  Further, research suggests that “spending that originates in the last week of the fiscal year has 2.3 to 5.6 times higher odds of having a lower quality score.”[6]  According to a recent report, with only limited time left in the current fiscal year, eight of the top ten highest-spending federal agencies have not used as much as 40 percent of their budgets.[7]  Some observers have raised concerns that this year’s annual spending binge could be the biggest yet.[8]

We respectfully request that you arrange for a staff-level briefing about how the Department of Defense will ensure that its spending in the last quarter of this fiscal year is not wasteful or abusive.  Please provide this briefing by September 14, 2018. 

The Committee on Homeland Security and Governmental Affairs is authorized by Rule XXV of the Standing Rules of the Senate to investigate “the efficiency, economy, and effectiveness of all agencies and departments of the Government.”[9]  Additionally, S. Res. 62 (115th Congress) authorizes the Committee to examine “the efficiency and economy of all branches of the Government . . . .”[10]

If you have any questions related to this letter, please ask your staff to contact Elliott Walden of Chairman Johnson’s staff at (202) 224-4751, Sarah Garcia of Ranking Member McCaskill’s staff at (202) 224-2627, Greg McNeill of Chairman Paul’s staff at (202) 224-4343, or Zachary Schram of Ranking Member Peters’ staff at (202) 224-6221.  Thank you for your attention to this matter.

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[1] U.S. Gov’t Accountability Office, PSAD-80-67, Government Agencies Need Effective Planning to Curb Unnecessary Year-End Spending (1980), available at https://www.gao.gov/products/PSAD-80-67 (citing that one of the rationales offered by agency personnel for year-end spending surges is “an implicit philosophy that all available funds must be spent before the end of the fiscal year . . .”).

[2] Id.

[3] See e.g., Prudent Planning or Wasteful Binge? Another Look at End of the Year Spending: Hearing Before the Subcomm. on Federal Spending Oversight & Emergency Management of the S. Comm. on Homeland Sec. & Governmental Affairs 115th Cong. (2017).

[4] Adam Andrzejewski, Use It Or Lose It – Trump’s Agencies Spent $11 Billion Last Week in Year-End Spending Spree, Forbes (Oct. 3, 2017), https://www.forbes.com/sites/adamandrzejewski/2017/10/03/use-it-or-lose-it-the-federal-governments-11-billion-year-end-spending-spree.

[5] Jeffrey B. Liebman & Neale Mahoney, Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence Federal Procurement, American Economic Review, Vol. 107, No. 11 (Nov. 2017), https://www.aeaweb.org/articles?id=10.1257/aer.20131296.

[6] Id. at 3529.

[7] Q4 Spending Statistics: Will Q4 FY18 Be the Biggest Spending Spree Industry Has Seen Yet?, The Pulse (Aug. 2, 2018), https://www.thepulsegovcon.com/the-pulse-content/2018/8/1/q4-spending-statistics-will-q4-fy18-be-the-biggest-spending-spree-industry-has-seen-yet (using information from datalab.usaspending.gov and FPDS in ascertaining these figures); Press Release, OMB Must Stop End of Year Spending Splurge, Americans for Limited Government (Aug. 10, 2018), https://getliberty.org/2018/08/omb-must-stop-end-of-year-spending-splurge.

[8] Id.; see also Get Ready for a Massive Government Spending Spree, Nextgov (Aug. 8, 2018), https://www.nextgov.com/cio-briefing/2018/08/get-ready-massive-government-spending-spree/150360.

[9] S. Rule XXV(k); see also S. Res. 445, 108th Cong. (2004).

[10] S. Res. 62 § 12(e)(1)(A), 115th Cong. (2017).