The Problem of Determining the Problem: The Problem with Year-End Spending

In the United States, the lapse of each fiscal year in September marks the expiration of certain agency funds.  As a response, agencies typically obligate funds in September to avoid returning unused funds.   This year-end spending phenomenon was the subject of multiple oversight efforts in the 1980s and 1990s.  However, now, government oversight of year-end spending is lacking.  Ineffective congressional inquiries, a lack of follow-through from oversight agencies, and reliance on narrative-driven data plague Congressional oversight of year-end spending.  Better oversight is needed to answer the question—is the government’s September shopping spree a harmless result of agency prioritization, or is it wasteful spending run rampant?  

I. The Phenomenon of Year-End Spending

            As each fiscal year winds to an end in September, the federal government rushes to obligate funds appropriated by Congress.  Between 2013 and 2018, agencies[i] obligated over 16.9% of their budgets in the month of September.  On average, agencies spend almost five times more in the last week of September than in any other week throughout the fiscal year.  This phenomenon has been coined a variety of different names, including “use-it-or-lose-it budgeting,” “hurry-up spending,”[ii] and “wasteful binge.”  Whatever it is called, the government’s habit of inflated spending at the end of the fiscal year is often accused of being wasteful, rushed, and inefficient.[iii]  The question remains whether year-end spending is (1) a harmless result of the budgetary process and agency planning, or (2) a dangerous form of rushed decision-making that poses efficiency and quality concerns.  Better oversight is needed to find out.  

            The universe of funds affected by year-end spending habits consists primarily of those appropriated for agencies to obligate to specific purposes.[iv]  These funds, primarily used to procure goods and services from private parties, typically expire at the end of each fiscal year.  For example, Congress may make an annual appropriation to an agency for a specific purpose.  Then, this agency will have until September 30, the last day of the fiscal year, to spend the appropriation or return it to the Treasury.  Thus, agencies face a dilemma each September as the fiscal year ends: obligate the remainder of appropriated funds or let these funds expire.  Agencies are likely driven to spend funds to avoid an appearance of overfunding which may invite future budget cuts from Congress.[v]  Alternatively, year-end spending increases may be the result of agency planning.  As the fiscal year winds to an end, agency heads can better realize their remaining budgets and spend accordingly.[vi]  

II. A History of Conclusory Oversight and the Lack of Follow Through

            In 1980, the Senate Subcommittee on Oversight of Government Management held hearings on year-end spending habits, finding that these year-end spending sprees “resulted in a lack of competition, poorly defined statements of work, inadequately negotiated contracts, and the procurement of low-priority items or services.”[vii]  That same year, the Government Accountability Office (GAO), then named the General Accounting Office, published a report on year-end spending.  The GAO found that some of the government’s year-end spending habits were harmless results of the yearly budget process, but others were very inefficient.  The GAO’s 1980 report failed to make findings based on hard data because fiscal data reported to Office of Management and Budget (OMB) was inconsistent — if agencies reported it at all. In most cases, agencies failed to report data to OMB. Thus, the GAO’s 1980 report on year-end spending relied on a broad assumption of three possibilities: (1) year-end spending is the harmless, natural result of agency planning and prioritization; (2) year-end spending is an inefficient disposal of government dollars to avoid future budget cuts; or (3) both the first and second possibilities are true.[viii]  

Between 1980 and 1998, the federal government enacted a series of laws that the GAO found to be sufficient safeguards to wasteful year-end spending.  While not directly aimed at year-end spending, these measures were enacted  to “promote economy, efficiency and effectiveness in the procurement of property and services by the . . . Federal Government.”[ix]  Primarily, the Competition in Contracting Act (CICA) of 1984 created a federal procurement system with more competition requirements.[x]  CICA established a better-regulated government contracting field through the Federal Acquisition Regulation (FAR).[xi]  Provisions of CICA and the FAR discourage sole source contracting, require open solicitations, and mandate waiting periods for contracts with substantial financial impacts.[xii] 

            Thus, in 1998, when the GAO revisited the topic of year-end spending, it concluded that measures like CICA and FAR were sufficient in safeguarding taxpayer money during year-end spending.[xiii]  The GAO’s conclusion flows logically: CICA and the FAR apply no less during September than during the rest of the fiscal year.  However, the GAO still recommended that OMB better enforce year-end fiscal reporting requirements to improve oversight efforts and ensure accurate numbers to review government spending.

            According to the GAO and private watchdogs, the government still struggles to accurately report its spending data.  In 2021, the GAO reported that obligated funds were inconsistently reported across multiple online reporting systems.  Additionally, private government watchdogs have highlighted problems with the federal government’s current reporting of awards, including (1) incomplete descriptions of awards; (2) not reporting, or inaccurately reporting sub-awards; and (3) using privatized and difficult-to-understand codes to identify awardees.

            Thus, although logical on its face, the GAO’s 1998 conclusion regarding year-end spending is difficult to test given modern challenges to fiscal reporting.  This is especially true today as agencies fail to reconcile consistency issues with new requirements to publish fiscal data on the internet.  Additionally, agency year-end spending has produced lower-quality procurements despite safeguards like CICA and the FAR.  A 2017 study sampled federal IT spending across twenty-seven agencies from 2005 to 2010 and rated procurements according to cost, schedule, and performance.  The study found that, on average, spending in the last week of each fiscal year was almost six times as likely to be rated in the bottom categories of these factors than spending during the rest of the year.

III. Modern Oversight of Year-End Spending

            Although the GAO has not returned to the matter of year-end spending in the twenty-first century, Congress has taken interest in the matter.  In 2008, a bipartisan group of Senators sent letters to various agency heads raising concerns that their year-end spending habits produced inefficient results for taxpayers.  More recently, the Senate held  a hearing to determine whether the spending phenomenon is “prudent planning or wasteful binge.”  This hearing featured a reliance on anecdotal evidence to frame year-end spending as wasteful.  For example, in his opening statement, Senator Rand Paul (R-KY) recalled that the military hovered aircrafts to burn fuel, sent soldiers to the shooting range solely to fire ammunition, and remarked that his predecessor bought obsolete printer supplies just to avoid losing appropriated funds at the end of September. 

Current oversight of year-end spending has been insufficient to answer the question of whether the government’s year-end spending phenomenon poses a problem for fiscal efficiency.  As Senator Gary Peters (D-MI) asked in 2017, “Why would our internal controls fail to prevent wasteful spending as we reach the end of the year?”  With a lack of hard data to address if year-end spending poses a problem, Congress is now left with the same question the GAO attempted to answer in 1998: does year-end spending pose a problem for efficiency and accountability?  

Effective congressional oversight is measured by four factors: quality, bipartisanship, credibility, and policy impacts.[xiv]  Modern oversight of year-end spending is lacking in all four categories.  First, congressional oversight of year-end spending is of poor quality[xv] because Congress does not have access to empirical data to determine whether, as the Senate’s Subcommittee on Federal Spending Oversight and Emergency Management put it, year-end spending is “prudent planning or wasteful binge.”  Members of Congress have not put forth evidence to tell whether their wasteful spending tales are unique to the end of the fiscal year.  Without a data driven approach, congressional oversight has proven, at most, that some spending that occurs throughout the year might be wasteful. 

Second, although congressional oversight of year-end spending has historically involved bipartisan[xvi]involvement, it has suffered from a lack of bipartisan support in recent years.  Senator Paul’s statements during the most recent hearing on year-end spending began with him making claims that, because he knew of a relative handful of wasteful year-end spending examples, the government’s year-end spending hikes were wasteful binges.  In contrast, Senator Peters focused on how year-end spending may be harmless procrastination or a result of agency planning.  Taken as a whole, the most recent Congressional hearing on year-end spending showcased disagreement between the Republican chair and Democratic ranking member about how Congress should approach year-end spending.

Third, congressional oversight of year-end spending is not credible.[xvii]  For many of the same reasons that the oversight lacks quality—primarily the lack of hard data driving oversight—the public is left without anything more than isolated reports of government waste to judge year-end spending.  Members have relied on an assumption that year-end spending increases may be wasteful despite inefficiencies in the OMB’s and Treasury’s public-facing data.  Members of Congress have ignored September spending on high-priority government projects and have not directed the GAO to investigate year-end spending since 1998.  Thus, Congressional oversight of year-end spending lacks credible support on which members may base any claim. 

Fourth, congressional oversight of year-end spending has failed to produce any real policy impacts.[xviii]  The GAO’s 1998 report concluded that contracting and fiscal controls were likely adequate to stop wasteful spending in September.  However, now, over twenty years later, the government still faces problems reporting fiscal data.  Moreover, the 2017 study of year-end spending—the only study looking at the issue from an empirical perspective—contradicts the GAO’s 1998 conclusion that policy safeguards are adequate.

Thus, Congressional oversight has proven ineffective.  Despite a hearing and letters to agency heads, year-end spending is still a phenomenon in federal appropriations law.  Moreover, Congress is left with the same question posed in 1984: is government year-end spending “prudent planning or wasteful binge?”

IV. Solutions: Applying Principals of Good Oversight to Year-End Spending

            The GAO should revisit the issue of year-end spending, considering modern challenges to fiscal reporting, and provide recommendations to address problems it does find.  The GAO’s 1998 conclusion began and ended with the assumption that measures like CICA, and subsequently the FAR, would ensure efficient year-end spending.  The federal government still struggles to maintain consistent fiscal reporting.  Online reporting requirements have added to this issue.  The modern realm of government fiscal reporting has changed drastically since 1998 and requires the GAO to revisit its 1998 recommendation considering new challenges.

Further, Congress should take a data driven approach to determine whether current fiscal reporting laws properly safeguard year-end spending habits.  Congress should direct the GAO to conduct an empirical study to determine whether year-end spending habits truly result in lower quality procurements.  Because members of Congress have not relied on empirical data, they have failed to show whether year-end spending creates wasteful procurements.  Reliance on empirical data will enable Congress to determine whether year-end procurement anecdotes are outliers, common occurrences throughout the fiscal year, or symptoms of wasteful year-end spending practices. 

            Congress has shown at least some bipartisan interest in solving year-end spending issues, or at least in exploring whether year-end spending poses an issue.  However, Congress’s oversight of year-end spending has led to unclear answers of whether year-end spending is a problem.  Regardless of whether year-end spending produces lower quality procurements, the phenomenon undoubtedly raises concerns for government efficiency.  Consequently, Congress should work toward better oversight of the issue to finally answer the question: is there a problem with year-end spending?

[i] While the Administrative Procedure Act omits Congress and the Judiciary form the definition of “agency,” this Paper uses the term to encompass the authorities located within these branches which are subject to year-end spending pressures.  5 U.S.C. § 551(1); but see Prudent Planning or Wasteful Binge? Another Look at End of the Year Spending: Hearing Before the S. Subcomm. on Fed. Spending, Oversight, and Emergency Mgmt., 114th Cong. 115-202 (2017) (statement of Sen. Rand Paul, Chairman, S. Subcomm. On Fed. Spending Oversight and Emergency Mgmt.) (detailing year-end spending pressures on Congress). 

[ii] See generally Hurry-Up Spending: Hearing Before the S. Subcomm. on Oversight of Gov’t Mgmt., 96th Cong. (1980). 

[iii] See, (statement of Sen. Rand Paul, Chairman, S. Subcomm. On Fed. Spending Oversight and Emergency Mgmt.); Boris Angelov, Expiring Budgets and Spending Sprees: The Cost of Use-it-or-Lose-it Budgeting, Chi. Pol’y Rev. (Feb. 11, 2014), (stating that year-end spending is “wasteful,” and calling on Congress to “provide value for taxpayer money” by fighting year-end spending habits). 

[iv] See, e.g.Gen. Acct. Off., Federal Year-End Spending: Symptom of a Larger Problem 3 (1980),

[v] Id. at 4-5; Robert Hale, Bad Idea: The “Use-it-or-Lose-it” Law for DoD Spending, Defense 360 (Dec. 15, 2020), (stating that an agency’s failure to spend all of its appropriations could suggest not all available funds are needed). 

[vi] Gen. Acct. Off., Year-End Spending Reforms Underway but Better Reporting and Oversight Needed 2 (1998), 

[vii] Id. at 1.  

[viii] See id. at 8-9. 

[ix] Office of Federal Procurement Policy Act Amendments of 1983, Pub. L. No. 98-191, § 2, 97 Stat. 1325 (1983). 

[x] Gen. Acct. Off., Federal Year-End Spending: Symptom of a Larger Problem 7 (1980),

[xi] Gen. Services Admin., The Competition in Contracting Act (CICA) (Dec. 11, 2012), 

[xii] Id. 

[xiii] Gen. Acct. Off., Year-End Spending Reforms Underway but Better Reporting and Oversight Needed 13-14 (1998),

[xiv] Carl Levin and Elise J. Bean, Defining Congressional Oversight and Measuring its Effectiveness, 64 Wayne L. Rev. 1, 17-21 (2018). 

[xv] See id. at 18 (stating quality of an investigation is a measure of effective congressional oversight).

[xvi] See id. at 19 (stating bipartisanship is a measure of effective congressional oversight).

[xvii] See id. at 21 (stating credibility is a measure of effective congressional oversight). 

[xviii] See id. at 21 (stating policy impact is a measure of effective congressional oversight).