The Trump administration’s announcement this month that it plans to reduce the discretionary spending budgets of most federal government agencies during fiscal year 2018 is enough to give pause to business owners who deal in the $2 trillion business-to-government, or B2G, marketplace. Spending by Defense, Homeland Security, and Veterans Affairs departments would increase by $54 billion collectively, according to the plan, while most other departments would see cuts ranging from 1 to 31 percent.
How will Washington state fare if the proposed budget is approved?
Lyndon Dacuan, a market analyst at Seattle-based Onvia, which tracks the B2G industry, says there will be some local winners and losers.
“Most of the proposed cuts would directly impact spending at the federal level, with significant increases in areas such as defense, homeland security, veterans affairs, the national nuclear security administration, and transportation,” he said. Dacuan notes that spending at the Department of Veterans Affairs, which has a notable presence in the state, would rise by about 6 percent.
But other sectors could feel the impacts of significant spending cutbacks.
“With as much that’s known about the Trump administration’s proposed budget, we can make a few predictions about what it could mean for Washington state,” said Dacuan.
He points to the following examples:
- A proposed 31 percent reduction of the Environmental Protection Agency’s budget would eliminate a grant that provided $28 million to help restore Puget Sound during the current fiscal year;
- A proposed 20 percent reduction of the National Institutes of Health’s (NIH) budget could trim research dollars statewide, with local institutions such as the Fred Hutchinson Cancer Research Center, which receives 85 percent of its budget from NIH, and the University of Washington, which receives nearly $1 billion in annual federal funding to research cancer, heart disease, Alzheimer’s, and more.
- A proposed 13 percent reduction of the Department of Transportation’s budget would be felt by Amtrak, Sound Transit by eliminating TIGER, New Starts, and Small Starts grants that benefit large transit projects;
- A proposed 13 percent reduction of Department of Education’s budget means Washington state could lose about $16.7 million in education spending.
Dacuan notes 25 percent of the B2G marketplace is comprised of contracts awarded at the federal level, while the remaining 75 percent is comprised of state, local, and education, or SLED, agency spending.
During the past three months, companies in Washington state were awarded three large government contracts all priced over $320 million, according to Onvia, with one contract worth more than $2 billion — Boeing was recently awarded a $2.1 billion contract to build 15 KC-46 tanker aircraft for the United States Air Force; 15 Washington state automobile dealerships will share a $334.7 million contract to provide vehicles, supplies, services, and equipment to the state’s Department of Enterprise Services; and Seattle-based Moffatt & Nichol, an engineering consulting firm, was awarded a $324.7 million contract to help build terminal rail upgrades at the Port of Everett.
Onvia reports Washington state is a top B2G market that posted year-over-year growth in areas such as construction site preparation, innovating education growth, and IT/tech and smart lighting.
“Washington has a strong diversified economy and is a recognized leader for environmental programs,” said Dacuan. “There isn’t anything stopping Washington from continuing on a path to lead the nation on environmental programs, something that (a state) like California (is) already gaining recognition for as the budget approval nears.”