The man charged with cutting government spending wants to end the “March Madness,” where government departments race to spend their budgets before the end of the fiscal year, often on IT hardware and software, but industry observers say the annual buying spree isn’t what it used to be anyway.
Traditionally, government departments with unspent budget dollars have looked to spend that money by the end of March and the government’s fiscal year, so they don’t risk having their budget allocation cut for the following year. In the past, the IT sector has been one area where a lot of this last-minute spending has gone, with many government-focused resellers transacting a lot of business around this period.
In a recent letter sent to public servants obtained by The Ottawa Citizen, Treasury Board of Canada president Tony Clement, who has been charged with cutting government spending across the board, warned government departments he wants this annual “March Madness” to end.
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“In the past, we have heard stories about what is known in Ottawa circles as ‘March Madness’ when organizations spend unused operational funds on things such as new furniture, promotional items, stockpiling of IT hardware, and other purchases,” wrote Clement.
“”This type of expenditure – dictated by the fiscal calendar rather than real departmental needs – is something that our government strongly opposes.”
Clement warned senior civil servants that their performance bonuses are tied to their budget cutting results, and added he would also hold his fellow ministers accountable for any last-minute spending within their departments.
While Clement’s comments would appear to throw a wrench into the year-end government buying season for public sector-focused VARs, the fact is the “March Madness” phenomenon is largely in the past, said Rick Reid, president of distributor Tech Data Canada.
“Those comments aren’t atypical from a politician’s perspective because the reality is the government is a business, and they have a business to run,” said Reid. “But quite honestly, (the fiscal year end) isn’t the same as it might have been five or ten years ago. There’s already been a levelling-out of the business.”
Government spending now tends to be more even throughout the year, he said. They may get their budget allocations three or four months into the fiscal year and have to act on it within the remaining eight months, but otherwise it’s pretty even with much less of a year-end surge.
The feedback from Tech Data’s partners so far is that this March is looking similar to recent years, despite Clement’s comments.
“To say there’s no bulge is an overstatement, but it’s not what it used to be,” said Reid. “March is still the biggest month, but it’s not what it used to be.”
Meanwhile, Reid said the government’s plan to centralize IT procurement and delivery through Shared Services Canada is proceeding, with the bureau looking over proposed major contracts to make sure they’re in line with their longer-term priorities. Otherwise, he said SSC isn’t putting up any roadblocks to departmental buying decisions while it still gets its own operations and systems up and running.
Follow Jeff Jedras on Twitter: @JeffJedrasCDN.
