An Assessment of the Impact of Federal Continuing Resolutions on the Pre-Approval Stage of Defense Acquisitions

Abstract

This study is an analysis of the impact of federal continuing resolutions on defense acquisitions. It focuses on the early stage of the acquisitions lifecycle when purchase requests are prepared and submitted to the acquisitions system. The research objective is to quantify the impacts of continuing resolutions on the number of purchase requests created, the processing period for acceptance of purchase requests into the acquisition system, and the total dollar amount of purchase requests. The analysis used data taken from the USMC Purchase Request Builder system, a database for purchase order creation prior to a requests acceptance into the acquisitions system. The sample obtained describes over 1,000 unique purchase requests generated between FY16 through FY19. The results of the analysis revealed strong impacts of CRs on the number of purchase requests initiated per week and on the total price of individual purchase requests. The results show that the weekly average number of requests generated is reduced by nearly half during a continuing resolution. The regressions using the count of purchase requests per week also revealed strong impacts purchase requests for both goods and services, though the impact may be greater on service requests. The estimates of the impact of Continuing Resolutions on the total price of individual requests revealed a significant impact on service requests. The results showed that the lack of budget authority is associated with a reduction in the size of individual requests and that this effect disproportionately effects service requests. All of the estimations described in this report made special care to separate the effects of CRs from the underlying seasonal trend in government purchasing that is often aligned with “use it or lose it” behaviors. Both the count of purchase request initiation and the Total Purchase Price effects persisted after including these seasonal controls. Our analysis of PRALT length, the time required for a request to advance from initial creation to acceptance in the procurement system, was initially significant, but ultimately could not be distinguished from the seasonal trends. Overall, this study is one of the few empirical exercises to date that measure the impact of continuing resolutions on defense procurement. The estimates generated from this analysis identify clear impacts on procurement activity that results from the uncertainty and increased administrative burden that is triggered by the lack of full budget authority.