How much discretion in discretionary spending?

The federal budget is divided into mandatory spending, discretionary spending, spending that comes from certain trust funds, and a few more sundry categories. Every year government contractors excitedly look to the new budget to glean some guidance as to how much might be spent on contracts, or what we call contractor-addressable spending. Addressable spending includes spending on existing contracts as well as new ones.

Discretionary spending is indeed an important bellwether of contract spending. But it is also the most potentially volatile kind of spending. That's because it is the only kind that can be easily constrained or expanded by congressional appropriators in a given year. Mandatory spending, on the other hand, is more stable and carries billions of dollars destined for federal contracts.

Further, much (a little over one-half) of discretionary spending is not addressable by contractors. That's because the discretionary budget pays bills like civil service salaries, rents to the General Services Administration, and some grants to state and local governments.

Thus government agencies don't have that much discretion or choice within discretionary funding on how they can spend money on contracts. The annual loud market buzz about the magnitude and trend of the discretionary spending number may be unwisely restricted; ask for an analysis that covers all dimensions of the budget.