FY22 Preparation Guide: Presidential and Federal Agency Budget Requests

Every year, U.S. federal agencies, the White House’s Office of Management and Budget (OMB), and Congress work on a budget for the upcoming fiscal year, which runs from October 1 through September 30.

The U.S. federal budget process is complicated and confusing. There is a lot of back and forth and collaboration to get this to happen and it doesn’t always go according to plan – and it doesn’t help that there are no enforceable deadlines (with exception of the federal government shutting down).

But at the end of the day, once this process is finished, the federal budget is approved by the House, Senate, and the President combined. Once the President receives it, they have 10 days to approve or veto it.

As federal government contractors, we sometimes lose sight of this process since a lot of this takes place during our busy season (and most of us don’t have a full-blown government affairs team to help us keep track). To help contractors understand the key processes of the federal budget lifecycle, we outlined three critical steps below:

In a typical year where there isn’t a Presidential transition, federal agencies submit their budget requests to the White House to help create the President’s budget request. Federal agencies engage in internal budget planning for at least six months before the fiscal year begins. These budget documents are great resources that help you understand where a certain agency sees itself going, its priorities, and its challenges (hello, white paper ideas!). These documents are a way to understand a new potential federal customer, or to better get to know your agency of choice.

The President’s budget request is supposed to kick off the budget process with delivery by the first Monday in February, but sometimes this submission is delayed. The President’s budget request plays three important roles:

1. Tells Congress what the President recommends as overall fiscal policy
2. Forecasts the President’s relative priorities for federal programs
3. Signals to Congress the President’s recommendations for spending and tax policy changes

On May 28th, President Biden released his proposed budget for Fiscal Year (FY22) requesting $6T in total mandatory and discretionary spending for the upcoming fiscal year. For this report, we will be focusing on how the President prioritizes the $1.5T in requested discretionary funding, which represents an 8.4% increase over regular discretionary spending in FY21.

Discretionary spending requires an annual appropriation bill and is typically set by the House and Senate Appropriations Committees and their various subcommittees. After a budget resolution is met and 302(a) allocations are specified (that means once Congress agrees on the specific funding levels) – then the real fun begins in the form of drafting appropriation bills. Once appropriations committees pass their bills, they are considered by the House and Senate, and then eventually find themselves in a conference committee where all issues get worked out (hopefully). Once the conference has worked out all their differences and has passed both chambers of Congress, it is sent to the President who can sign the bill or veto it. As we all know, in recent years, Congress has not passed all of the appropriations bills before the start of the fiscal year which either leads to a federal government shutdown or a continuing resolution (CR).

FY22’s budget is filled with many changes and potential opportunities for spending. The President’s budget proposes an increase in many areas including education, and racial and sexual inequalities training. Earmarks have returned to the House and Senate Appropriations Committee. Currently, each House member has 10 earmarks while the Senate has an unlimited number.

As of the week of July 19th, House appropriators have favorably reported all 12 FY22 appropriations bills and are looking to move 7 of those bills as a spending package at the end of July before the House is scheduled to be in before a month-long recess and 2 months before FY21 ends. Senate appropriators have not yet announced their FY22 markup schedule, though there is a chance they will markup a few bills before the August recess.

Aside from the additional spending bills, the biggest issue in this year’s budget will most likely be defense spending. This is unpopular for both Democrats and Republicans. Democrats continue to be upset at President Biden’s lack of rollbacks with border barriers and immigrations and customs while Republicans are upset about the lack of defense funding.

Few people expect the 12 appropriation bills to become law before the end of the fiscal year on September 30th — especially while both sides of Congress try to work through the Infrastructure Deal, and the American Jobs and Families Plan.

The Pulse developed this guide to help you understand where federal funding could potentially be going in the next fiscal year. This 114-page guide summarizes the following across 19 federal agencies:

• Discretionary budget request summary
• Key focus areas going into FY22
• Comparison of Presidential and agency initiatives and budgetary priorities

Not only is it important to understand this critical lifecycle and budgetary elements for business development purposes, but we broke down the differences between the federal agency requests and the Presidential request to help you identify key focus areas, initiatives, and challenges for the next fiscal year.  It is important to note these differences as Congressional appropriators make the final decision on prioritizations.

Guide researched and authored by Katherine Eige and Daniel Bickle, Pulse Analysts.