USE IT OR LOSE IT: DO YEAR-END BUDGET PRACTICES PERMANENTLY INHIBIT FEDERAL IT PROJECTS?
By federal law, the U.S. fiscal year begins on October 1 and concludes on September 30, and any unused funds by agencies are returned to the U.S. Treasury. Quantitative evidence has shown that this budget environment creates incentives for government managers to surge spending as the end of the fiscal year approaches due to this “use it or lose it” mechanism. More recent literature has shown that this surge in spending has a negative impact on quality of procurements that are initiated at the end of the fiscal year. This paper uses both Ordinary Least Squares and Ordered Logit methodologies to examine when in the fiscal year federal IT projects are started, and how the timing is associated with the quality of the project as measured by cost and schedule performance.
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