Fall out funding refers to unallocated government funds that become available towards the end of the fiscal year due to various reasons. These funds typically arise from underspending in different departments or projects, budget reallocations, or unexpected savings. As the fiscal year closes, federal agencies face a "use it or lose it" scenario, where unspent budgetary allocations might not be rolled over into the next fiscal year. This urgency drives federal employees to allocate these funds quickly to avoid budget reductions in the following fiscal cycle.

Drivers of Fall Out Funding

Several factors contribute to the occurrence of fall out funding:

1. Project Delays or Cancellations: Planned projects that get delayed or canceled can leave behind unspent funds.
2. Cost Savings: Projects that come in under budget create surplus funds.
3. Budget Reallocations: Shifting priorities within agencies can lead to reallocations, leaving some programs with extra funds.
4. Year-End Spending Urgency: Agencies often rush to obligate remaining funds to ensure they don't face budget cuts next year.

What to Expect from Federal Partners

Federal employees, particularly those in procurement and budget offices, typically respond to fall out funding with an interesting combination of urgency and caution. The “use it or lose it” mindset can drive fast action, which leads many to believe this is a great place to get federal funding fast. That’s a bit of a fallacy, however, as the speed makes many uncomfortable and causes them to lean into low-risk, quick-turnaround projects to ensure funds are used efficiently and compliantly. 

Because of this, there is a strong preference for established relationships. This money is much more likely to be spent on known vendors with a track record of delivering on time and within budget. With that, it’s rarely a great tactic for market entry, and strengthens our continued mantra focused on forging and maintaining the right relationships so that you can be a trusted agent when opportunities arise.

The UFR Process: Unfunded Requirements

The Unfunded Requirements (UFR) process allows federal agencies to identify and prioritize needs that exceed their budget allocations. Different agencies and services have nuanced approaches to managing UFRs, but the general process involves (1) Identification of needs, (2) Prioritization, and (3) Submission and approval. Sometimes this process is executed at a low level of authority. As the year presses on, the level at which this exercise is executed moves up, along with the level of competition. 

Navigating Agency-Specific Nuances

Understanding the specific processes and preferences of different agencies can significantly enhance the chances of securing fall out funding. Here are some nuances to consider:

1. Department of Defense (DoD): The DoD operates with a complex web of stakeholders, including users, funders, and procurement officers. Establishing relationships with program managers and understanding DoD's priority areas can be crucial.
2. Department of Homeland Security (DHS): DHS often prioritizes security and technology solutions. Engaging with their innovation units, like the Science and Technology Directorate, can position you for access.
3. Civilian Agencies: Agencies like the Department of Health and Human Services (HHS) and the Environmental Protection Agency (EPA) may have more straightforward processes but emphasize compliance and impact.

Strategies to Secure Fallout Funding

Businesses can leverage several strategies to secure fall out funding through the UFR process. Before we get into how, know that you do not need to be on an unfunded list prior to the end of year UFR exercise. You can be added to it. Please don’t take this as a reason to track or align yourself with unfunded efforts. (More details on unfunded requirements, here!)  

1. Early Engagement: Build relationships with federal program managers and contracting officers early in the fiscal year to understand their needs and priorities. Create rapport by meeting your cost, schedule, and performance goals on existing partnerships.
2. Be Solution-Oriented: Emphasize how your product or service addresses their critical needs. Make sure you’re capturing the language they use in defining their mission and objectives. 
3. Demonstrate Readiness: Show that your business can deliver quickly and efficiently, minimizing risk for the agency. 
4. Help them Help You: Whatever team or agency you’re working with will have a process and format in which fallout funding requests are considered. In the Air Force, it was quad charts. If you can, find out what it is, and do the work for them to the best of your ability. Your sponsor is much more likely to push for your offering if you’re making it easy for them to do.

Securing fall out funding through the UFR process requires strategic engagement, understanding of agency-specific nuances, and a proactive approach to relationship building. It’s not an optimal federal market entry point, but by positioning your team as a reliable and ready solution provider, you can bolster your opportunities and effectively tap into these unallocated funds and support federal agencies in meeting their critical needs. 

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