GWIQ-02: Public Sector Spending Showcase - …...Fed vs. SLED Markets » Deficit spending protects budget from economic cycles » $500B highly centralized contract spending » Common

GWIQ-02:Public Sector Spending Showcase - Assess the Lay of the Land for the Year Ahead

Kevin Plexico, Deltek

Agenda» Differences in the Federal vs. State, Local and Education Markets

» Federal Market Outlook

» SLED Market Outlook

Federal Market SLED Market

Fed vs. SLED Markets

» Deficit spending protects budget from

economic cycles

» $500B highly centralized contract

spending

» Common procurement policies defined in

the FAR

» Dominated by unique Aerospace/Defense

market

» Balanced budget subjects SLED market

to economic cycles

» $1T in spending spread across 100k+

governments

» Highly fragmented procurement policies

» Dominated by social services and

infrastructure

Federal Market Outlook

CONFIDENTIAL © Deltek, Inc. All Rights Reserved. 4

Bipartisan Budget Act of 2019 (BBA19)

5

On August 2, 2019, the President signed a two-year bipartisan bill that increases discretionary

budget caps established in the Budget Control Act by $169B and $153B, respectively. For FY 2020,

the bill caps spending in the security category at $738B (including $72B in Overseas Contingency

Operations (OCO)) and the non-security category at $630B.

Discretionary Budget Authority Caps, FY 2012-2021

Source: H.R. 3877 *Excludes Overseas Contingency Operations (OCO), and supplemental funding.

© Deltek, Inc. All Rights Reserved.

Discretionary Budget vs. Contract Spending, FY 2009-2020 (Req.)


1,492

1,2641,221 1,198

1,140 1,134 1,1171,167

1,220

1,4231,354 1,334

541 541 542 522466 448 444 481 517

562 542 534

0%

10%

20%

30%

40%

50%

0

200

400

600

800

1,000

1,200

1,400

1,600

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019enacted*

FY 2020request

$B

Discretionary Budget Authority Contract Spending

Source: Congressional Budget Office, FPDS, Deltek

Source: House and Senate Appropriations Committees

*Based on approved Senate subcommittee allocations

FY 2020 Appropriations (as of Oct 31, 2019)

7

FY 2020

House Senate

Appropriation BillFY 2019

Enacted ($B) Status $B%Change

vs. FY 2019 Status $B

%Change

vs. FY 2019

HR

2740

Defense 674.4 Passed 690.2 2.3% Passed cmte 694.9 3.0%

Labor, HHS, Education 178.1 Passed 189.9 6.6% No action 187.7 5.4%

State and Foreign Operations 54.2 Passed 56.4 4.1% Passed cmte 55.0 1.5%

Energy and Water 44.6 Passed 46.4 4.0% Passed cmte 48.9 9.6%

HR

3055

Interior/Environment 35.6 Passed 37.3 4.9% Passed cmte 35.8 0.6%

Agriculture 23.0 Passed 24.3 5.7% Passed cmte 23.1 0.4%

Transportation and HUD 71.1 Passed 75.8 6.6% Passed cmte 74.3 4.5%

Commerce, Justice and Science 64.1 Passed 73.9 15.3% Passed cmte 70.8 10.5%

Military Construction/VA* 97.1 Passed 108.4 11.6% No action 105.5 8.7%

Financial Services 23.2 Passed 24.6 6.0% Passed cmte 24.2 4.3%

Homeland Security 61.6 Passed cmte 63.8 3.6% Passed cmte 53.4 -13.3%

Legislative Branch 3.8 Passed cmte 4.0 4.3% Passed cmte 5.1 34.2%


FY 2020 Discretionary Budget Themes

© Deltek, Inc. All Rights Reserved.8

Source: Department of Defense

Includes base and OCO

DEFENSE:

» Investments in key technologies - cybersecurity, artificial intelligence, hypersonics,

autonomous systems, directed energy, hypersonics

» Creation of U.S. Space Force within the Air Force, as well as the Space Development

Agency

» Acquisition and management reform – business processes, contract management,

requirements development, management overhead

» Emergency funding in Army’s military construction budget to address border security and

hurricane recovery ($9.2B).

CIVILIAN:

» Proposes a 33% increase in border security and immigration enforcement funding,

including $5B for the border wall.

» R&D investments: border surveillance/law enforcement detection ($57M); cybersecurity

($37M); American AI Initiative ($850M)

Category Management – Contractor Considerations

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As category management evolves, contractors should assess the implications of agency contract preferences,

potential changes in recompete acquisition strategies, approaches for assessing cost savings and strategies for

managing demand to drive cost savings and efficiency. GSA provides specific metrics and guidance to agencies

for meeting these objectives.

Contracts Demand Savings Positioning

Under What Tier Are Your

Contracts Classified, and

When Do They Expire?

As Tier 0-classified contracts

expire, agencies will be

considering elimination (to

meet contract reduction goals)

or migration to a BIC contract

or other CM-managed contract

to reduce Tier 0 spend.

How Are Agencies

Approaching Demand

Management?

Agencies can leverage a

number of way to better

manage demand, such as

longer refresh cycles, changing

the timing of buying actions,

and negotiating unit price

reductions.)

How Are Agencies

Calculating Savings?

Agencies examining:» Previous Prices Paid » Average Prices Paid » Average Contract Rate

Savings » Unadjusted Contract Rate

Comparisons External Benchmarking

Contract Positioning

Positioning for access on BIC

and other preferred vehicles –

either by contract or teaming

relationships – will be critical.

This could be especially

impactful to small businesses.

10

Multiple Award Schedule (MAS) Consolidation

Phase 1 (FY 2019):

» Develop solicitation of single schedule

» Review all terms and conditions

» Map SIN among current solicitations

» Release new schedule and close existing schedules to new

offers

Phase 3 (FY 2020 and on):

» Consolidate contracts of vendors with multiple schedules

into single contract

» Allow contracts near expiration to expire

» Allowance of task orders to finish terms before consolidation

Phase 2 (Beginning FY 2020):

» Complete mass modifications to update terms and conditions

for existing contracts

» New SIN made available on GSA e-buy

» Vendors apply for new, applicable SIN


GSA is consolidating the

existing 24 Multiple

Award Schedules (MAS)

into a single schedule for

products and services.

Part of this effort involved

review and streamlining

of Special Item Numbers.

11

Use of Other Transaction Agreements (OTAs)


• Contractor concern is growing that the DOD’s use of Other Transaction

Agreements (OTAs) is bypassing traditional procurement avenues and limiting

potential IT business opportunities.

• Confusion also abounds about how to become involved with industry

consortia and compete for the prototype IT requirements that DOD

announces.

• The available data shows that Defense organizations are awarding more OTA

contracts, but they are not spending a significant amount on those

contracts vs. the available ceiling value.

• DOD is also aware of concern about consortia and it is moving to limit their

creation and clarify what each consortium does.

Source: FPDS, Deltek

SLED Market Outlook


Three Trends in SLED Contracting

Overall, a healthy and

stable market for bids

with strong revenue

growth

Certain sectors

showing strong growth

in opportunities

through Q3 ‘19

Contractors are

optimistic about the

SLED market


1 2 3

2015

2016

2017

2018

2019

2020

Annual Rate of Growth


Overall SLED Forecast

2014

2015

2016

2017

2018

2019

2020

Annual Bids and RFPs Issued

500K

506K

495K

492K

470K

470K

471K

1.2%

1.1%

0.5%

4.8%

-.02%

0.3%


Year-over-Year Growth Rates in Bids/RFPs (Q3 ‘18 vs. Q3 ‘19)

Services leads the $1.3T SLED

Market


Services are the most sensitive to the

economic cycle but offer more upside

business opportunity.

2019 Government Contractor Confidence Index points to strength & optimism


139.62018 133.6

2017 135.8

2016 129.4

2015 135.1

Compares Favorably To

Levels Tracked By Legacy

Onvia Survey Index

Source: 2019 Deltek Clarity Government Contracting Industry

More than two out of three firms expect to grow their government business next 12 months


68%

Source: 2019 Deltek Clarity Government Contracting Industry

Documents

GWIQ-02: Public Sector Spending Showcase - …...Fed vs. SLED Markets » Deficit spending protects budget from economic cycles » $500B highly centralized contract spending » Common