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
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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.
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Discretionary Budget vs. Contract Spending, FY 2009-2020 (Req.)
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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%
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FY 2020 Discretionary Budget Themes
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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
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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)
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• 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
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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
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1 2 3
2015
2016
2017
2018
2019
2020
Annual Rate of Growth
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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%
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Year-over-Year Growth Rates in Bids/RFPs (Q3 ‘18 vs. Q3 ‘19)
Services leads the $1.3T SLED
Market
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Services are the most sensitive to the
economic cycle but offer more upside
business opportunity.
2019 Government Contractor Confidence Index points to strength & optimism
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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
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68%
Source: 2019 Deltek Clarity Government Contracting Industry