Outlook for the Federal Technology Market

Kevin M Plexico Vice President, Federal Information Services Deltek, Inc.

Federal Discretionary and Contract Spending Trend

*Note: 2011 and 2012 Contract Spending are Deltek estimates Source: Presidents Budget FY 2012, House Appropriations Committee, Deltek

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Final Federal Appropriations for 2012

2012 Appropriations
Agriculture Commerce, Justice, Science Defense Energy & Water Financial Services Homeland Security Interior & Environment Labor/HHS/Education Legislative Branch Militry Const./Vet Affrs State/Foreign Operations Transportation/HUD Base Discretionary Funding Other Discretionary Funding Disaster Funding Overseas Contingency Operations Total Discretionary Funding

2011
Enacted ($B) 20.2 53.3 513.0 31.7 21.7 41.6 29.6 157.4 4.5 73.1 48.1 55.4 1,049.6 19.8 52.7 518.1 32.0 21.5 39.6 29.2 156.3 4.3 71.7 42.1 55.6 1,042.9

vs. 2011 vs. 2011 (%) ($B) (0.4) -2% (0.6) -1% 5.1 1% 0.3 1% (0.2) -1% (2.0) -5% (0.4) -1% (1.1) -1% (0.2) -5% (1.4) -2% (6.0) -12% 0.2 0% (6.7) -1%

158.0 1,207.6

8.1 115.0 1,166.0

(43.0) (41.6)

-27% -3%

Source: House Appropriations Committee, Deltek

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Agency Dependence on Contractors

Source: Presidents Budget, FY 2012

1/17/2012

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Discretionary and IT Budget Relationship

Historically, IT spending patterns tracked closely with discretionary spending.
Deltek Estimate

Source: OMB, Deltek

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Strategic Growth Opportunities for Federal Contractors

Energy R&D Investments Energy conservation & infrastructure modernization Utilize electronic health records to reduce costs Expand government health care programs Healthcare

Energy / Conservation

Consolidation Leverage cloud Improve performance

Budget Streamlining

Cyber Security

Expansion of cyber operations Consolidation of networks to improve cyber security

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Key Administration IT Priorities

Increasing cloud computing adoption and reducing infrastructure costs Consolidating and optimizing data centers and reducing infrastructure costs

Establishing policy, implementing continuous monitoring, increasing workforce

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Growing Importance of Task Order Based Contracts

Source: USASpending.gov, Deltek

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Major Contract Vehicles Today and Tomorrow

HHS
Today
CIOSP2 SEWP IV CITS (CDC)

VA
Today
Schedule 70 SEWP IV VETS

Army
Today
S3 FIRST ITES

DHS
Today
EAGLE First Source

Tomorrow
CIOSP3 SEWP IV CIMS (CDC)

Tomorrow
T4 SEWP IV CEC

Tomorrow
EAGLE ITES3 R23G

Tomorrow
EAGLE 2 First Source 2

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Federal Contract Spending by Industry in Maryland

Source: FPDS, Deltek

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Federal IT Spending in the State

$42 billion (or roughly half of the Federal IT budget) spent in or contracted in Maryland
Contract Office Location
Maryland Place of Performance Other

Maryland

$13.5B

$19.2B

Other

$9.2B
Source: FPDS, Deltek

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Federal IT Spending by Department in Maryland

Source: FPDS, Deltek

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Conclusions
Budget environment leading to much more competitive landscape Growth most likely to come from market share vs. market growth Protecting incumbency is paramount Companies need to position for growing areas either through acquisition or organic growth Positioning on Contract Vehicles increasingly important Leveraging integrator relationships critical for small firms

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