2018 NOHA Business Summit Conference Carey Webster Sr. Director, Research at Deltek

Agenda Budget Trends and Outlook Small Business and Native Contracting Trends © Deltek, Inc. All Rights Reserved.

Budget Trends and Outlook © Deltek, Inc. All Rights Reserved.

FY 2019 Discretionary Budget Themes –Defense Defense Budget* $686B FY 2019 Discretionary Budget Themes –Defense Infuses Department of Defense with funding to close capability gaps and execute the New National Defense Strategy Targets investments in training, equipment, maintenance, missile defense, modernization and infrastructure to increase lethality and improve operations in Europe and Asia Mitigates capacity readiness challenges in command and control, cybersecurity, Intelligence, Surveillance, and Reconnaissance (ISR) Drives partnerships for initiatives in hypersonics, autonomy, cyber, space, directed energy, electronic warfare, and artificial intelligence Acquisition Reform Continues organizational transformation – establishment of new Offices of the Under Secretaries of Defense for Acquisition and Sustainment (A&S) and Research and Engineering (R&E) Promotes rapid prototyping/rapid fielding programs and use of Other Transaction Authority (OTA) Streamlines and codifies acquisition regulations O&M Request $284B Procurement Request $144B RDT&E $92B Source: Department of Defense *Includes additional FY 2019 funding provided by the Bipartisan Budget Act of 2018 © Deltek, Inc. All Rights Reserved.

FY 2019 Discretionary Budget Themes –Civilian Civilian Budget* $572B FY 2019 Discretionary Budget Themes –Civilian Priorities include: Southwest border wall and immigration enforcement Veteran care Combatting opioid addiction IT Modernization Cybersecurity Reorganization and reform Streamlining common functions to reduce duplication (e.g. statistics, finance, etc.) Workforce reform Regulatory reform Infrastructure $1T in total infrastructure investment through a combination of direct federal funding and incentives for non-federal funding $250B for grants, transformative projects, credit programs, and capital revolving funds Border Security and Immigration Enforcement $23.1B Opiod Epidemic $17B R&D $60.4B Source: OMB *Includes additional FY 2019 funding provided by the Bipartisan Budget Act of 2018 © Deltek, Inc. All Rights Reserved.

Federal Contract Spending

Contract Spending in Relation to Agency Budgets CONFIDENTIAL © Deltek, Inc. All Rights Reserved.

Small Business and Native Contracting Trends © Deltek, Inc. All Rights Reserved.

The Shift to Small Business Contracting SBA Government Wide Goal % 5% 5% 3% 3% © Deltek, Inc. All Rights Reserved.

What Is Government Buying from Small Business? © Deltek, Inc. All Rights Reserved.

Quarterly Spending by Size of Business Source: FPDS, Deltek ©Deltek, Inc. All Rights Reserved

How Are Awards to Small Business Made? © Deltek, Inc. All Rights Reserved.

Preference Programs Used in Native Contracting When looking at the preference programs used to award contracts to native owned firms, you can see the sharp decline that has happened in the award of sole source contracts In general, we’ve seen contracting officers move away from sole source contracts allowed to all kinds of firms Sole source awards are allowed to 8(a) firms, HUBZone firms, SDVO and, most recently, women owned firms. However, in practice they are used sparingly as COs give preference to competed programs You can see that here with the corresponding increase in the 8(a) competed awards and the Small Business set asides © Deltek, Inc. All Rights Reserved.

Native Contracting Trending Upward as % of Total Market © Deltek, Inc. All Rights Reserved.

Trend in Federal Contracting with Firms Owned by HNOs © Deltek, Inc. All Rights Reserved.

Federal Contracting with Firms Owned by HNOs by Industry © Deltek, Inc. All Rights Reserved.

Federal Contracting with Firms Owned by HNOs by Preference Program Used © Deltek, Inc. All Rights Reserved.

Deltek GovWin IQ Opportunity Tracking for Small Business © Deltek, Inc. All Rights Reserved.

For more information: Carey Webster CareyWebster@Deltek.com