1. Public Procurement Outlook 2012 Presented by Brent Maas NIGP Marketing Director

2. Key Trends and Influences Economy – Indicators & Outlook – Federal, State & Local Budgets Professional Developments & Dynamics – Values, Guiding Principles, Standards of Practice – Cooperative Practices – Technology – Succession Planning – Education & Certification

3. Indicators & Outlook: Energy Price Avg. Consumption: 0.6% U.S. v. 1.6% Worldwide YearPercent Change 200920102011 2012 2009-102010-11 2011-12 Crude ($/bbl) 61.6579.4092.36 88.00 28.816.3 -4.7 Gasoline ($/gal) 2.352.783.52 3.43 18.426.7 -2.7 Diesel ($/gal) 2.462.993.80 3.73 21.527.1 -1.9 Heating Oil ($/gal) 2.512.963.69 3.71 17.924.8 0.4 Natural Gas ($/mcf) 12.1211.1911.05 11.53 -7.7-1.2 4.3 Electricity (cents/kwh) 11.5111.5811.80 11.91 0.61.9 0.9 Source: U.S. Energy Information Administration – Price Summary Table Source: U.S. Energy Information Administration – International Energy Outlook 2011

4. Manufacturing Production:2.8% Total Industrial Production: 1.9% Food Production: 0.9% Resins & Synthetics Production: 1.2% Agricultural Chemical Production: 1.5% Real Disposable Personal Income: 1.6% Consumer Price Index:1.8% Indicators & Outlook: Reference Indices 2012:2011

5. Indicators & Outlook U.S. Sensitivities Financial – Tight credit & bond markets – Debt – Foreclosures and housing – Catastrophe funding Political – Congressional discord – Presidential election – Sustained 9+% Unemployment

6. Financial – Bond Markets – Euro-zone – Chinese monetary policy Rebuilding Japan – Supply chain Mid-East Social & Political Change Indicators & Outlook Global Sensitivities

7. Federal Budget FY11-15 Estimates Source: www. usgovernmentspending.com and www. usgovernmentrevenue.com - compilation of data from the president’s “Budget of the United States Government” and US Census Bureau’s “Statistical Abstract of the United States”

8. Federal Budget FY11-15 Trends & Influencers Average revenue growth – 7.1% Average expense growth – 2.8% Total est. cumulative deficit FY11-15 – $15.5T $19.8T ( 27.8%) Total est. GDP – $15.1T $18.8T ( 24.7%) Estimated GDP $ Trillion (Yr-Yr % Change) FY11FY12FY13FY14FY15 $15.1 (3.6%) $15.8 (4.9%) $16.8 (5.9%) $17.8 (6.1%) $18.8 (5.7%)

9. The good news… General fund revenues exceeded forecast 2 years running (FY11 $322M) – Corporate taxes & estimated payments $165.8M (58%) – Individual income tax, refunds & sales tax 5% growth in payroll withholding & sales tax Unemployment 6.5% v 9.1% (U.S.) (top 36%) Personal income up 2.8% Less surplus real estate properties than most states Indicators & Outlook Virginia FY10-FY11 Overview Source: (VA) House Appropriations Committee Staff, “General Fund Revenue Collections for Fiscal Years 2011 and Preliminary Budget Outlook for 2012-14, August 8, 2011.

10. The cautionary notes… General fund revenues not yet back to FY08 level 5% growth lagging (payroll withholdings) – 8% growth emerging from 1991 recession – 7.2% growth emerging from 2001 recession – 6.1% long-term growth trend 5.4% growth lagging (sales tax) – 7% growth emerging from 1991 recession – 14% growth emerging from 2001 recession Indicators & Outlook Virginia FY10-FY11 Overview Source: (VA) House Appropriations Committee Staff, “General Fund Revenue Collections for Fiscal Years 2011 and Preliminary Budget Outlook for 2012-14, August 8, 2011.

11. The cautionary notes… Consumer Price Index up 3.9% Labor & housing market soft Slow-nominal income growth Indicators & Outlook Virginia FY10-FY11 Overview Source: U.S. Bureau of Labor and Statistics, Major Economic Indicators Reports – “Consumer Price Index;” “Employment Situation;” “Real Earnings.” October 7-19.

12. Employment - 2% growth – Leading sectors: business & professional services, hospitality, education – Trailing sectors: construction, information, financial Personal Income – 3.6% growth Wages & Salary – 4.7% growth Indicators & Outlook Virginia FY12 Source: Virginia Department of Taxation (Governor’s Confidential Working Papers), “The Economic Outlook And Revenue Forecast through Fiscal Year 2014.” November 22, 2010.

13. Housing – Starts = +1,400/month avg. (+50% of pre-recession peak) – Appreciation 3.9% Fuel – Price 3-4% – Consumption Gasoline – stable/slight decline Diesel 1.5% Indicators & Outlook Virginia 2012 Source: U.S. Energy Information Agency, “Short-Term Energy and Winter Fuels Outlook.” October 2011

14. Virginia Budget Revenue (forecast) – General Fund: $15.5B – Non-General Fund: $23.6B Expense – General Fund: $16.3B – Non-General Fund: $23.0B Source: “Part A-Overview: Executive Amendments to the 2010-2012 Biennial Budget.” December 17, 2010.

15. Professional Developments & Dynamics Values & Guiding Principles

16. Professional Developments & Dynamics Standard Practices www.principlesandpractices.org – Public Procurement Policy Manual Open for public comment thru November 18 – Risk Management – Cooperative Purchasing – Strategic Planning – Performance Metrics – Performance Measurement – Performance Management

17. Cooperative practices Technology implementation Succession planning – workforce demographics Education and certification Professional Developments & Dynamics

18. Public Procurement Outlook 2012 Presented by Brent Maas NIGP Marketing Director