Acquisition Forecast Obstacles and Opportunities in a Challenging Market

1. Acquisition ForecastObstacles and Opportunities in a Challenging Market Kevin PlexicoVice President, Information Solutions Deltek, Inc. April 24, 2013

2. Agenda • The Big Picture • 2013 Recap & Sequestration • 2014 and Beyond • Impact on Companies and Strategies for Success

3. The Big Picture

4. How Big is the Problem?U.S. Debt as % of GDP Source: President’s Budget for FY 2014

5. Debt as % of GDPComparing the US to Other Major Economies USA’s figure in 2008 was 76% Source: International Monetary Fund’s Fiscal Monitor, Dec 2012

6. Look Back and a Look Ahead on OutlaysThe Major Cost Drivers in the Federal Budget

7. 2013 Recap & Sequestration

8. FY 2013 Appropriations Summary Source: House Appropriations Committee • All other agencies funded under a Continuing Resolution • Appropriations and CR still subject to sequestration

9. Potential Impact of Sequestration on FY 2013 Contracting Total estimated impact = $35B $30B in the Defense Dept Source: Deltek

10. Sequester Impact Guidance from OMB Impact to Date Federal Employees Furlough plans going into effect for many agencies Though some agencies have reduced scope Contracting Large number of solicitation and award delays Very few cancellations to date Guiding Principal • Focus on delivery of mission Employees • “Identify number of employees to furlough” and how (maximum is 22 days or 30 continuous days) • Limit hiring personnel, giving awards to employees and training, conferences, travel Acquisition • “Identify any major contracts/grants they plan to cancel, re-scope or delay” • “Only enter into new contracts or exercise options” that are “high priority investments” or when it would “cause significantly greater costs” Communications • “Inform… partners and stakeholders in a timely and complete manner”

11. The Outlook for 2014 and Beyond

12. Budget Outlook 2014 and Beyond:Comparing the Budget Proposals Source: President’s Budget for FY 2014, House Budget Committee, Senate Budget Committee

13. Discretionary Budget and Contract Spending Trend and Outlook • 2013 figure • Assumes no sequestration • includes $50B for Hurricane Sandy relief • Sequestration • Approximate funding level if sequester remains in place Source: President’s Budget for FY 2014

14. Changes in Discretionary Budget, 2014 vs. 2013 • 13 agencies* with $14.5B in increased spending • 12 agencies* with $52.8B in decreased spending • In 2013, ~$47B in disaster assistance for Hurricane Sandy Source: President’s Budget for FY 2014, House Appropriations Committee* Not all agencies show

15. FY2014 IT Budget Request Source: OMB, Deltek

16. The Bright Side of the Budget Outlook • The sequester cuts are only ~7% in FY 2013 • The stock market lost 54% of its value from Jul 2007 to Mar 2009 • The housing industry lost 33% 2006-2009 • Provides some degree of certainty for funding 2013 and beyond • With FY 2013 funding in place, threat of shutdown is off the table • Provides a ‘low water mark’ for 2014 and beyond • Starting in 2014 and for next 7 years, caps increase 1-2% per year • Even with sequester in place • Still a number of areas of growth • Health care, cyber security, Veterans Affairs, C4ISR, Treasury

17. Impact on Companies and Strategies for Success

18. Impact of Market Changes on Company Prime Contract Revenue Growth Note: Excludes companies that did not generate at least $1M annually in prime contract revenue between 2008-2012 Source: USASpending.gov and Deltek

19. Finding Growth in a Flat MarketHow Are Growing Companies Achieving Growth

20. Q&A