ONVIASTATE & LOCALPROCUREMENT SNAPSHOT/// Q2 2015

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

Onvia’s database shows that procurement activity in bids and RFPs decreased slightly (-0.8% in Q2 ‘15 vs. Q2 ‘14), indicating a relatively flat overall market and an improvement over last quarter’s rate of -1.9%.

Onvia has identified three indicators that point to growth in competitive opportunities over the next 6-12 months:

1) American City & County’s 2015 mid-year survey of 300 government officials points to growth in spending: Four out of five survey respondents will spend the same amount or more in the 2nd half of ‘15 versus the 2nd half of ‘14. Major industries expected to grow include public works and transportation, consistent with current trends in Onvia’s data from bids and RFPs in the infrastructure related sectors.

2) According to Gartner’s 2015 forecast for state and local government, technology budgets are expected to grow during 2015 after two years of

declines. Onvia’s data supports this conclusion, with IT consulting for Q2 ‘15 being up significantly over the same period last year.

3) Onvia’s data points to growth based on the overall trend in bids and RFPs for state and local agencies. The annualized rate of change in quarterly opportunities has improved from -4.9% in Q4 ‘14 to -1.9% in Q1 ‘15, to -0.8% in Q2 ‘15, a consistent upward shift even though Q2 ‘15 absolute numbers continue to be relatively flat.

This quarter’s slight reduction in competitive opportunities does not necessarily mean lower spending. Factors such as cooperative purchases, “below threshold” buying, and consolidation into fewer/larger contracts may affect the number of projects that go out for bid/RFP.

Onvia’s awards database indicates typical award values have been increasing each year since 2012 despite the recent quarterly declines in volume of bids and

RFPs suggesting there is an overall trend toward more efficient purchasing.

Our guest contributor this quarter is Michelle Hermelee, industry expert in government contracting and President of BH Sky Associates, a leading consulting firm that advises vendors on strategies for successfully competing for government contracts in today’s environment of more efficient procurement.

Michelle’s article will discuss how to leverage cooperative purchasing using GSA schedules to boost sales and control expenses in the large state and local government marketplace.

Market Snapshot

MARKET SNAPSHOT

In the second quarter of 2015, government SLED (State, Local and Education) contracting opportunities decreasedslightly versus Q2 ‘14, however three different indicators point to growth in contracting activity over the coming year.

137,469Q2 ‘14

136,328Q2 ‘15

-4.9%Q4 ‘14

-1.9%Q1 ‘15

-0.8%Q2 ‘15

Change in Market Opportunities

Annualized Rate of Change by Quarter

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015 MARKET SNAPSHOT

BIDS & RFPs

30,000

60,000

90,000

120,000

150,000

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q12013 2014 2015

Source: Onvia project database of state, local and educational agency bids and RFPs

Q2 ‘14 Q2 ‘15

SLED Project Counts Over Time

Onvia’s database shows clear seasonality trends in the SLED market based on eight trailing quarters of activity. Because of seasonality, we measured growth in competitive bids and RFPs by comparing same quarter year-over-year activity.

Q2 ‘15 saw a decrease of 0.8% versus the same quarter last year. This is a smaller rate of decrease compared to last quarter’s decrease of 1.9%.

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

Industry SnapshotINDUSTRY SNAPSHOT

We looked deeper into activity by industry. The following charts show annual rates of change for bid & RFP activity each quarter compared to the same quarter the previous year. Growth rates improved in Q2 ‘15 across each major industry group.

Rate of Change: -0.4%

OMT Bids & RFPs

Q2 ‘ 1429,445

Q2 ‘ 1529,341

Operations & Maintenance

Industrial Supplies

Transportation/Vehicles

Sub-categories:

Rate of Change: -0.6%

AEC

GROWTH RATES IN BIDS/RFPs BY QUARTER (vs previous year same quarter)

Bids & RFPs

Q2 ‘ 1481,200

Q2 ‘ 1580,684

Architecture/ Engineering

Construction & Supplies

Water/Energy

Sub-categories:

Rate of Change: -3.5%

Business Services Bids & RFPs

Q2 ‘ 1426,918

Q2 ‘ 1525,977

Healthcare

Office Equipment

Educational Services

Professional Services

Financial Services

Food Services

Public Safety

Sub-categories:

Rate of Change: -1.4%

IT/Telecom Bids & RFPs

Q2 ‘ 1411,095

Q2 ‘ 1510,943

Hardware

Consulting

Wireless/Telecom

Software

Sub-categories:

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

Industry Detail by Sub Category

INDUSTRY DETAIL BY SUB CATEGORY

Note: The four larger industry groups shown earlier were tracked at the project category level; due to some projects being categorized into more than onesubcategory and some projects not classified into subcategories, the sum of the subcategories may not equal the counts of the overall category. Category growth rates may not be fully consistent with the rates of subcategories.

PROJECT COUNTS Q2 ‘15 vs Q2 ‘14

IS Consulting/Network Consulting

-0.8%

Software HardwareWireless/Telecom

-5.5% -5.9%

IT/TELECOM% Annual Change in Projects Q2 '15 vs. Q2 '14

-5.0%

10.0%

5.0%

0.0%

15.0%

20.0%

25.0% 24.0%

BUSINESS SERVICES% Annual Change in Projects Q2 '15 vs. Q2 '14

FinancialServices

-0.2% -1.1%

HealthcareServices

PublicSafety

ProfessionalServices

EducationalServices

FoodServices

OfficeEquipment

-2.4%-1.4%

-9.0% -9.3%

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

-3.5%

ARCHITECTURE/ENGINEERING/CONSTRUCTION% Annual Change in Projects Q2 '15 vs. Q2 '14

Water& Energy

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Construction& Supplies

-0.8%

2.0%

Architecture/ Engineering

2.9%

OPERATIONS/MAINTENANCE/TRANSPORTATION% Annual Change in Projects Q2 '15 vs. Q2 '14

Transportation/Vehicles

3.6%

IndustrialSupplies

Operations & Maintenance

-0.3%-2.6%-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

Agency SnapshotAGENCY SNAPSHOT

We examined bid/RFP volume by level of government. As the charts below indicate, rates of change in Q2 ‘15 are either moving upward or sideways depending on the level. Local government obtained positive growth with a rate of 0.3%.

Rate of Change: -3.3%

Education Bids & RFPs

Q2 ‘ 1418,501

Q2 ‘ 1517,892

K-12 School Districts

Community Colleges

Sub-categories:

Rate of Change: 0.3%

Local Bids & RFPs

Q2 ‘ 1484,455

Q2 ‘ 1584,684

Cities

Towns

Counties

Special DistrictsSub-categories:

Rate of Change: -2.2%

State Bids & RFPs

Q2 ‘ 1434,513

Q2 ‘ 1533,751

State Government

Agencies

Universities

Sub-categories:

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

Q2 ‘13 Q3 ‘13 Q4 ‘13 Q1 ‘14 Q2 ‘14 Q3 ‘14 Q4 ‘14 Q1 ‘15 Q2 ‘15

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

GROWTH RATES IN BIDS/RFPs BY QUARTER (vs previous year same quarter)

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

Agency Detail by Sub Category

AGENCY DETAIL BY SUB CATEGORY

PROJECT COUNTS Q2 ‘15 vs Q2 ‘14

To provide further insight into each of the three larger agency categories, we broke out rates of change in opportunities for the current quarter by major industry sectors to highlight general areas of expansion and contraction taking place within each type of agency.

There were four instances where an industry group within a given level of government showed a positive rate of change: Business services (state), AEC (local), OMT (local), and OMT (education).

IT/Telecom

-2.8%

0.5%

BusinessServices

Architecture/Engineering/Construction

Operations/Maintenance/Transportation

-6.9%-4.3%

STATE AGENCIES RATE OF CHANGE% Annual Change in Projects Q2 ‘15 vs Q2 ’14

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

IT/Telecom

-3.6%

-10.6%

BusinessServices

Architecture/Engineering/Construction

Operations/Maintenance/Transportation

-2.6%

2.5%

EDUCATION RATE OF CHANGE% Annual Change in Projects Q2 ‘15 vs Q2 ’14

-5.0%

-10.0%

-15.0%

10.0%

5.0%

0.0%

15.0%

LOCAL GOVERNMENT RATE OF CHANGE% Annual Change in Projects Q2 ‘15 vs Q2 ’14

-15.0%

0.0%

-5.0%

-10.0%

5.0%

10.0%

15.0%

IT/Telecom

-2.8%

BusinessServices

2.1% 0.6%

Architecture/Engineering/Construction

Operations/Maintenance/Transportation

0.0%

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015 QUARTERLY GUEST CONTRIBUTOR COLUMN

Many vendors are aware of the cooperative purchasing trend in State, Local and Education (SLED) government, but not all have considered the potential of these contracts. Defined simply as instances where two or more government agencies purchase from the same contract to obtain better pricing and efficiency in procurement, these purchases are growing steadily: Approximately 15,000 awards in Onvia’s database of nearly 800,000 awards since 2012 are cooperative purchasing agreements. The increased utilization and availability of these agreements saves time and money for SLED agencies that struggle with tight budgets and modest growth in revenue from taxpayers in recent years.

There are a number of co-op associations or joint buying groups. The two largest programs are NASPO ValuePoint (formerly WSCA-NASPO) and GSA Schedules Cooperative Purchasing Program; together they account for about half of the awards issued from these groups in Onvia’s database since 2012. This article focuses on the growing market opportunity in GSA’s State and Local Cooperative Purchasing Program.

Millions in SLED Spending through GSA’s Cooperative Purchasing GSA’s Cooperative Purchasing Program provides access tothousands of nationwide, prevetted vendors that offer

a wide array of products, solutions and services. The cooperative purchasing program is open to government agencies in 50 states, all counties, municipalities, cities and towns, tribal governments, public authorities, school districts, and colleges. The program allows state and local governments to purchase a variety of supplies and services under two GSA Schedule contracts -- Schedule 70 (General Purpose Commercial Information Technology Equipment, Software and Services) and Schedule 84 (Total Solutions for Law Enforcement, Security, Facilities Management, Fire, Rescue, Clothing, Marine Craft and Emergency/Disaster Response).

Quarterly GuestContributor ColumnBy Michelle Hermelee, President, BH Sky AssociatesUsing GSA to Leverage State and Local Cooperative Purchasing

Services

Software

Information Technology Equipment

Schedule 70General Purpose Commercial

Fire

Rescue

Facilities Management

Security

Law Enforcement

Schedule 84Total Solutions

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ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

From 2009 to 2014 SLED agency spending increased from almost $600M to nearly $750M for Schedule 70 and from approximately $25M to over $75M for Schedule 84 — a very healthy increase considering the economy was in a severe recession during that period. IT vendors should note that almost 50% of Schedule 70 expenditures go towards wireless services. For vendors whose offering is relevant to Schedule 84, the largest spending category is law enforcement and security equipment supplies and services.

The Benefits of GSA’s Schedule ProgramIn addition to the standard benefits of cooperative purchasing, top program perks of GSA for vendors include:

▪ Longer Term Contracts: GSA contracts provide stability to vendors because their contract term is for a base five year period with three five year options to extend which is, in

essence, a 20-year contract (VA contracts are base five year with one five year option to extend).

▪ Convenient System for Customers to Request Quotes: State and local government buyers can request quotes electronically from approved GSA Vendors across the full range of products and services offered through the program using the GSA eBuy system.

▪ Visibility and Exposure: Vendors with a GSA contract have their approved products and services listed on the public comprehensive online shopping superstore, GSA Advantage!

Key Takeaways for State and Local Government VendorsCooperative purchasing, though a relatively small segment of the state and local government procurement marketplace, is growing in popularity and

volume. This growth can be attributed to not only the operational cost savings on the agency side, but also for the potential of greater contracting volume and the procurement efficiencies gained by vendors. Vendors should consider participating in cooperative purchasing - working with a top co-op association or GSA’s Cooperative Purchasing Program is an opportunity for vendors to increase exposure to agency buyers, gain the advantage over competitors and grow their government revenue.

QUARTERLY GUEST CONTRIBUTOR COLUMN

ABOUT OUR GUEST CONTRIBUTOR:Michelle Hermelee, President of BH Sky Associates, LLC, founded BH Sky Associates in 2006 to provide hand-holding, step-by-step guidance, consulting, information, and training to guide businesses successfully through the government procurement process. Michelle is a NCMA Certified Schedule Contract Manager (CSCM) with over fifteen years of in-depth experience securing and negotiating government contracts.

BH Sky is headquartered in Princeton, NJ, with a location in Washington, D.C. BH Sky specializes in GSA contract management including contract modifications and GSA schedule proposal preparation. We also perform government market research on behalf of our clients.

Michelle Hermelee PresidentBH Sky Associates

ONVIA STATE & LOCAL PROCUREMENT SNAPSHOT - Q2 2015

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Onvia specializes in providing business intelligence solutions to vendors to grow their government business, helping them get ahead of the bid and RFP process. Active vendors in the government market that need timely, comprehensive and unique insights in their industry vertical, key buyers and competitive landscape should visit www.onvia.com and request a demo to speak with a Business Development Manager in their industry. Onvia helps clients strategically grow their government business with solutions for project intelligence, agency intelligence and vendor intelligence in the public sector.

Disclaimer:The information contained in this Onvia publication has been obtained from publicly available federal, state and local and government data sources. These data sources are reviewed and updated periodically to better reflect activity in the public sector. Changes in opportunity volume due to source changes are general-ly not material enough to affect research findings, but may be material in some instances. Additionally, the number of calendar working days each quarter may differ slightly each year, which can also affect volume. Onvia disclaims all warranties as to the accuracy, completeness or adequacy of such information. The views and opinions expressed in this publication are those of Onvia’s research organization or contributors and are subject to change.

For More Informationwww.onvia.com(800) 575-1736