Public Procurement Outlook 2012

Presented by

Brent MaasNIGP Marketing Director

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

Indicators & Outlook: Energy

• Price

• Avg. Consumption: 0.6% U.S. v. 1.6% Worldwide

Year Percent Change

2009 2010 2011 2012 2009-10

2010-11

2011-12

Crude ($/bbl) 61.6579.4

092.36

88.00

28.8 16.3 -4.7

Gasoline ($/gal) 2.35 2.78 3.52 3.43 18.4 26.7 -2.7

Diesel ($/gal) 2.46 2.99 3.80 3.73 21.5 27.1 -1.9

Heating Oil ($/gal) 2.51 2.96 3.69 3.71 17.9 24.8 0.4

Natural Gas ($/mcf) 12.1211.1

911.05 11.53 -7.7 -1.2 4.3

Electricity (cents/kwh) 11.5111.5

811.80 11.91 0.6 1.9 0.9

Source: U.S. Energy Information Administration – Price Summary Table

Source: U.S. Energy Information Administration – International Energy Outlook 2011

• 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

Indicators & OutlookU.S. Sensitivities

• Financial– Tight credit & bond markets– Debt– Foreclosures and housing– Catastrophe funding

• Political– Congressional discord– Presidential election– Sustained 9+% Unemployment

• Financial– Bond Markets

– Euro-zone

– Chinese monetary policy

• Rebuilding Japan– Supply chain

• Mid-East Social & Political Change

Indicators & OutlookGlobal Sensitivities

Federal Budget FY11-15 Estimates

($2,000)

($1,000)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Fiscal Year

$ B

illi

on

s

Revenue $2,303 $2,628 $3,003 $3,333 $3,583

Expense $3,601 $3,729 $3,771 $3,977 $4,190

Surplus / (Deficit) ($1,299) ($1,101) ($768) ($645) ($607)

FY11 FY12 FY13 FY14 FY15

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”

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)

FY11 FY12 FY13 FY14 FY15

$15.1 (3.6%)

$15.8 (4.9%)

$16.8 (5.9%)

$17.8 (6.1%)

$18.8 (5.7%)

• 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 & OutlookVirginia 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.

• 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 & OutlookVirginia 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.

• The cautionary notes…

• Consumer Price Index up 3.9%

• Labor & housing market soft

• Slow-nominal income growth

Indicators & OutlookVirginia 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.

• 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 & OutlookVirginia FY12

Source: Virginia Department of Taxation (Governor’s Confidential Working Papers), “The Economic Outlook And Revenue Forecast through Fiscal Year 2014.” November 22, 2010.

• 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 & OutlookVirginia 2012

Source: U.S. Energy Information Agency, “Short-Term Energy and Winter Fuels Outlook.” October 2011

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.

Professional Developments & Dynamics

Values & Guiding Principles

Professional Developments & Dynamics

• Standard Practices www.principlesandpractices.org

– Public Procurement Policy ManualOpen for public comment thru November 18

– Risk Management– Cooperative Purchasing– Strategic Planning– Performance Metrics– Performance Measurement– Performance Management

• Cooperative practices

• Technology implementation

• Succession planning – workforce demographics

• Education and certification

Professional Developments & Dynamics

Public Procurement Outlook 2012

Presented by

Brent MaasNIGP Marketing Director