Facility Use/ARMS Program

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Facility Use/ARMS Program

• Sid Saunders
• Pendulum Management
• Oct 18, 2006
• DTI Conference

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AMCs Public-Private Partnership -Goal and
Objectives-

• Goal
• Improve the output and performance of AMC
  organic facilities through increased
• participation by the private sector via
  industrial partnerships or cooperative
• activities.
• Objectives
• Enhance support to the warfighter via stronger
  cooperative partnership
• relationships with industry.
• Leverage industrys best practices.
• Improve organic operations and efficiencies.
• Reduce and offset cost of ownership of organic
  facilities.
• Leverage private investment in Army facilities.

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Transforming the Industrial Base- Army Strategy
-

• Why transform . . . A Vision!
• To meet National Security Missions
• To integrate Lean/6 Sigma/Agile Manufacturing
  Concepts
• To satisfy Defense Future Systems Requirements
• To migrate to Public-Private Partnerships
• Our Strategy . . .

Joint pull production . . . Reconfigurable
and responsive manufacturing . . . Rapid
acquisition
Integrated matrixed capabilities
Maximum flexible workforce

• Ammunition Plants
• Program Budget Decision 407, Ordnance Base
  rightsizing
• SecArmy approved way ahead
• Integrate
• Consolidate
• Divest
• Lease
• Armament Retooling Manufacturing Support

• Arsenals
• Ground Systems Industrial Enterprise
• Arsenal Support Program Initiative

• Maintenance Depots
• Centers of Industrial and Technical Excellence
• Army Public-Private Partnership Plan

• Lean Philosophy
• 6 Sigma
• Public-Private Partnerships
• Legislative Reform
• Financial Reform
• Capital Improvement Program

• Way Ahead . . .
• Pursue Legislative and Financial Reform
• Negotiate Plant Divestiture and Leasing
  Agreements Develop the AMC Partnership
  Enterprise

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Types and Authorities
3 Major Partnering Categories
Use of Government Facilities and Equipment
(including leasing) FAR Subparts 45.3 and 45.4 10
USC 2667 10 USC 2474
Workshares and Teaming 10USC 2469a 10USC 2474
Sale of Articles and Services 10USC 2208(j) 10USC
2563 10USC 4543 10USC 7300 22USC 2754 22USC 2770
Partnering Workshare - Co-production efforts
wherein each contribute, independently, a
pre-determined amount of resources (skills,
manpower, facilities, equipment, etc.) to a
program
Partnering Facility Use - Partnering agreements
wherein public and Private entities use govt
facilities available as underutilized under The
authority of Federal Acquisition Regulation (FAR)
Sub-part 45 and the Armys Supplement To the FAR
Partnering - Direct Sales - Partnering agreements
wherein articles or services for private industry
as a sub-contractor
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FACILITY USE AGREEMENT

• Authorized by FAR 45.302-1,-2
• Allows commercial use by Defense Contractor for
  Consideration. The Defense Contractor acts as
  Landlord.
• Consideration can be cash or services
• Method being used to convert Army plants to
  commercial use to reduce cost of Army ownership
• Can be used for all or part of a facility
• Conversion of Army plants supported by ARMS
  Program -

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ARMS Contracting Innovations

• The Government has No Privity of Contract with
  Subcontractor / Tenants.
• The Facility Use Contractor negotiates with
  tenants for
• Applicable facilities usage rates
• Site improvements to facilitate tenant operations
• Application of appropriate financial incentives
• Terms of tenant facility usage
• The Facility Contractor then negotiates with the
  ARMS PM.
• The ARMS PM emphasizes quick response to Facility
  Contractor tenant placement requests.
• ARMS incentives fund the Facility Use Contractor,
  who in turn applies the funds to tenant site
  improvements.

NEGOTIATIONS
FACILITY CONTRACTOR
ARMS PM
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ARMS Program Savings Analysis, Fiscal Year 2005

• ARMS savings to the Army/government were 34.3
  million
• Rent from ARMS tenants 12.6 million
• Overhead absorbed 20.3 million
• Third-party sales 0.2 million
• Services in kind 1.2 million
• ARMS investments/expenses disbursed were 3.9
  million.
• The programs average annual rate of return
  reached 9 percent in fiscal year 2005.
• There were 93 tenants involved in the ARMS
  program, employing 1,743 personnel.

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Award Winning Method

• National Council for Public Private Partnerships
  Federal Project Award
• Corenet Global Innovator Award
• NAID/ADC Marketing Awards

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Facility Use - Lessons Learned

• Facilities and equipment are assets
• Commercial users will pay to use assets
• Commercial users will commit more for long term
  use
• Recent contracts utilize long term facility use
  contracts(25 year)
• Long term facility use agreements look more like
  leases

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Comments

• Both leases under 10 USC 2667 and facility use
  contracts are proven techniques to reduce costs
  by allowing commercial use of Army assets.
• Army installations and organizations need to find
  a more effective way to integrate these solutions
  and use the best tool for the job

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References

• AMC Partnering Program
• www.amc.army.mil/partnering
• ARMS Program
• www.openterprise.com

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Contact

• Sid Saunders
• ssaunders_at_pendulumsite.com
• 210-288-2431