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Facility Use/ARMS Program

Facility Use/ARMS Program. Sid Saunders Pendulum Management Oct 18, 2006 DTI Conference. AMC’s Public-Private Partnership -Goal and Objectives-. Goal: Improve the output and performance of AMC organic facilities through increased

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Facility Use/ARMS Program

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  1. Facility Use/ARMS Program Sid Saunders Pendulum Management Oct 18, 2006 DTI Conference

  2. AMC’s 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 industry’s best practices. • Improve organic operations and efficiencies. • Reduce and offset cost of ownership of organic facilities. • Leverage private investment in Army facilities.

  3. Commercialize When Economically Feasible at Minimum Cost & Risk 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

  4. 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 Army’s Supplement To the FAR Partnering - Direct Sales - Partnering agreements wherein articles or services for private industry as a sub-contractor

  5. 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 -

  6. TENANTS 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

  7. 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 program’s 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.

  8. Award Winning Method • National Council for Public Private Partnerships –Federal Project Award • Corenet Global Innovator Award • NAID/ADC Marketing Awards

  9. 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

  10. 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

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

  12. Contact • Sid Saunders • ssaunders@pendulumsite.com • 210-288-2431

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