Understanding the Policy Drivers and Legal Authorities for Public-Public Partnership/ADC Role

1. Understanding the Policy Drivers and Legal Authorities for Public-Public Partnership/ADC Role Tim Ford CEO, Association of Defense Communities August 5, 2013 – Monterey, California

2. I. The Policy Framework for Partnerships and Section 331

3. Note: Topline in out-years includes the Congressional Budget Office (CBO) estimate of overseas contingency operations (OCO) based on a phased drawdown to 30,000 troops in 2017 and remaining flat thereafter. Sources: Department of Defense, National Defense Budget Estimates for Fiscal Year 2013 (Green Book), Office of the Under Secretary of Defense (Comptroller), March 2012; Congressional Budget Office, Long-Term Implications of the 2013 Future Years Defense Program, July 2012. Analysis by CSIS Defense and National Security Group.

4. Strategic Choices and Management Review Cuts DOD’s major headquarters budgets by 20 percent (OSD, the Joint Staff, service headquarters and secretariats, combatant commands, and defense agencies and field activities); Cuts the number of direct reports to the secretary of defense by further consolidating functions within OSD, as well as eliminating positions. One option under review reduces Army end strength to between 380,000 and 420,000; Army forces now are slated to come down to 490,000 soldiers in the active component and 555,000 in the reserves. The review identified additional consolidations and mission reductions if sequester-level caps are imposed for the long term, including consolidations of regional combatant commands and defense agency mission cuts. Even if officials implement the full complement of reductions to force structure, modernization programs, management and overhead, and compensation and benefits identified in the review, savings still would fall short of meeting the required sequester cuts in the early years of implementation.

5. What Are the Biggest Issues Facing the Defense Community? • Enacted Cuts (Budget Control Act) • Sequestration – Current and Future • End of Wars/ Downsizing • Ongoing Federal Budget Battles

6. What Is the Impact? • Operations & Maintenance Cuts • Diminished investment in our defense infrastructure • Need to evaluate infrastructure and downsize (BRAC) • Defense Drawdown • Defense worker adjustment (service members, contractors, civilians) • Local Economic Challenges • Furloughs • Losses to businesses/contractors • Defense industry decline

7. ADC Policy Position • The budget shortfall at DoD will force difficult decisions about military installations. • If Congress is willing to cut the DoD budget, it must give the department the flexibility it needs to save money. • Discussion of DoD shifts in installation strategy must be an open and independent process. • Infrastructure choices must be driven by strategy but focused on reducing costs and not merely transforming the force.

8. How Are Communities and States Responding? • Reactive • Responding to change & supporting their local installation • Proactive • Identifying partnerships that promote efficiency and mission effectiveness

9. II. Understanding the Legal Authorities for Partnership

10. Legal Authorities • 10 USC 2913 – Allows DoD organizations to enter into agreements for shared energy savings services • 10 USC 2667 – Allows DoD Organizations to lease non-excess property for non-defense uses in return for cash or in-kind services • FY 1995 NDAA – Permanent legislation allowing DoD “assets” in Monterey County, California to acquire municipal services from government agencies located in that county. • FY 2004 NDAA – Permanent legislation allowing DoD “assets in Monterey County, California to acquire municipal services from government agencies located in that county. • DoDD 1000.11 – Directive permitting operation of financial institutions on DoD installations. • 31 USC 6305/10 USC 2371/15 USC 3710 – Cooperative Research and Development agreements allowing for use of federal property and materials by non-federal government organizations (public or private for joint research purposes.) • FY 1940 NDAA – paved the way for 1st government-owned contractor-operated ordnance plant • 10 USC 3706 – Permits cooperative agreements • 10 USC 2684a – Permits DoD to enter into agreements to address the use or development of real property in the vicinity of a military installation or military airspace • 10 USC 2694a – Permits DoD to convey surplus real property for conservation purposes • 10 USC 18280 – Permits DoD to acquire a facility or addition to an existing facility through an exchange with a State, local government or private entity.

11. Legal Authorities • 10 USC 2869 (expired) – Permits DoD to convey real property at military installations to support military construction, or land acquisition to limit encroachments • 15 USC 3715 – Permits federal agencies to lend use of its lab facilities to state and local governments, and educational institutions and certain nonprofits dedicated to improving science, mathematics and engineering education • 10 USC 2194 – Permits DoD to loan, or to transfer surplus material and equipment to educational institutions and certain nonprofits dedicated to improving science, mathematics and engineering educations • 10 USC 2539b – Permits DoD to make available to any person or entity, at an appropriate fee, the services of any Government laboratory, or sell, rent, lend or give samples for research purposes • 10 USC 2681 – Permits DoD to conduct commercial test and evaluation activities at a Major Range and Test Facility Installation, charging at least enough to cover all direct costs incurred in rendering test or evaluation

12. New Legal Authority for Partnership: NDAA FY13 – Section 331 • Enacted January 10, 2013 • Intergovernmental support agreements with state and local governments: 10 USC 2336 • “In General: (1) The Secretary concerned may enter into an intergovernmental support agreement with a State or local government to provide, receive, or share installation-support services if the Secretary determines that the agreement will serve the best interests of the department by enhancing mission effectiveness or creating efficiencies or economies of scale, including by reducing costs.” • May be entered into on a sole-source basis • May be for a term not to exceed five years • Installation support services are those services typically provided by local government for its own needs • These agreements shall not be used to circumvent A-76 requirements for competition

13. Section 331 Details • Not a contract: Can be entered into on a sole-source basis • Congressional intent: • FAR does not apply to support agreements • Use local wage rates to manage services

14. Barriers to Partnerships Some federal policies, legislation and regulations Installation-level implementation barriers • Resistance to change • No capacity to identify and access opportunities • Lack of experienced staff to develop partnerships • Inability to monitor performance/contract oversight • Many of the opportunities and obstacles are place-specific A partnership is more than a contractual relationship Individual and group attitudes can cause road blocks

15. The 4 “I”s of Partnerships Individual excellence • Both partners are strong and have value to contribute • Motivation to pursue future opportunities, not to mask weaknesses or escape a difficult situation Importance • Relationship fits the major strategic objectives of the partners • Plays a key role in long-term goals of the partners Interdependence • Partners need each other and neither can accomplish alone what both can do together • Have complementary assets and skills Investment • Partners invest in each other • Make long-term commitment by devoting financial resources