NC Military Business Center DoD Military Construction Trends and NC Program May 1, 2012

1. NC Military Business Center DoD Military Construction Trends and NC Program May 1, 2012

2. Agenda • Department of Defense budget trends • Army construction and engineering trends • Army NC FY12/FY13 snapshot • Navy construction and engineering trends • Navy/USMC NC FY12/FY13 snapshot • NCMBC resources, events and questions

3. DoD Budget • Budget Control Act of 2011 • $487b cuts over 10 years; higher than Bush budget • Sequestration: additional $500-$600b over 10 years • “Slowdown in spending – no procurement holiday” • Strategic guidance (Jan 2012): shapes military post- IQ/AF, post-Budget Control Act • President’s budget submittal, FY2013: $613 billion • $525b base; $88b overseas contingency operations

4. DoD Construction • NCMBC.us, “Federal Construction” page • SAME FY2013 DoD Program Briefings • NAVFAC • Army Corps of Engineers • USAF • DoD Energy Security

5. NAVFAC Trends FY2013 Program: • MILCON: $1.7b; Housing: $102m; BRAC: $165m • MILCON: Down from $3.8b in FY2012 • 58% Navy, 42% USMC • MIDLANT: 22% of workload, tied 1st (w/SW) • Acquisition strategy: • “the method in the DD1391…is the way it will happen” • MACC TO’s: “if can’t negotiate to budget w/#1, go to #2”

7. NAVFAC Trends Delivery method: • Design build (60%), Design bid build (40%) • Shift to more in-house (IH) design (shift AE to IH) • Maintain/enhance core competencies • Lowest cost; reduced funding for contracted services • Reduced workload facilitates transition • Design staff stay at FY2010 levels; 5% of design IH • IH RFP prep for all DB projects; IH design some DBB

8. NAVFAC Trends BIM: • Implementing “snale’s pace” • Issue is Navy IT system inadequacies • Two pilots: NAVFAC SE (FY12), NAVFAC SW (FY13) • NAVFAC not only designs/acquires; must run and maintain facilities

9. NAVFAC Trends Total Ownership Cost (TOC): • New tri-service tool to evaluate TOC of DB proposals • Uses automated Excel spreadsheets; replaces Energy and Sustainment technical factor • Focus on 7 facility types and major cost drivers: • Initial design and construction; 40 year energy costs; 40 year sustainment costs • Two FY12 pilots; implement FY13

10. NAVFAC Trends Energy Technology Clearinghouse • High demand for insertion of new technologies • Streamline integration of proven technologies • Help AEs/Government to select technologies • Regionally organized based on climate zones • Clearinghouse available APR 2012 (FBO.gov) • Future tri-services/DOE clearinghouse in development

11. NAVFAC Trends Overall trends • MILCON continue trend down to $1.2b to $1.7b annually (FY08 level) • OICC MCIEast is “winding down” • O&M-funded, SRM projects remain constant • Heavy focus in O&M projects on: • Energy efficiency • Security

12. Remaining NAVFAC FY12

13. Remaining NAVFAC FY12

14. NAVFAC FY13 Program

15. NAVFAC FY13 Program

16. NAVFAC FY13 Program

17. USACE Trends FY2013: “A Year of Transition” • Mission, force structure changes driving strategies • Facility Investment Strategies: • Sustain required facilities • Dispose of excess facilities • Improve energy / cost savings • Improve facility quality • Build-out critical facility shortfalls

18. USACE Trends FY2013 Program • USACE MILCON program: $4.9b (FY12: $9.1b) • Army MILCON: $2.1b (FY12: 44.3b, -55%) • DoD MILCON: $2.4b (FY12: $3.3b, -6%) • SOF, DeCA, DoDEA, DLA, Medical, etc. • Overseas contingency construction -80% • O&M funded, SRM projects: stable from FY12

21. USACE Trends Energy and Environmental • Energy Initiatives Task Force (EITF): • Huntsville District lead • Engage private capital • Supports goal, 25% renewable energy by 2025 • Purchase up to $7b in energy over 30 years • Net Zero master planning initiative: energy, water and waste

22. USACE Trends Project Delivery: • Centers of standardization, MATOCs evolving • Updating standard designs for energy • Establishing IDIQs based on region, not facility type • Multiple delivery methods: DB, DBB, adapt build • Adapt build: moving to energy as driving factor • LCCA: if provide enhancements, must provide LCCA for the enhancements

23. USACE Trends Project Delivery: • Life Cycle Cost Analysis (LCCA): required for all proposed enhancements • LEED: FY12 National Defense Authorization Act prohibits government from paying above silver • Congress wants competition, “Better Buying Power” • “More SB involvement, more local contractors” • If not two bidders on task order, will recompete

24. USACE Trends “Paradigm Shift” • Surge era to post-surge era • MILCON focus to SRM focus • Energy as consideration to energy as driver • MILCON transformation to innovation • Corps as service supplier to systems integrator

25. Remaining USACE FY12

26. Remaining USACE FY12

27. Remaining USACE FY12

28. Remaining USACE FY12

29. Remaining USACE FY12

30. Remaining USACE FY12

31. USACE FY13 Program

32. USACE FY13 Program

33. Agency FY13 Program

34. Senior Leader Perspective Dorothy Robyn, Deputy Under Secretary of Defense • Facility energy strategy: reduce demand, expand renewable supply, improve energy security • DoD installations, test-beds for energy technologies • Microgrids, efficient integrated buildings, nano-technology HVAC, on-site generation • DoD taking new technology risks ESCOs will not • Civilian renewable energy siting challenges

35. Senior Leader Perspective USACE and Air Force • 3 good things: • SRM will remain 90% of current program • Major increase in investment in energy projects • Barracks and QOL are still priorities • Worries • Cost, government buildings 35% higher than civilian • Selecting right technologies – and maintaining them

36. Senior Leader Perspective Rear Admiral Mossey (NAVFAC) • 3 good things: • SRM will remain 80% of current program • Major increase in investment in energy projects • MILCON is down – but $1.75b is still huge for Navy • Worries • Government may not be ready to own technologies that industry can provide, or maintain the facilities

37. Upcoming NCMBC Events • Consolidated Construction Teaming Forum (8 MAY) • Defense Contractor Academy (JUN – AUG) • NC Federal Environmental Symposium (13 JUN) • NC Federal Advanced Technology Symposium (17 JUL) • Defense Trade Show (7 AUG) • NC Aerospace Supplier Conference (14 AUG) • 2012 Federal Construction Summit (10-11 OCT)

38. Contact Information • Scott Dorney, Executive Director, Phone: 910-678-0190, dorneys@ncmbc.us • Sue Kranes, MILCON Initiative PM, 336-601-0446, kraness@ncmbc.us • Paulanne Page, MILCON Specialist, 910-330-8560, pagep@ncmbc.us • Carolyn Bunting, MatchForce Administrator, 910-578-2579, buntingc@ncmbc.us

39. NCMBC Resources

40. NCMBC Resources • Business Development Team • MILCON Specialists • Websites: MatchForce.org, ncmbc.us • Federal construction page (ncmbc.us) • Market entry checklist • Capability matrices (contractor, designer, supplier) • Spreadsheets (Forecast, MACC/MATOC, Primes) • Current bidding projects list • Summit, other event materials • Federal Construction Events

43. Checklist Presentations Spreadsheets

44. Forecast Spreadsheet Justification Data

45. Future MILCON Projects

47. Current Prime Contracts

48. Current Multiple Award Contracts

49. Current AE IDIQ Contracts

50. Construction Opportunities in NC - Updated Daily