DEPOTS AND ARSENALS: What do all the changes mean?

1. DEPOTS AND ARSENALS: What do all the changes mean? Sheila Clarke McCready DEFCON National Conference February 11, 2012

2. Depots & Arsenals: AFGE Position Overview • Congress and the Administration must preserve the organic industrial base – our nation’s government-owned and government-operated (GOGO) depots, arsenals and ammunition plants – as DOD shifts military strategy and draws down force structure. • The Administration’s stated commitment to preserving the defense industrial base must include organic facilities. • Core workload must be GOGO; sufficiently robust to ensure efficiency; and include protections to guarantee that new systems are brought into the depots. Core should be extended to arsenals and teeth added to the Arsenal Act. • The 50/50 public-private depot law, guaranteeing a 50% floor of depot workload to the public sector, must be preserved.

3. Fiscal Year 2012 National Defense Authorization Act (NDAA) : Changes and Controversy • Amended Major Sections of Title 10 Related to Depots and Arsenals • Resulted In Conference Confrontation Between House and Senate • Generated Questions Regarding Public-Private Equilibrium • Mobilized Private Sector Campaign to “Undo” Selected Provisions • Intensified Scrutiny of Administration Implementation • Guaranteed Congressional Modification in the FY 13 NDAA • Created Opportunity and Challenge for Public Employees to Shape Title 10 Provisions

4. Fiscal Year 2012 National Defense Authorization Act: Depots • Reaffirmed 50/50 • Changed the Definition of Depot Maintenance and Repair • Amended the Definition of Core • Mandated Core Reports to Congress • Altered Acquisition Policy

5. NDAA FY 12: Depots – 50/50 • Remains unchanged. • Was not addressed in either the House or Senate bill. • Was referenced in other sections in terms of compliance. • Expect a request for a waiver for nuclear refueling of aircraft carriers. • Could see a request for a waiver from the Air Force. • Impact on calculation from changed definition of depot maintenance still unknown. • Concerned about the impact of opening the statute to waivers and the future ease of use of the waiver provision by DOD. • Suggested change by industry not expected to be considered by Congress.

6. NDAA FY 12: Depots – Repair and Maintenance Definition 10 USC 2460 BEFORE § 2460. Definition of depot-level maintenance and repair (a) In General.— In this chapter, the term “depot-level maintenance and repair” means (except as provided in subsection (b)) material maintenance or repair requiring the overhaul, upgrading, or rebuilding of parts, assemblies, or subassemblies, and the testing and reclamation of equipment as necessary, regardless of the source of funds for the maintenance or repair or the location at which the maintenance or repair is performed. The term includes (1) all aspects of software maintenance classified by the Department of Defense as of July 1, 1995, as depot-level maintenance and repair, and (2) interim contractor support or contractor logistics support (or any similar contractor support), to the extent that such support is for the performance of services described in the preceding sentence. (b) Exceptions.— (1)The term does not include the procurement of major modifications or upgrades of weapon systems that are designed to improve program performance or the nuclear refueling of an aircraft carrier. A major upgrade program covered by this exception could continue to be performed by private or public sector activities. (2)The term also does not include the procurement of parts for safety modifications. However, the term does include the installation of parts for that purpose.

7. NDAA FY 12: Depots – Repair and Maintenance Definition 10 USC 2460 After

8. NDAA FY 12: Depots – Repair and Maintenance Definition Pros Cons Removes exception for nuclear refueling of carriers, opening 50/50 Concerned about how they will define availability at lower echelons Doesn’t include “any similar contractor support” to capture PBL, etc. • Includes ICS and CLS • Clarifies as a function, regardless of location • Limits definition of software • Includes modifications without exception, clarifying as labor • Expands definition

9. NDAA FY 12: Depots – Core 10 USC 2464 Old (4)The Secretary of Defense shall require the performance of core logistics workloads necessary to maintain the core logistics capabilities identified under paragraphs (1), (2), and (3) at Government-owned, Government-operated facilities of the Department of Defense (including Government-owned, Government-operated facilities of a military department) and shall assign such facilities sufficient workload to ensure cost efficiency and technical competence in peacetime while preserving the surge capacity and reconstitution capabilities necessary to support fully the strategic and contingency plans referred to in paragraph (3). (5)The commercial items covered by paragraph (3) are commercial items that have been sold or leased in substantial quantities to the general public and are purchased without modification in the same form that they are sold in the commercial marketplace, or with minor modifications to meet Federal Government requirements. (b) Limitation on Contracting.— (1)Except as provided in paragraph (2), performance of workload needed to maintain a logistics capability identified by the Secretary under subsection (a)(2) may not be contracted for performance by non-Government personnel under the procedures and requirements of Office of Management and Budget Circular A–76 or any successor administrative regulation or policy (hereinafter in this section referred to as OMB Circular A–76). (2)The Secretary of Defense may waive paragraph (1) in the case of any such logistics capability and provide that performance of the workload needed to maintain that capability shall be considered for conversion to contractor performance in accordance with OMB Circular A–76. Any such waiver shall be made under regulations prescribed by the Secretary and shall be based on a determination by the Secretary that Government performance of the workload is no longer required for national defense. § 2464. Core logistics capabilities (a) Necessity for Core Logistics Capabilities.— (1)It is essential for the national defense that the Department of Defense maintain a core logistics capability that is Government-owned and Government-operated (including Government personnel and Government-owned and Government-operated equipment and facilities) to ensure a ready and controlled source of technical competence and resources necessary to ensure effective and timely response to a mobilization, national defense contingency situations, and other emergency requirements. (2)The Secretary of Defense shall identify the core logistics capabilities described in paragraph (1) and the workload required to maintain those capabilities. (3)The core logistics capabilities identified under paragraphs (1) and (2) shall include those capabilities that are necessary to maintain and repair the weapon systems and other military equipment (including mission-essential weapon systems or materiel not later than four years after achieving initial operational capability, but excluding systems and equipment under special access programs, nuclear aircraft carriers, and commercial items described in paragraph (5)) that are identified by the Secretary, in consultation with the Chairman of the Joint Chiefs of Staff, as necessary to enable the armed forces to fulfill the strategic and contingency plans prepared by the Chairman of the Joint Chiefs of Staff under section 153(a) of this title.

10. NDAA FY 12: Depots – Core 10 USC 2464 NEW

11. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

12. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

13. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

14. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

15. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

16. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

17. NDAA FY 12: Depots – Core 10 USC 2464 NEW Continued

18. NDAA FY 12: Depots – Core PROS • Establishes clear reporting that will assist in tracking DOD actions, including GAO review • Clearly states that core must be GOGO • Linked to National Military Strategy • Expands Core throughout the Lifecycle of a weapons system • Core is required to be established, including facilities, equipment, technical data, & trained personnel within 4 years of initial operating capacity • Requires the Secretary to assign sufficient workload to ensure cost efficiency and technical competence • Expands universe to include Special Access Programs • Retains A-76 Prohibition

19. NDAA FY 12: Depots – Core CONS • Can be waived – authority too broad • Not an enduring element of the national defense strategy • Financial infeasibility for nuclear aircraft refueling • Best interest of national security • Best interest of US for special access program • Waiver notification to Congress is after the fact • Carries commercial item definition too far • Limits core to depot maintenance rather than the broader category of logistics

20. Depot Maintenance – Acquisition Policy • FY 12 NDAA Section 801 amends Title 10 to incorporate certification requirements for core depot requirements into the Acquisition Milestone Process at Milestones A and B to better ensure the establishment of organic core depot maintenance capability. • Targeted to require depot maintenance decisions earlier in the acquisition process and avoid problems down the line. • Should make sure that technical data and other factors are procured that allow organic maintenance of key, mission-essential weapons systems.

21. Fiscal Year 2012 National Defense Authorization Act: Arsenals & Depots • Permanent and Expanded Authority for Army Industrial Facilities to Enter Into Cooperative Agreements With Non-Army Entities • Strongly supported by Rock Island Arsenal, working closely with Iowa and Illinois bipartisan, bicameral delegations. • House bill removed restrictions on the ability of Army industrial facilities to enter into cooperative agreements with non-Army entities, usually the private sector. • The Senate bill was more restrictive. • The Senate receded to the House. • This provision was designed to provide the ability of industrial facilities in the Army to partner to bring workload to their facilities and to mitigate against downsizing from the drawdown in Iraq and Afghanistan.

22. Fiscal Year 2012 National Defense Authorization Act: Arsenals & Depots • Minimum Capital Investments • The House modified the requirement for minimum capital investments for depots and arsenals by specifying the funds to be considered in calculating the investment and by adding Tooele Army Depot, UT. • The Senate modified the requirements and also added a number of GOCO facilities to the list that must receive capital investment by the Army. • AFGE opposed adding GOCO facilities to the capital investment funding allocation, which would dilute funding to GOGO facilities. • The Conference Report supported AFGE’s position and required DOD to submit a table showing funded workload performed by each facility for the preceding 3 fiscal years and actual investment funded.

23. Fiscal Year 2012 National Defense Authorization Act: Arsenals • Designation of Military Arsenal Facilities as Centers of Industrial and Technical Excellence (CITE) • The House bill contained a provision that allowed all military industrial facilities to be designated as CITES. • The Senate contained a similar provision. • AFGE supported the provision on behalf of GOGO facilities; however, requested a modification in the language to ensure that only fully organic facilities [GOGO and not and not Government-Owned, Contractor-Operated (GOCO)] could be designated as a CITE. • The Conference Report clarifies that Army arsenals, all of which are organic GOGO facilities, are designated as a CITE. • This should help establish greater workload for Army arsenals represented by AFGE.

24. Depots and Arsenals: Next Steps • Preserve 50/50 unchanged or to tighten waiver authority to prevent arbitrary and capricious use if DOD takes unprecedented action in light of changes to the definition of depot maintenance. • Save positive changes in the definition of depot maintenance and repeal those phrases that are less beneficial to depots. • Tighten the definition of core, particularly the tie between GOGO and core, and the reduction in the broad waiver authority. • Fight industry efforts to gut organic industrial facility and civilian employee protections • Improve the Arsenal Act to: • Include a core or financially efficient workload • Expand the required customer base DOD-wide rather than just the Army • Eliminate the arbitrary closure provision • Individual facility specific provisions that benefit organic industrial facilities as a whole

25. Industrial Facilities: Summary • Historical data reveals that organic depot level maintenance, as well as arsenal and ammunition plant manufacturing capability, provide the best value to the American taxpayer in terms of cost, quality and efficiency. • To ensure the best value to the taxpayer and the warfighter and to preserve the national defense through military readiness, DOD must effectively utilize organic facilities at optimal capacity rates. It reduces costs and returns taxpayer dollars to the community as economic multipliers. • DOD must sustain a highly mission-capable, mission-ready workforce. Personnel must be managed to funding levels and not to artificial civilian end-strength constraints.