AFSS Leadership Conference

1. AFSSLeadership Conference Marilyn Jackson-Brame and Joann KansierOffice of Competitive Sourcing Crystal Gateway Marriott Arlington, Virginia May 4, 2004 F E D E R A L A V I A T I O N A D M I N I S T R A T I O N • A I R T R A F F I C O R G A N I Z A T I O N

2. DOT IG recommendationon consolidation • FAA Studies • OMB Guidance • President's Management Agenda • Aging facilities and equipment • Retirement eligible workforce • Imbalanced workload • Inadequate funding of AFSS related programs • Potential for efficiencies PROBLEM FAA’s Business Case for Competitive Sourcing Outside Influences State of AFSS

3. What Can Be Expected From the AFSS A-76 Competition? Status Quo After A-76 (regardless of outcome) • Facilities: • 48 expiring leases • Substandard facilities • Equipment: • Aging • Does not meet all service requirements • People: • Inadequate/unbalanced staffing • Cost: • Continues to escalate • Facilities: • Upgraded/new facilities • Equipment: • Meet all service requirements • People: • Staffing efficiencies • Right of First Refusal * • Opportunities for second careers for retirees * • Cost: • Average 30% reduction beginning in FY07 • Incentives to continue implementing cost savings measures * Applicable if a vendor is the selected service provider

4. Impact on Employees • Staffing imbalances currently exist • No permanent hiring, increased overtime costs, and vacations denied • 46% of employees are eligible to retire at time of award • May receive full government pension and salary if private vendor is awarded the contract • Employees not eligible for retirement may receive severance pay in addition to a salary if hired by the vendor • Employees guaranteed Right of First Refusal • If current employees qualify for vendor vacancies they receive first offer • Federal regulations require mandatory separation of Air Traffic Control Specialists after age 56 under certain circumstances • This does not apply to the private sector • The Service Contract Act is applicable to Air Traffic Control Specialists • Wages must be in accordance with community rates • Discussion with Department of Labor

5. What the Office of Competitive Sourcing has Done for Employees • Enhanced communications with existing employees • Actively sought HR participation • Canvassed other Government Agencies to learn what they’ve done • Talked to vendors about their approach to personnel • Provided two resources to support HR actions and negotiations • Built provisions into the solicitation to incentivize hiring existing employees at current rates • Experience requirements • Emphasis on recruitment and retention • Pay current rate or substantiate why anything else is reasonable • AFSS A-76 Binders • Question & Answer Pamphlets • AFSS A-76 Video • Bi-monthly editions of “The Briefer” • Office of Competitive Sourcing Website

6. AFSS Acquisition Approach

7. “No one cares what you know until they know that you care." - Dr. Phau Opening Thought

8. Competitive Sourcing A-76 • Changes in the Circular: • Emphasis on Preliminary Planning • 12-18 month timeline • MEO “thrown into the mix” • FAR-Based • Alternative acquisition strategies available Methodology for Comparing Cost of Government vs. Contractor Performance of Commercial Activities 1955 1979 1998 2003 1966 Evaluation of Commercial Activities and Cost Comparison Concepts Formalization of OMB Circular A-76 Issuance of Supplemental Handbook of OMB Circular A-76 Introduction of Federal Activities Inventory Reform (FAIR) Act OMB’s Revised A-76 Circular Released President’s Management Agenda on Competitive Sourcing Evolution of Competitive Sourcing A-76

9. Unique Aspects of this Competition • Waivers Approved by CSO: • 15-month schedule • Use of trade-off source selection • Deviations approved by OMB: • 5 year base contract with consecutive 3 year and 2 year award term options • Weight of cost in proposal (to be less than 50%) • Staggered technical and cost proposal submission • Enable the MEO to team with a private vendor as a means to infuse capital into facilities, equipment, and labor • Communicate with the MEO in the same manner as other potential service providers • Supplement the cost proposal evaluation by using net present value

10. Ensure PWS reflects customer expectations Award one nation-wide contract for AFSS services 5-year base contract Consecutive 3 year and 2 year award term options Offer Government Furnished Property (GFP) Mandatory GFP provided for the life of the contract Optional GFP provided for 2 years Operational personnel must be U.S. Citizens Our Acquisition Approach

11. Conduct “trade-off” source selection based on the combination of overall benefits, risk, and cost for the delivery of effective and efficient AFSS services Evaluate technical proposals on approach to Phase-in Staffing and management Service delivery Performance management Utilize an incentive pool and credits to ensure quality of service delivery Application based on performance levels tracked by 21 unique metrics Our Acquisition Approach (cont’d)

12. High-Level Timeline FY03 FY04 FY05 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Acquisition Strategy Development Public Announcement to Source Selection is 15 Months A-76 Public Announcement 12/19/03 Issue RFI Narrow Eligible Offerors (6) * May occur at an earlier date if circumstances reasonably permit Final SIR Week of 5/03/04 One-on-One Discussions Cost Proposal 9/02/04 Development of Solicitation & PWS & QASP Release 1st Draft SIR 12/19/03 Release 2nd Draft SIR 3/05/04 Offeror’s Response Approve PWS Scope PWS Draft (FAA Review) Technical Proposal 8/03/04 Source Selection Source Selection Deadline 3/17/05 OCA Pre-Planning JRC I JRC IIA JRC IIB

13. Approaching the AFSS Unit Costs • ATO Unit Cost Calculations • FY03 Operating Costs / AFSS Count = $36 • Count includes Aircraft Contacted, Flight Plans, Advisories, Pilot Briefings • Activities the ATO Unit Cost Calculation does not account for (13M)* • If NOTAMS Issued and Broadcasts Recorded are counted the unit cost = $32 • If all activities are counted the unit cost = $20 • Broadcasts Recorded • SAR Services • Flight Data Actions • NOTAMs Issued • ADIZ Penetration Coordination Actions • PIREPS Received and Processed • Customs Notifications • FRZ Flight Operation Waiver Validation Actions • Law Enforcement Responses * These activities are not officially tracked - ATO-A conducted an informal survey

14. Providing Necessary Services at Reasonable Costs • Current system productivity analysis • Conducted analysis of high-productivity vs. low-productivity facilities • Improvements at "inefficient" facilities could yield labor savings of approximately 27% • Bottoms-up architectural analysis • Reasonable architecture and labor estimates based on consolidation described in IG report • Estimated that FAA could save 25% over current costs • Comparable efficiencies • NAVCANADA gained 28% savings after privatization • Center for Naval Analysis study of A-76 competitions found average savings above 30%

15. Establish Cost Ceilings

16. “It still holds true that man is most uniquely human when he turns obstacles into opportunities." - Eric Hoffer Closing Remarks • AFSSs have been overlooked for many years and do not have the facilities, equipment or staffing to perform effectively • A-76 is a way of infusing capital and updating technology to improve service delivery while significantly lowering costs • The Office of Competitive Sourcing will keep up its efforts to ensure a continuing focus on the existing workforce