Defense Energy Support Center DESC Facilities Optimization

1. Defense Energy Support Center(DESC)Facilities Optimization

2. Optimization Optimization is the process of conducting short and long term studies to develop best fit solutions which will help to efficiently operate and maintain Department of Defense (DoD) petroleum storage and distribution systems.

3. Policy DOD 4140.25-M, CHAPTER 8, paragraph E(1), Management of Storage and Distribution Facilities States: �At the request of the Service, DESC will consider funding operation of the phase II GOCOs if economic benefit to DoD can be demonstrated.� 1. More recently we have started to develop the process thru which GOGO terminal could be funded. (bring flow chart)1. More recently we have started to develop the process thru which GOGO terminal could be funded. (bring flow chart)

4. Background In the late 80�s early 90�s efforts focused on reduction of facilities based on force structure reductions such as the Yorktown pipeline and North Carolina fuel distribution systems. In 1996, DOD MILCON funding constraints resulted in OSD direction to DESC & the Services to seek alternatives for Government-owned infrastructure More Recently, Defense Reform Initiative Directives (DRIDs) have directed DOD components to examine processes with a view towards using commercial infrastructure & minimizing DOD investment. 1. DRID #1 Defense Review Initiative Directory 1. DRID #1 Defense Review Initiative Directory

5. Optimization Process Refer to flow charts in hand outRefer to flow charts in hand out

6. Optimization Process Based on Project Management Principles Definite beginning and end with Milestone (MS) reviews in between Project begins with a request from the Activity via their Service Control Point (SCP) Initial site visit & requirements review (MS#1) Requirements refinements and solution development (MS#2) Implementation approval (MS#3) Projects ends with a post project review 1. Each milestone brief is preceded by an Oral Review Board (ORB) and then briefed to JB. JB must approve the process in order to proceed into the next phase. 2. any or all Milestone briefs will be made available to Mr. Jones. 1. Each milestone brief is preceded by an Oral Review Board (ORB) and then briefed to JB. JB must approve the process in order to proceed into the next phase. 2. any or all Milestone briefs will be made available to Mr. Jones.

7. Organization

8. Organization Need a flexible organization Small solid base of civil servants Expand and contract with volume of work Need project management, systems analyst and contracting skills 5 civil service: (1) 2003-14, (1) 2003-13, (1) 2003-12, (2) MF (3) contract employees total= 8 2. Have developed comprehensive training syllabus for MFs and developing one for CS personnel 5 civil service: (1) 2003-14, (1) 2003-13, (1) 2003-12, (2) MF (3) contract employees total= 8 2. Have developed comprehensive training syllabus for MFs and developing one for CS personnel

9. Teams High performance Team Horizontal across the Business Unit Service Control Point Representation Service & DESC Facility Specialists Service & DESC Lawyers Service & DESC Engineers Inventory, Logistics & Planning Specialists Environmental and Safety Specialists

10. Project Initiation Service Component identifies target and requests feasibility assessment Project Manager establishes a preliminary Plan of Action Project Manager establishes core members of the project team (SCP, Activity and Facilities Specialist) Team conducts a preliminary site visit Preliminary report briefed at Milestone #1

11. Requirements Refinement Service Control Point, Activity and DESC conduct a follow on site assessment. DESC prepares Assessment Survey Report with Service and Activity participation and coordination. Findings outline: Problems associated with current infrastructure and services Fuel infrastructure and services to be provided To include consolidation of facilities when feasible Recommendation of way forward: outsourcing, commercialization, status quo or joint use Estimated cost of Base�s current operations Economics of the review/cost savings expected Findings & proposed solution briefed at Milestone #2

12. Optimization Solutions Status Quo Revised Methods Outsourcing Commercialization

13. Study Results If economic benefit is expected, DESC will proceed with developing the Performance Work Statement (PWS), solicitation and contract award Service and Activity participate in developing, coordinating and finalizing the PWS. 1. In preceding with the acquisition phase, there is an increase in the non-product cost. 2. Once contract is established this is identified to OSD comptroller shop (Tom Laverly) so that he might make an adjustment to service budget. 3. As more sites are id for commercialization, expect a growth in the POM budget1. In preceding with the acquisition phase, there is an increase in the non-product cost. 2. Once contract is established this is identified to OSD comptroller shop (Tom Laverly) so that he might make an adjustment to service budget. 3. As more sites are id for commercialization, expect a growth in the POM budget

14. Benefits of contractor Owned & Operated Facilities (COCO) Private investment capital utilized Modern & more efficient facilities are provided in near term Reduced environmental liability Military manpower made available for more critical war fighting roles Overall savings to DoD 1. Service call on utilization of manpower1. Service call on utilization of manpower

15. Completed Projects Ft. Bragg, NC (Army) Contract Award Date: 17 Apr 98 Cost Savings: $7.5 M** Operation Date: 18 Nov 98 MILCON Avoidance: $6.5 M Contract Price: $8.9 M * 2 stations operating Schofield Barracks, HI (Army) Contract Award Date: 18 Jun 98 Cost Savings: $6.7 M ** Operation Date: 1 Feb 99 MILCON Avoidance: None *** Contract Price: $9.3 M * 1 station operating Ft. Bliss, TX (Army) Status Quo Best Solution M = million $ * Contract Price Over a 20 year period ** Net Present Value (NPV) over a 20 yr period *** No MILCON programmed at this location **** Contract Price Over a 5 year period ***** Net Present Value (NPV) over a 5 yr period

16. Completed Projects Ft. Jackson, SC (Army) Contract Award Date: 8 Jun 99 Cost Savings: $.4M ** Operation Date: 15 Dec 99 MILCON Avoidance: $1.3 M Contract Price: $6.2 M * 1 station operating ? 29 Palms, CA (USMC) Contract Award Date: 14 Jul 99 Cost Savings: $3.4 M ** Operation Date: July 2000 MILCON Avoidance: $2.5 M Contract Price $10.3 M * 1 station operating Ft. Hood, TX (Army) Contract Award Date: 7 Dec 00 Cost Savings: $4.5 M ***** Operation Date: February 2001 MILCON Avoidance: None *** Contract Price: $3.5 M **** Hunter Army AF (Army) Contract Award Date: 7 Dec 00 Cost Savings: $.7 M ***** Operation Date: February 2001 MILCON Avoidance: None *** Contract Price: $4.9 M ****

17. Completed Projects Ft Stewart, GA (Army) Contract Award Date: 1 Jun 01 Cost Savings: $1.8 M ** Operation Date: February 2002 MILCON Avoidance: $7.3 M Contract Price: $9.3 M * Ft Gordon, GA (Army) Contract Award Date: 04 Oct 01 Cost Savings: $.5 M ** Contract Price: $4.7 M * MILCON Avoidance: $1.6 M Operation Date: March 2002 (Tent.) MC Bases Okinawa Contract Award Date: 2/21/02 Cost Savings: $1.6 M Contract Price: $1,318,655 Contract Operation Date 4/1/02

18. Savings Contracts Awarded: $51.0 million Alternatives to MILCON: $19.2 million Program Savings to Date: $31.7 million (NPV over 20 yrs)

19. Defense Energy Support CenterMCAS 29 Palms Commercialization

22. Current & Planned Projects

23. Army Projects Projects in Progress Simmons AAF/ Camp Makall � Solicitation issued Ft Campbell, KY � Preparing for MS#1 brief Ft Carson, CO � Preparing for MS#1 brief Ft Lewis, WA � Preparing for MS#1 brief

24. Army Projects Planned Site Visits Ft Drum, NY Ft Polk, LA Korea USAEUR Ft Sill, OK Dugway PGFY04 Ft Leavenworth, KS Ft Dix, NJ Ft Benning, GA Ft Huachuca

25. USMC Projects Projects in Progress Camp Lejeune NC � Preparing for MS #2 brief MCB Camp Pendleton � Preparing for MS #2 brief MCAS Miramar � Preparing for MS #2 brief MCAS Yuma- Preparing for MS #2 brief 1. Okinawa - requirement for a local contract.1. Okinawa - requirement for a local contract.

26. USMC Projects Planned Site Visits MCB Quantico, VA MCAS Yuma, AZ MCRD San Diego, CA MCRD Parris Island, SC MCAS Beaufort, SC MCAS Cherry Point, NC MCAS New River, NC MCMWTC Bridgeport, CA MCAS Iwakuni, Japan MCAS Futenma, Japan MCLB Barstow, Ca MCLB Albany, Ga

27. Navy Projects FISC DFSP Management Transition: Norfolk Jacksonville San Diego Puget Pearl Harbor Yokosuka Other Navy DFSP Optimization: Sewell�s Point Yorktown

28. Joint Reserve Base (JRB) Projects Projects in Progress NAS Willow Grove-Preparing for MS#1 brief JRB Planned Site Visits NAS Fort Worth, TX NAS Atlanta, GA

29. Other Projects Craney Island Pipeline Study Pt Loma-Miramar Pipeline Study Central European Pipeline System (CEPS) study Moffett Federal Airfield Study (MS #2) Development of a model to provide estimated costs for commercial gas stations installed on Government sites. Optimization studies for transportation & distribution systems at Selma, NC, Port Mahon, DE & Jacksonville, NJ Harrisburg ANG (193rd SOW) Review (MS#1)

30. Keys: 1. Better more efficient facilities 2. Use of private investment capital 3. Better use of Military manpower 4. Net savings to DoD Keys: 1. Better more efficient facilities 2. Use of private investment capital 3. Better use of Military manpower 4. Net savings to DoD