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Facility Use/ARMS Program. Sid Saunders Pendulum Management Oct 18, 2006 DTI Conference. AMC’s Public-Private Partnership -Goal and Objectives-. Goal: Improve the output and performance of AMC organic facilities through increased

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facility use arms program

Facility Use/ARMS Program

Sid Saunders

Pendulum Management

Oct 18, 2006

DTI Conference

slide2

AMC’s Public-Private Partnership

-Goal and Objectives-

  • Goal:
  • Improve the output and performance of AMC organic facilities through increased
  • participation by the private sector via industrial partnerships or cooperative
  • activities.
  • Objectives:
    • Enhance support to the warfighter via stronger cooperative partnership

relationships with industry.

    • Leverage industry’s best practices.
    • Improve organic operations and efficiencies.
    • Reduce and offset cost of ownership of organic facilities.
    • Leverage private investment in Army facilities.
slide3

Commercialize

When Economically Feasible at Minimum

Cost & Risk

Transforming the Industrial Base- Army Strategy -

  • Why transform . . . A Vision!
    • To meet National Security Missions
    • To integrate Lean/6 Sigma/Agile Manufacturing Concepts
    • To satisfy Defense Future Systems Requirements
    • To migrate to Public-Private Partnerships
  • Our Strategy . . .

Joint pull production . . . Reconfigurable and responsive manufacturing . . . Rapid acquisition

Integrated matrixed

capabilities… Maximum

flexible workforce

  • Ammunition Plants
  • Program Budget Decision 407, Ordnance Base rightsizing
  • SecArmy approved way ahead
    • Integrate
    • Consolidate
    • Divest
    • Lease
  • Armament Retooling & Manufacturing Support
  • Arsenals
  • Ground Systems Industrial Enterprise
  • Arsenal Support Program Initiative
  • Maintenance Depots
  • Centers of Industrial and Technical Excellence
  • Army Public-Private Partnership Plan
  • Lean Philosophy
  • 6 Sigma
  • Public-Private Partnerships
  • Legislative Reform
  • Financial Reform
  • Capital Improvement Program
  • Way Ahead . . .
    • Pursue Legislative and Financial Reform
    • Negotiate Plant Divestiture and Leasing Agreements & Develop the AMC Partnership Enterprise
types and authorities
Types and Authorities

3 Major Partnering Categories

Use of Government Facilities and Equipment (including leasing)

FAR Subparts 45.3 and 45.4

10 USC 2667

10 USC 2474

Workshares and Teaming

10USC 2469a

10USC 2474

Sale of Articles and Services

10USC 2208(j)

10USC 2563

10USC 4543

10USC 7300

22USC 2754

22USC 2770

Partnering Workshare - Co-production efforts wherein each contribute, independently, a pre-determined amount of resources (skills, manpower, facilities, equipment, etc.) to a program

Partnering – Facility Use - Partnering agreements wherein public and Private entities use govt facilities available as underutilized under The authority of Federal Acquisition Regulation

(FAR) Sub-part 45 and the Army’s Supplement To the FAR

Partnering - Direct Sales - Partnering agreements wherein articles or services for private industry as a sub-contractor

facility use agreement
FACILITY USE AGREEMENT
  • Authorized by FAR 45.302-1,-2
  • Allows commercial use by Defense Contractor for Consideration. The Defense Contractor acts as Landlord.
  • Consideration can be cash or services
  • Method being used to convert Army plants to commercial use to reduce cost of Army ownership
  • Can be used for all or part of a facility
  • Conversion of Army plants supported by ARMS Program -
arms contracting innovations

TENANTS

ARMS Contracting Innovations
  • The Government has No Privity of Contract with Subcontractor / Tenants.
  • The Facility Use Contractor negotiates with tenants for:
    • Applicable facilities usage rates
    • Site improvements to facilitate tenant operations
    • Application of appropriate financial incentives
    • Terms of tenant facility usage
  • The Facility Contractor then negotiates with the ARMS PM.
  • The ARMS PM emphasizes quick response to Facility Contractor tenant placement requests.
  • ARMS incentives fund the Facility Use Contractor, who in turn applies the funds to tenant site improvements.

NEGOTIATIONS

FACILITY CONTRACTOR

ARMS PM

arms program savings analysis fiscal year 2005
ARMS Program Savings Analysis, Fiscal Year 2005
  • ARMS savings to the Army/government were $34.3 million:
  • Rent from ARMS tenants $12.6 million
  • Overhead absorbed $20.3 million
  • Third-party sales $0.2 million
  • Services in kind $1.2 million
  • ARMS investments/expenses disbursed were $3.9 million.
  • The program’s average annual rate of return reached 9 percent in fiscal year 2005.
  • There were 93 tenants involved in the ARMS program, employing 1,743 personnel.
award winning method
Award Winning Method
  • National Council for Public Private Partnerships –Federal Project Award
  • Corenet Global Innovator Award
  • NAID/ADC Marketing Awards
facility use lessons learned
Facility Use - Lessons Learned
  • Facilities and equipment are assets
  • Commercial users will pay to use assets
  • Commercial users will commit more for long term use
  • Recent contracts utilize long term facility use contracts(25 year)
  • Long term facility use agreements look more like leases
comments
Comments
  • Both leases under 10 USC 2667 and facility use contracts are proven techniques to reduce costs by allowing commercial use of Army assets.
  • Army installations and organizations need to find a more effective way to integrate these solutions and use the best tool for the job
references
References
  • AMC Partnering Program
    • www.amc.army.mil/partnering
  • ARMS Program
    • www.openterprise.com
contact
Contact
  • Sid Saunders
    • ssaunders@pendulumsite.com
    • 210-288-2431