Headquarters U.S. Air Force Fly – Fight – Win Ms Kathleen Ferguson Deputy Assistant Secretary of the Air Force Installations Association of Defense Communities Brief Our Air Force…. Our Future 0

Fly – Fight – Win Meeting real-world requirements Doing right by our people Reducing excess Being more efficient Squeezing costs Setting priorities and sticking to them Making tough choices DoD Priorities 1 “…we launched a comprehensive effort to reduce the department’s overhead expenditures. The goal was, and is, to sustain the U.S. military’s size and strength over the long term by reinvesting those efficiency savings in force structure and other key combat capabilities.” Robert M. Gates, Secretary of Defense Statement on Department Budget and Efficiencies, January 06, 2011

Fly – Fight – Win Continue to Strengthen the Nuclear Enterprise Partner with the Joint and Coalition Team to Win Today’s Fight Develop and Care for Airmen and Their Families Modernize Our Air, Space and Cyberspace Inventories, Organizations and Training Recapture Acquisition Excellence Air Force Priorities 2 “…our approach has been, and remains, to ensure we balance investments across our core functions, and focus on the combat and enabling capabilities necessary for joint and coalition warfighting at any point across the potential spectrum of conflict.” Michael B. Donley, Secretary of the Air Force “State of the Air Force”, September 13, 2010 …by reducing overhead and support functions and shifting resources to warfighter and readiness programs

Fly – Fight – Win 3 Efficiencies and Enhancements Efficiencies Reduce Overhead/Support Functions Numbered Air Force/Air Operations Center Consolidations Weapon System Sustainment Reduce Energy Consumption Information Technology Reduce Personnel Overhead Streamline Logistics CAF Flying Training Review Program Management Administration/Knowledge-Based Contractors Facility Sustainment Restoration and Modernization Buy More Efficiently Evolutionary Acquisition for Space Efficiency Evolved Expendable Launch Vehicle Enhancements Force Structure, Modernization, Readiness Long Range Strike Family of Systems Normalize MC-12W Sustained Procurement of Reapers Economical Production of EELV F-15 Radar Modernization F-35 Simulators Recapitalizing MC-130H/W Improving B-52 Computer Infrastructure Increased Cost of Operations Pay and Allowances Weapon System Sustainment Requirements Growth Fuels Reduce Excess Overhead Costs and Apply Savings to Force Structure, Modernization, and Readiness EfficienciesFY12FYDP AF Initiated$3.4B$33.3B Dept Wide Total$2.8B$10.0B Dept Wide (Blue)$1.5B$7.8B Dept Wide (Non-Blue)$1.3B$2.2B Total$6.2B$43.3B

Fly – Fight – Win The Air Force Budget FY11 PB FY12 PB $170.8B $166.3B MILPERS O&M MILCON, BRAC & MFH RDT&E Procurement $119.6BBlueBaseline $119.0BBlueBaseline 4 Numbers may not add due to rounding

Fly – Fight – Win FY12 PB Request – Blue $ 5 Numbers may not add due to rounding MILPERS O&M MILCON, BRAC & MFH RDT&E PROCUREMENT NON-BLUE OCO Excludes Non-blue and OCO $166.3B

Fly – Fight – Win Military Construction, BRAC & Military Family Housing Numbers may not add due to rounding Supporting Weapon System Beddown While Meeting COCOM Needs & Taking Care of Airmen MILCON: $97M increase over FY11 PB Eight projects focusing on replacing lowest quality & BMT recruit dorms Projects for initial beddown of F-35 (Nellis, Luke) & F-22 (Hill & Hickam); aircraft realignment beddown projects for B-52 (Minot), F-16 (Holloman) Ten facility/infrastructure improvement projects supporting commanders’ most critical needs Supports COCOMS highest priorities: STRATCOM HQs, TRANSCOM air freight terminal (Guam), CENTCOM dorm complex (QATAR); three joint base barracks projects Continues Global Posture emphasis – three Guam Strike/aircraft maintenance projects BRAC focus now environmental clean-up for 28 Legacy BRAC closures and BRAC closures MFH: Improves 1,300 units in Japan & United Kingdom; maintains/oversees owned, leased & privatized units; will privatize 100% of CONUS, Hawaii, & Alaska homes

Fly – Fight – Win Focuses resources on new / emerging requirements and funds on-going missions Implements Secretary of Defense Efficiencies Initiatives moving support into mission Continues increasing Irregular Warfare capability for today’s fight – builds on progress made in FY11 to reach 65 CAPs by end of FY13 Supports 1.2M flying hours; sustains fleet of over 5.5K aircraft Continues to optimize flying hour program through simultaneous submission of OCO and baseline budget – balances peacetime training and contingency operations Weapon System Sustainment supports aircraft availability – funded at 65% (84% w/ OCO) Pay and benefits for 182K civilian personnel – no pay raise in FY11 or FY12 Holds end-strength at FY10 levels – with limited exceptions * Transfers 1.8K positions to RDTE Ensures day-to-day operations at 80 major installations -- facilities sustainment funded at 80% Includes operations at 2 space lift ranges – Patrick AFB and Vandenberg AFB Operation & Maintenance Reinvesting Efficiencies to Enhance Warfighter Capabilities Numbers may not add due to rounding

Fly – Fight – Win The Future: Managing Our Assets w/ Integrated Approach 8 Real Property as a Foundation - Adopted industry best practices - Space Optimization –CBRE/JJL - Streamlined demolition process - Enhanced Use Leasing CE and Infrastructure Energy Strat Plans Streamlined Work and Project Mgt - Activity Management Plan Concept - IT supports new business processes - Facility Condition Index/Mission Dependency Index to prioritize assets Global Energy Stewards - Renewable Energy Sources - Metering - Alternate Fuels - Enhanced Use Leasing - Improve Infrastructure/UP Centers of Expertise & Strategic Sourcing - Centralized MILCON /MFH/ERA - Facility Energy Center - O&M Reach back & Readiness services - Strategic Sourcing Division at AFCESA NextGen IT: FOC Centralized IT Mgt -Enterprise database -Transparent data - Enterprise architecture - BEA compliant

Fly – Fight – Win 20/20 by 2020 Reduction Goals 20/20 by 2020 Goals 20% net reduction in AF physical plant by % reduction in operating cost for remaining portfolio by 2020 FY06 20/20 by 2020 baseline = 401 MSF Net reduction goal = 80 MSF 20/20 by 2020 in perspective 80 Major installations in AF Average installation size = 4.8 MSF Langley 5.3 MSF Hurlburt Field 4.3 MSF Net SF reduction equivalent to ~16 installations to be spread across entire AF 9

Fly – Fight – Win Housing Privatization: Goal is 100 % Awarded/Under Const: 28,799 units ACC II ( Davis-Monthan, Holloman ), AETC Group I (Altus, Luke, Tyndall, Sheppard ), AETC Group II ( Columbus, Goodfellow, Laughlin, Maxwell, Randolph, Vance ), AFSPC Tri-Group ( Peterson, Los Angeles, Schriever ), AMC East ( Andrews, MacDill ), BLB ( Barksdale, Langley, Bolling ), Hickam I & II, Hill, McGuire/Fort Dix, Nellis, Offutt, Robins II, Vandenberg, USAFA, AMC West ( Tinker, Travis, Fairchild ), McChord ( w/ Ft Lewis – Army lead ), Falcon Group ( Patrick, Moody, Little Rock, Hanscom ), Lackland II In Concept Development: 16,586 units Wright-Patterson II Western Group: FE Warren / Malmstrom / Whiteman / Beale Southern Group: Shaw / Arnold / Charleston / Keesler Northern Group: Minot / Mountain Home / Cavalier / Grand Forks / Ellsworth / Cannon Continental Group: Seymour Johnson / Hurlburt / Eglin / McConnell / Edwards / Eielson Joint Base Elmendorf-Richardson ACC III: Second phases Dyess/Moody Privatization Status to Date Closed 37,851units (27 projects / 44 bases) Inadequates Eliminated through Award 35,153 Demolition Complete18,938 Construction Complete15,520 Renovations Complete8,189 % Privatized69% In Acquisition 16,586 units (7 projects / 24 bases) 69% 100% Completed Projects: 9,052 units Buckley, Dyess I, Elmendorf I & II, Kirtland, Lackland I, Robins I, Wright- Patterson I, Dover, Scott

Fly – Fight – Win Enhanced Use Lease 11 Current Project Pipeline Values Category Project Type Value Energy Solar $ 242.0M Coal $ 118.0M Waste-to-Energy $ 82.0M Cogeneration $ 40.0M Real Estate Mixed Use $ 166.1M Industrial $ 48.1M R&D $ 64.0M Hospitality $ 22.0M Medical $ 1.5M Real Estate $301.3M 38% Energy $482.0M 62% A:Current Pipeline ~$.78B Targeted Project Strategy Values Target Approach Example Focused on hot market, high revenue, and vastly available land bases with high EUL success to date to generate surge of revenue AFMC: Edwards, Hill (Solar, Geothermal) B:Mid-term ~$3.6B Portfolio Expansion Strategy Values Innovation Strategies Description Focused Execution Diversity portfolio with right mix of projects Reinvestment and Cost Avoidance Dividends Re-invest EUL proceeds into installation requirements generating cost avoidance and cost savings measures New Assets Natural Infrastructure and resources, equipment with excess capacity, available real property New Execution Models MAJCOM IDIQs, PPA/EUL, Fence to Fence EUL, Performance- driven support (RESS) New Technologies Nuclear, cogeneration, algae Energy 30% Traditional Real Estate 10% Innovation 60% C: Long-term ~$3.7B

Fly – Fight – Win QUESTIONS?