1. 25 June 2008 Base Realignment and Closure 2005 Supply and Storage Joint Physical Inventory Working Group Meeting

2. 2 2 DLA Director’s Focus Extend the Enterprise –DLA employees, inventories, and logistic capabilities will be located forward Connect Warfighter Demand with Supply –DLA will establish and manage seamless business process links between the services’ materiel requirements and the source of the materiel – the American industrial base Deliver Supply Chain Excellence –DLA will exercise responsible leadership by proactively collaborating with national supply chain partners in developing solutions that best support the warfighter Moving closer to true end to end supply chain support

3. 3 3 BRAC 2005 Supply and Storage Base Realignment and Closure 2005 (BRAC 2005) Supply and Storage (S&S) recommendations achieve economies and efficiencies that enhance the effectiveness of logistics support to operational joint and expeditionary forces They reconfigure the Department of Defense logistics infrastructure to improve support to the future force, whether home-based or deployed

4. 4 4 Implementation Supply Storage and Distribution DoD Data Call Analysis Recommendations DLA/ MRPO Established Today Commission Study and Recommendation To President CONOP BRAC 2005 Supply and Storage Overview 2003 20112004 2005 2006 2007 2008 2009 2010 Presidential Review Congressional Review Business Plans to OSD Implementation Depot Level Reparables Implementation Consumable Item Transfer Implementation Privatization BRAC Became Law Implementation Planning DLA J-39 Established Implementation Complete

5. 5 5 Supply and Storage Governance Supply & Storage Joint Cross Service Group Materiel Readiness Component Advisory Group Director, DLA Corporate Board (Brief As Required) BRAC Implementation Group (Meet monthly) DLA –Business ManagerJoint Oversight MRPO - MRCAG Advisor Vice Director, DLA J-39/ MRPO J-3/4 (COO) OEB (Brief As required)

6. 6 6 BRAC 2005 Supply and Storage Decisions Decision 35 (Recommendation 176): Depot Level Reparable (DLR) Procurement Management Consolidation Decision 43 (Recommendation 175): Commodity Management Privatization Decision 51 (Recommendation 177): Supply, Storage, and Distribution Management Reconfiguration DLR Procurement Pillar: Transfer procurement management and related support functions for the procurement of DLRs from the Military Services to the Defense Logistics Agency (DLA) Consumable Item Transfer (CIT) Pillar: Transfer of function related to the management of consumable items from the Military Services to DLA Commodity Management Privatization Pillar: Transfer supply contracting functions for tires, packaged petroleum products, and compressed gasses from the Military Services to DLA. Disestablish (privatize) all other supply, storage, and distribution functions for these commodities Strategic Distribution Pillar: Designate 2 DLA Distribution Depots as Strategic Distribution Platforms (SDPs), mirroring the 2 existing SDPs. Designate remaining DLA Defense Depots (DDs) as Forward Distribution Points (FDPs), focused on local customers Maintenance Depot Supply and Storage (Retail Operations) Pillar: Transfer all supply, storage, and distribution functions and associated inventories in the military Service maintenance depots from the military Services to DLA

7. 7 7 DLR Procurement Management Consolidation The Decision …realigns or relocates the procurement management and related support functions for the procurement of depot-level reparables (DLR) to the Defense Logistics Agency.... Post-BRAC Business Model A Single, Integrated DLR procurement management provider supporting all Service requirements by FY 11:  A single face to industry for all new DLR procurement  DoD fully leveraging its DLR buying power  Reduced inventory  Commercial partners maintaining a single procurement management strategic partnership Saves DOD $ by leveraging all procurement buys and managing them within a single agency!

8. 8 DLR Way Ahead Detachment Stand-up Actions Completed As of 20 Jun 08

9. 9 9 Consumable Item Transfer (CIT) BRAC Language The Decision Services relocate consumable item budgeting/funding, contracting, cataloging, requisition processing, customer services, item management, stock control, weapon system secondary item support, requirements determination and integrated materiel management Inventory Control Point function to the Defense Logistics Agency  Updates long standing CIT initiative  Mission consolidation – reduces excess capacity An integrated consumable items manager supporting military Service requirements

10. 10 The Decision Transfer supply contracting functions for tires, packaged petroleum products, and compressed gasses from the Military Services to DLA. Disestablish (privatize) all other supply, storage, and distribution functions for these commodities  Saves management costs by transferring contracting functions to a single procurement agency-DLA  Saves facilities costs by eliminating storage function at CONUS facilities  Saves labor costs by eliminating receipt, store, issue functions at Distribution Depots  Reduces inventory investment Target of opportunity – reduce excess capacity, reduce costs Commodity Management Privatization

11. 11 Privatization and CIT Functions, Inventory, NSN Transfer Key Activities PrivatizationConsumable Item Transfer Compressed Gasses and Cylinders Chemicals and Packaged POL Land TiresAircraft Tires 2007-2011 Contract Award 30 Apr 072 May 0725 Jan 0729 Dec 06 Full Implementation 31 Aug 0814 Aug 086 Nov 0721 Oct 07 Depot Personnel Reduction Government to Contractor 30 May 09 13 Nov 0719 Oct 07 Consumable Item Transfers 16,762 Remaining Consumable Item Transfer Projection 32,902 Estimated Savings ($) $91.7M$69.6M$120.2M$34.8M As of 20 Jun 08

12. 12 Supply, Storage & Distribution Reconfiguration Decision Reconfigure wholesale storage and distribution around four regional Strategic Distribution Platforms (SDPs) Realign remaining DDs as Forward Distribution Points (FDPs) and consolidate their supply, storage, and distribution functions, and associated inventories with those supporting industrial activities such as maintenance depots and shipyards Enhances expeditionary force deployment and sustainment readiness Reduces excess capacity Eliminates unnecessary redundancy Strategic Distribution Platforms  Distributes workload on a regional basis  Satisfies wait time requirements  Improves strategic flexibility and surge options Maintenance Depot Supply and Storage  Consolidates all supply and storage functions at maintenance depots and shipyards  DLA responsible from receipt of requirements to delivery to mechanic  Reduces unnecessary duplication  Achieve minimum and necessary materiel at Forward Distribution Points

13. 13 Strategy Provide direct logistical support to depot production: –Provide supply, storage, and distribution support directly to industrial customers –Provide prepositioning of stocks as required by the industrial customers…based on production driven demand plan –Part request routed to closest hierarchical location and filled DLA Supply Chain Owner (SCO) is responsible for support DLA Site Commander: –Reports to the SCO –Responsible for day-to-day site operations –Provides single face to the customer

14. 14 Network locations are stocked independently based on customer defined requirements Regional Alignment San Joaquin Oklahoma City Warner Robins Susquehanna Corpus Christi Hill Barsto w San Diego Albany Jacksonville Anniston Tobyhanna Cherry Point Norfolk Richmond Puget Sound Columbus SDP FDP

15. 15 Military Service SS&D Functions and Inventory Transfer Key Activity Air ForceNavyUSMCArmy WR- ALC OC-ALCOO-ALCFRC East FRC SE FRC SW NNSYPSNSAlbanyBarstowTobyCorpusAnniston Implementa tion kickoff meeting held 22-26 Jan 07 11-13 Sep 07 22-26 Jan 07 17 Jul 07 25 Oct 07 27-29 Nov 07 27-29 Nov 07 Dec 09 Charters / POAMs developed 22-26 Jan 07 11-13 Sep 07 22-26 Jan 07 19Jul 07 25 Oct 07 27-29 Nov 07 27-29 Nov 07TBD Strategic MOU established 30 Nov 06 2 Oct 07 1 Jun 08 27-29 Nov 07 27-29 Nov 07 1 Apr 08 Strategic MOU signed 3 Aug 07 24 Jun 08 15 Jul 08 30 Jun 08 General Order completed 4 Sep 0711 Jan 0822 May 08 30 Jun 0829 Aug 08 19 Dec 08 16 Mar 09 24 Aug 09Mar 09Jun 10TBD Day One Functional transfer 15 Oct 07 3 Feb 086 July 0831Aug 0826 Oct 081 Feb 0910 May 09 19 Jul 09Sep 09Sep 10 To Be Model 15 Sep 11 3 Jan 11 Jan 11 TBD Inventory transfer 31 Mar 09 31 May 0931 Jul 091 Feb 1115 Mar 11 25 Apr 11 13 Jun 11 25 Jul 11Feb 10Feb 11TBD Final Org Designated 15 Sep 11 3 Jan 11 Jan 11 TBD Actions Completed As of 20 June 2008

16. 16 Mitigating Implementation Risk Where Is-As Is -- provides a trained/ready workforce upon transfer Revised DLA policies -- account for many of depot current practices… protection of stocks, materiel returns; minimum necessary, etc Single face to customer – DLA Site Commander has access to all DLA activities for immediate customer support Providing more tools/data to forward positioned DLA employees -- rapid response to customer needs Implementation IPTs co-lead by Military Service and DLA Implementation -- rolling out AF, then Navy, MC and Army Lessons learned captured and applied as implementation continues DLA Director, as well as direct reports (staff and field commanders) personally involved in successful BRAC law implementation Crawl – Walk - Run

17. 17 Way Ahead Demonstrate DLA Spirit – Forward Presence –Standardization and synergy –Decisions made at point of effect Metrics will evolve as we continue to track –“When performance is measured, reported, compared and rewarded…it becomes exceptional” EBS Forward –Process Improvement…transition to new personnel –Interface with Military Services as necessary Emphasis on cross-Military Service collaboration Implement Enterprise Solutions

18. 18 Backup

19. 19 Compressed Gases and Cylinders –Worldwide supply management through customer direct shipments –Awarded to Haas TCM on 30 April. Base period of 5-years with a maximum value of $1 Billion –Full implementation: May 2009 Chemicals and Packaged Petroleum, Oils, and Lubricants (POL) –Worldwide supply management through customer direct shipments –Awarded to SAIC on 2 May. Base period of 5-years with a maximum value of $1.34B –Full implementation: May 2009 Tires –Worldwide supply management of aircraft and land tires Estimated value – Land: $1.6B; Aircraft: $720M; both for 5 year base period with 5 year option –Land Tires Awarded to Prime: Michelin North America, Sub: SAIC; on January 25, 2007; Full implementation: November 6, 2007; –Aircraft Tires Awarded to Prime: Michelin Aircraft Tire Company, LLC; Sub: Lockheed on December 29, 2006 Full implementation: Aircraft –October 21, 2007 Commodity Management Privatization

20. 20 Vision Extend DLA’s core capability of managing supply chain processes closer to war fighter Focus on weapon system support Implement integrated demand and supply planning, sourcing, delivery, and disposal to produce point of consumption effects DLA / ICP’s DLA, USTC, DTCI and Distribution providers Joint Forces / COCOMS Suppliers Provide Service Support Meeting Time-Based Obligations