1. 1 Base Realignment and Closure (BRAC) The Army’s Approach to Managing Resources 10 August 2005 Mr. Jeff Giangiuli Vice President CALIBRE

2. 2 Discussion I.Definitions of BRAC Savings and Costs II.Appropriation III.Results of Past Rounds IV.Management of Current Legacy V.Expectations for Current BRAC 2005 VI.Concluding Thoughts

3. 3 BRAC Savings Defined For Closing and Realigning Installations : Total Cost of Installation Operations - One-time Implementation costs - Recurring costs at Gaining Installations Recurring costs at Enclaves - = Net BRAC Savings Savings result from: Civilian personnel reductions Base Operations Support (BOS) cost reductions Sustainment Restoration and Modernization (SRM) cost reductions Reduced capital fund costs Cancellation of budgeted Military Construction (MILCON) projects Family Housing Operations cost reductions

4. 4 BRAC Costs Defined BRAC costs are the one-time, non-recurring costs that support the implementation of BRAC decisions. Costs are organized into 6 BRAC budget activities: BA1: MILCON BA2: Family Housing BA3: Operations and Maintenance BA4: Military Personnel BA5: Other Procurement BA6: Environmental Part of Army Total Obligation Authority (TOA) Budgeted, Appropriated, and Executed as an OSD account

5. 5 COSTSCOSTS ONE-TIME (FY90-05) BRAC 88 1,342 BRAC 91 1,369 BRAC 93 285 BRAC 95 2,560 5,556 BRAC MAKES $ENSE ($M) SAVINGSSAVINGS FY90-05: BRAC 88 3,317 BRAC 91 3,612 BRAC 93 613 BRAC 95 2,229 9,771 ANNUAL RECURRING BRAC 88 260 BRAC 91 304 BRAC 93 68 BRAC 95 313 945 FY97 Break Even Year

6. 6 ENVIRONMENT 45% MILCON 31% O&M / Other 24% $2.5 Billion $1.7 Billion $1.3 Billion BRAC 1988 – 1995 Program Execution TOTAL ARMY BRAC FUNDING FY 90-05 Total: $5.6B

7. 7 Program Optimization  Program Review Crosswalks (PRXs) and In-Process Reviews (IPRs): Validates installations future year cost-to-complete (CTC) Validates path to Remedy in Place/Response Complete (RIP/RC)  Environmental Services Cooperative Agreements (ESCAs): Transfers both property and cleanup effort Accelerates the disposition of “Hard to Move” BRAC property Integrates cleanup and redevelopment to the benefit of local communities  Performance-Based Contracting: Eliminates lengthy clean-ups Demonstrates commitment to all stakeholders for cleanup of the property Limits risk to Army of cost overruns Resource Optimization

8. 8 (Continued) Fiscal Optimization  BRAC Action Scheduler (BRACAS): Financial optimization model that evaluates savings options based on the “scheduling” of various realignment and closure actions Critical to the efforts to “optimize” BRAC 2005 implementing actions to enhance BRAC savings  BRAC Optimization Model (BOM) Financial model that takes into account environmental regulations, legal agreements, key dates, and relative risk Output removes slack and budget conflicts

9. 9 Army/BRAC Path Forward for FY05 Finalize Last Four BRAC Rounds Maximize Use of Performance-Based Contracting Maximize Use of ESCAs and Early Transfers Review/Justify CTC Track BRAC 2005 Costs and Savings Link Environmental and Real Estate Stove Pipes Accelerate Conveyance of Real Property

10. 10 “Expectation of GAO and Congress is to implement BRAC at the published cost and achieve and track expected savings. BRAC 2005 Cost and Savings Audit Trail TABS COBRA BRAC Budget POM/ Budget Actual/ updates Cost$$$$ Savings

11. 11 Control Costs Army (ACSIM) Lead GO Team 22 Installations Aug – Sept 05 Review Senior Mission Commander Plans Reconcile COBRA Estimates with Developing Requirements Look at all options (e.g. Revitalize existing facilities, privatization) Employ Army Audit Agency (AAA) Teams Use Standard Designs (Site Adapt for local requirements) Use Commercial Specifications Centrally Manage Change Requests

12. 12 BRAC 2005 Savings Metrics Response to GAO/Congressional Interest COBRA analysis establishes savings baseline Implementing organizations develop savings estimates BRACD/ARSTAF evaluate estimates against baseline Deviations accepted based on DFAS data (accounting records) or similar evidence of actual cost of operations Dispute issues audited by AAA BRACD establishes BRAC 2005 savings budget baseline Army G-8 programs BRAC 2005 savings by appropriation/organization Army updates savings estimates annually based on actual execution data BRACD updates BRAC 2005 justification book to reflect savings

13. 13 Savings a product of Manpower Efficiencies Achieved as we finish MILCON and relocations Achieved upon Closure and Realignment Majority available in FY08 – 11 Track BRAC savings annually during POM build Additional Revenue from Land Sales Fair Market Value should reduce Federal and Public Benefit Conveyance property requests Rural Army properties are likely candidates for no-cost Economic Development Conveyances (EDCs) Capture & Use of Savings

14. 14 Concluding Thoughts Management and control of resources associated with implementing BRAC actions is difficult because of economic, mission, infrastructure, environmental, and political issues. An aggressive and committed resource management approach is needed. Use of private sector and/or market forces has helped to “accelerate” some past BRAC actions that were otherwise “languishing”. What worked before should be built upon for implementation of the next round to minimize one-time costs, accelerate timelines, and maximize recurring savings – especially with respect to the “hard to move” properties.

15. 15 Contact Information Mr. Jeff Giangiuli Vice President CALIBRE Phone: 301-921-4445 Email: jeff.giangiuli@calibresys.com