Public-Private Partnerships key to Organic Industrial Base

REDSTONE ARSENAL, Ala.-- The U.S. Army Contracting Command (ACC) is leveraging Public-Private Partnerships (P3) to preserve the Organic Industrial Base (OIB) and ensure Soldiers have what they need, when they need it. P3 agreements are arrangements between government agencies, or between government agencies and industry or educational partners, to provide products, services and research and development. P3 agreements can also be used to secure use of facilities or equipment for the partners.

"These partnerships are absolutely critical to the preservation of the nation's Organic Industrial Base which is key to not only the Army, but to overall military readiness," said Teresa Bonds, chief of the Strategic Programs Division, ACC-Warren, Anniston Army Depot, Alabama.

Bonds is one of two ACC contracting officers who has a separate Direct Sales warrant that allows her to establish P3 agreements. She was involved in developing the Army Materiel Command's P3 policy letter.

"Partnering allows the government and the contractor to work together in a 'win-win' relationship to ensure Army readiness," she said. "It also enhances the ability to respond to future contingency operations by improving operational efficiencies, lowering costs, leveraging organic engineering services, accelerating innovation and maximizing use of the capabilities and strengths of both private and public entities."

The Defense Acquisition University's Public-Private Partnering Guidebook explains how P3s differ from regular defense contracts. The book states, "Defense contracts specify the work tasks, articles, services and outcomes to be provided by the private-sector entity. They are generally one-sided in their directive requirements -- from the government to the contractor. Partnerships enable a more collaborative relationship in which parties from both public and private sectors are able to leverage and maximize the use of their resources in ways that were not specified in their underlying contracts."

Three types of P3 agreements exist: work share, facility use and direct sale. Work shares are co-production arrangements using Army and private sector facilities and/or employees and allow a program manager (PM) or the life cycle management command (LCMC) to use both private industry and a depot to perform work.

In an example of a work-share agreement, Bonds said a PM or LCMC "workloads" a depot to perform part of the work. Funding flows from the PM or LCMC to the depot for direct labor and also funds a private industry via a Federal Acquisition Regulation contract for managing parts. The parts and the work come together at the depot for the final product.

Facility use agreements allow a private entity to use government facilities or equipment. In this agreement, the private entity pays the government. For example, General Dynamics Corporation builds the Stryker combat vehicle but does not have a test track. Anniston Army Depot does, so General Dynamics pays Anniston Army Depot a fee to use its test track on a non-interference basis.

The third partnership is a direct sale. In this case, the private entity approaches the government for a manufacturing or production service, usually involving direct labor. For example, a firm that has a contract to build a vehicle but needs help painting the vehicle could work out an agreement where the government facility does the work. The PM pays the contractor to produce the vehicle, and the contractor pays the government facility for painting it.

Successful programs begin with an internal partnering triad consisting of the business developers, contracting officers and legal counsel, said Bonds.

"It is important that the triad has involvement from the beginning of the partnering opportunity," she said. "Each member of the triad contributes unique advantages to the partnering process."

Bonds pointed to two examples of how partnerships evolve over time from building new vehicles to maintenance and reset. The M113 armored personnel carrier program is a Foreign Military Sales/direct sales partnership between Aniston Army Depot and BAE Systems.

BAE provided supply chain management and Aniston provided almost 63,000 hours of labor, resulting in more than $4.3 million for the depot. Bonds said the partnership helped maintain the organic and private core skill sets, expanded Aniston's customer base, and improved Aniston's and BAE's P3 relationship.

She also highlighted Aniston's partnership with General Dynamics Land Systems for Stryker vehicles. Bonds said that the partnership began in 2002 as a $13.3 million direct sale/facility use partnership for building new Strykers.

In 2006, they added a $49.4 million work share/facility use partnership for battle damage repair and in 2009, they added a Stryker reset partnership for $152.4 million. In 2012, they formed a $19.5 million work share partnership for Stryker double V hull exchange.

"Partnerships require equal amounts of trust, commitment and acceptance of risk," said Bonds.

"With shared ownership of risk and commitment, partnerships are a sure-fire tool to ensure everyone involved is working towards the same goal of delivering what our Soldiers need, when they need it."