Attachment_0017_-_PWS_17_-_Armament_Retooling_and_Manufacturing_Support.pdf

Attachment 0017 June 20, 2018

PWS 17 – ARMAMENT RETOOLING AND MANUFACTURING SUPPORT

1. INTRODUCTION:

1.1. Purpose: The Armament Retooling and Manufacturing Support (ARMS) Program is a Congressionally mandated defense conversion/commercial reuse program established in 1993 (10 United States Code (U.S.C.) § 4551-4555, “ARMS Initiative”) to reduce Government ownership costs at Government-Owned Contractor-Operated (GOCO) Army Ammunition Plants/Depots while maintaining a readiness capability and to reduce the impact of defense downsizing on local communities. The Army, by allowing the use of GOCO facilities for ARMS efforts, enables the Contractor to reduce GOCO operation and maintenance costs. This PWS provides the requirements for execution of the ARMS program, which will be funded utilizing tenant rent revenue.

1.2. Applicable Documents: The following documents apply to Contractor’s performance of ARMS efforts:

a. 10 U.S.C. § 4551-4555 ARMS Initiative

b. 18 U.S.C. § 641 Public Money, Property, or Records

c. 10 U.S.C. § 2692 Storage, Treatment, and Disposal of Non-Defense Toxic and Hazardous Materials

d. ARMS Immediate Use Request Form

1.3. Contractor Requirements: The Contractor is authorized to use the GOCO facility for ARMS tenants and third-party use under the specific authorization and in compliance with FAR Part 45 and the ARMS Initiative (10 U.S.C. § 4551-4554). In no instance shall the Contractor consider Government approval for use of the GOCO facility in accordance with this PWS as an extension of the contract.

2. ARMS TENANT USE:

2.1. ARMS Tenant Use Agreement (TUA) Authorization:

2.1.1. The Government may authorize the Contractor to use Government assets (consisting of plant equipment, buildings, land, and infrastructure) in support of TUAs under this contract during the term hereof for time periods not to exceed fifty (50) years (25-year initial term with options for up to 25 year extension), notwithstanding the fact that the TUA period of performance may exceed the term of this contract.

2.1.2. The Contractor shall make a request to the Procuring Contracting Officer (PCO) for use of Government assets. The PCO has the sole authority to authorize use of Government assets. The approval for each use shall stand as a separate agreement under the authority of the contract. The Contractor shall inform the PCO of the expiration status of all TUAs and shall submit a proposal to exercise any TUA option, or any other TUA revision, at least sixty (60) days prior to expiration of the TUA. In the case where the current approved TUA period is a year or less in duration, the Contractor shall submit a proposal to exercise a TUA option, or any other TUA revision, at least thirty (30) days prior to expiration of the TUA.

2.1.3 The Contractor shall include a provision in all of its TUAs that tenants agree to hold the Government harmless if it does not approve a TUA for renewal or extension. The Contractor shall obtain written acknowledgement from the prospective tenant stating the aforementioned and provide the acknowledgement with the request package submitted to the Government.

2.2. ARMS Tenant Termination and Expiration:

2.2.1. The PCO may issue the Contractor a notice for termination of any TUA when the PCO determines it to be in the best interest of the Government. When this occurs, the following applies:

2.2.1.1. The Government and Contractor (representing its own and any tenant interests) shall negotiate a timetable for the cessation of operations and the return of the facility to the Army.

2.2.1.2. Termination settlement costs will be determined in accordance with FAR Part 49.

2.2.2. Upon expiration or termination of all or part of the LCAAP contract, the Government may establish a successor contract. The successor shall be required to accept the terms and conditions of the TUAs in place so long as such terms and conditions do not violate applicable laws and regulations. The Government will include the terms and conditions of established TUAs in the solicitation issued to obtain a successor.

2.2.3. In the event the Contractor ceases to be the operator for LCAAP while authorized TUAs remain in effect, the Government will release and hold harmless the Contractor, with respect to said agreements, from all responsibilities and those liabilities arising from acts/omissions occurring after the date that the Contractor ceases to be the operator of LCAAP.

2.2.4. Upon expiration or termination of all or part of the contract, the Contractor shall, prior to vacating the facility, ensure that all property is secure and in good operating condition, allowing for fair wear and tear. Each item of property shall be returned to the Government with all additions and any approved modifications, whether by the Contractor or by its subcontractors, vendors and/or tenants during the term of the contract. The Contractor shall ensure that all manuals and operating processes, and all intellectual property for operation and maintenance shall be with the machine or equipment upon return. The Contractor shall be responsible to ensure that all licenses are available and transferred to the Government.

2.3. ARMS Tenant Use Proposals and Agreements:

2.3.1. The Contractor shall simultaneously submit all ARMS proposals for tenant use and/or ARMS funding to the PCO, the Administrative Contracting Officer (ACO) and the ARMS team for approval. The Government will evaluate proposals based on compliance with the ARMS program objectives, merit, efficiency, the ultimate impact of the proposed use to the Army, and the soundness of the overall business decision. A description of the types of tenant use proposals and funding requests are below.

2.3.1.1. New Tenant Proposal: The technical proposal (also referred to as a Request for Use of Facilities (RUF)) for a new tenant to the installation shall include the ARMS Proposal Mandatory Checklist, ARMS Proposal Mandatory Safety Checklist, and all appropriate environmental documentation. If the RUF involves treatment, storage, or disposal of non-Department of Defense (DoD) hazardous material (i.e., waste), a request for waiver of the 10 USC § 2692 legislation shall be required. Technical proposals that require funding shall follow the funding request guidance of either paragraph 2.3.1.4 or 2.3.1.5.

2.3.1.1.1. The Contractor may submit a conceptual tenant use proposal (high-level description) prior to submitting a technical proposal to obtain preliminary review and tentative approval by the Government; however, a full technical proposal is required for final Government approval.

2.3.1.2. Proposal under a Blanket Use Agreement (BUA): A BUA is an agreement between the PCO and Contractor to expedite processing and authorization of tenant use for office, storage, and light manufacturing space in underutilized buildings or areas. The BUA authorization applies to TUAs that do not have a significant impact on human health or the environment in accordance with the National Environmental Policy Act (NEPA) and Army Regulation AR 200-1 (32 CFR Part 651), and do not involve treatment, storage, or disposal of non-Department of Defense (DoD) hazardous material as set forth in 10 USC § 2692. A BUA allows the Contractor to forgo submitting ARMS documentation prior to tenant occupancy. If a BUA is requested by the Contractor and issued by the Government, the Contractor shall notify the ACO concerning its intent to use Government assets on a non-interference basis. Such use shall comply with the conditions listed in the applicable BUA. The Contractor shall submit the ARMS Proposal Mandatory Checklist and the TUA to the Government thirty (30) days after the Contractor and tenant have signed the TUA.

2.3.1.3. Proposal for Existing Tenant: A proposal addressing expansion, extension, or revisions to an existing TUA shall include information applicable to the requested expansion, extension, or specific revisions. Proposals for existing tenants that require funding shall follow the funding request guidance of either paragraph 2.3.1.4 or 2.3.1.5.

2.3.1.4. ARMS Investment Funding Request: The Contractor may request ARMS investment funds from the Government for unique tenant proposal requirements such as environmental baseline studies, environmental assessments, design/engineering analyses, feasibility studies, and Government property/facility/infrastructure preparation, upgrades, renovations, and repairs, etc. If the Contractor requests ARMS investment funding to support a tenant use proposal, it shall provide supporting details of project cost, schedule, and a complete description/Statement of Work (SOW) for the project for approval/disapproval by the Government. ARMS property management and marketing expenses are to be borne by the Contractor as described in paragraph 4, “ARMS Property Management and Marketing Requirements”.

2.3.1.5. Immediate Use (IU) Funding Request: The Contractor may request ARMS IU funding ($50,000 or less) to support investment projects for existing or prospective tenants. The IU funding request shall include an ARMS Immediate Use Request Form (Appendix B), a concise scope, and cost/pricing data (a quote is sufficient). The following are examples of typical IU funding projects:

a. Consolidation of equipment, including movement of equipment to create work areas for ARMS tenants

b. Purchase, modification, or repair of equipment for use by an ARMS tenant

c. Building alterations, repairs, and modifications for immediate tenant use or occupancy

d. Tenant area alterations, including mowing, road/pathway repairs/restoration

e. Design, feasibility, and engineering analyses

f. Environmental Baseline Studies, which establish a baseline for existing environmental conditions prior to reuse for ARMS purposes

2.3.2. Property procured by the Contractor or tenants using ARMS investment funding shall become property of the Government, unless the Government specifically declines ownership, and the Contractor shall comply with FAR Part 45.

2.3.3. The Government shall not be held responsible for the Contractor’s breach of contract in TUAs, Contractor’s negligence, or if the Contractor is no longer the operating contractor. The Contractor shall include this provision in all TUAs.

2.3.4. The Government does not have privy of contract with the tenants. Each TUA is between the Contractor and the tenant.

2.3.5. The Contractor shall advise tenants in writing of all applicable Government regulations including, but not limited to, Federal, State, Local, environmental, safety, security, property, and maintenance regulations, and contract terms and conditions prior to such tenants occupying and/or beginning operations on Government property. The Contractor shall have procedures in place to verify that tenants abide by all requirements at all times while on Government property.

2.3.6. The Contractor shall provide a copy of each TUA to the PCO within thirty

(30) days of execution by the Contractor and tenant. The Government shall possess full rights to publish or post the TUAs for the purposes of future competition, conveyance, etc. The Contractor shall require the same agreement from all tenants and include the TUA publication release requirement in each of its TUAs to ensure tenants understand and agree to such terms.

3. TENANT CONSIDERATION DETERMINATION AND TENANT DUE DILIGENCE:

3.1. Consideration to the Government for tenant use shall be in accordance with FAR Part 45 and FAR 52.245-9. Tenants can be ARMS commercial tenants, other Government entities, and/or the Contractor. Consideration can be in the form of tenant rent or services-in-lieu of rent. Paragraph 5, Table 1 addresses the distribution of the consideration.

3.2. The Contractor shall be responsible for collecting all consideration from the tenants and maintaining it in the Facility Contractor Account (FCA). The Contractor/ARMS Property Manager shall track, maintain, and provide the FCA transactions as requested by the Government. The FCA account will be monitored contractually. If at any time a tenant is delinquent, it is the responsibility of the Contractor to inform the PCO of the delinquency within forty-five (45) days and outline the corrective actions taken by the Contractor.

3.3. The Contractor is not responsible for defaulted consideration/rent payment(s) for a tenant, provided the Contractor has performed the appropriate due diligence in verifying the credit worthiness of the prospective tenant in accordance with commercial best practices and has taken the appropriate actions to recover the delinquent consideration/payment(s). The Contractor may use Dunn and Bradstreet, commercial trade references, bank references, etc. as credit sources to evaluate credit worthiness of a prospective tenant. Upon request, the Contractor shall provide the Government the results of the credit check along with the supporting documents.

4. ARMS PROPERTY MANAGEMENT AND MARKETING REQUIREMENTS:

4.1. ARMS Marketing Plan – The Contractor shall provide an ARMS Marketing Plan (CDRL A121). The ARMS Marketing Plan shall outline the Contractor’s overall marketing strategy to include, at a minimum, the following elements:

a. Survey of local commercial real estate market

b. Expected marketing efforts and programs

c. Target market (types of tenants)

d. Expected rental consideration and number of tenants for the next three years

e. Any areas of concern

f. Advertising and promotion

g. Customers

h. Market size and trends

i. Competition and competitive edge

4.2. ARMS Quarterly Activity Report – The Contractor shall provide an ARMS Quarterly Activity Report (CDRL A122). The Quarterly Activity Report shall, at a minimum, cover the following elements:

a. All areas of activity associated with current and future marketing activities

b. Current tenants

c. Current issues

d. FCA status for each Government Fiscal quarter

The Activity Report for the 4th quarter of the Government fiscal year shall address changes/updates to the ARMS Marketing Plan for the upcoming Government fiscal year.

4.3. Monthly Conference Call – The Contractor shall participate in monthly status calls with the Government ARMS Team to discuss current issues and best practices.

4.4. Annual ARMS Program Review and Workshop – The Government will hold an annual off-site program review/workshop, which the Contractor shall be required to attend. The annual meeting may be up to three (3) days. Any travel expenses for meeting attendance shall be borne by the Contractor as part of their ARMS property management and marketing responsibilities.

4.5. Annual ARMS Validation – The Contractor shall support the annual ARMS validation effort by tracking, maintaining and reporting records of cost, revenue, critical skills, jobs created, and benefits to the Army resulting from use of the GOCO under the ARMS program.

5. CONTRACTOR COMPENSATION AND INCENTIVE:

5.1 The Contractor Compensation and Incentive Fee (CIF) is that portion of the total ARMS consideration/rent revenue (cash) which is provided to the Contractor as compensation/incentive for performance of ARMS requirements herein. The Government calculates the CIF in accordance with the ARMS Revenue Distribution Table (Table 1) below. The Contractor will receive the CIF, calculated based on the current year total revenue, in the following year.

Table 1 ARMS Revenue Distribution

Annual ARMS Consideration (Cash Revenue)

Contractor Compensation/ Incentive

Fee (CIF) ARMS Project Allotment

Portion

Current year consideration (cash) is from 20% revenue loss to 4.99% revenue growth over the Baseline

20% (of total consideration)

80% (of total consideration)

Current year consideration (cash) is from 5% to 15.99% revenue growth over the Baseline

25% (of total consideration)

75% (of total consideration)

Current year consideration (cash) is 16% or more in revenue growth over the Baseline

30% (of total consideration)

70% (of total consideration)

NOTES:

1. ARMS consideration (revenue) generated at the GOCO during the current year as compared to the revenue generated during the prior year determines Contractor compensation/incentive. The “Baseline” represents prior year revenue. For example, revenue generated in FY20 will result in CIF being paid to the Contractor in FY21.

2. If the current year consideration decreases by more than 20% from the Baseline, the contractor compensation/incentive may decrease to 15% of the total revenue. Should there be mitigating circumstances, the PCO may decide to eliminate or reduce any decreased amount.

3. The Baseline is recomputed annually on the last day of the Government Fiscal Year or on a mutually agreed-to date consistent every year.

5.2. The Contractor will begin collecting the ARMS rent revenue and will receive its first CIF commencing with operational control of the facility. At this time, the FCA will become the responsibility of the Contractor.

5.3. ARMS Project Allotment portion of the FCA will fund the Contractor’s execution of approved ARMS projects for existing and potential tenants.

6. MAINTENANCE OF FACILITIES (ARMS USE OF GOVERNMENT ASSETS): The Contractor shall ensure each TUA incorporates the appropriate tenant maintenance responsibilities.

7. USE REVOCATION AND UNAUTHORIZED USE:

7.1. The Government will not revoke authority to use Government assets unless the Contractor fails to comply with the requirements of the contract, or the Government has a compelling need that precludes confirmed availability.

7.2. The unauthorized use of Government assets can subject a person to fines, imprisonment, or both under 18 U.S.C. § 641.

APPENDIX A

ARMS PROGRAM DEFINITIONS

“ARMS” refers to the Armament Retooling and Manufacturing Support Initiative Act of 1992 that was established in FY 1993 (10 U.S.C. § 4551-4555 “ARMS Initiative”).

“ARMS Property Manager” is the Contractor representative who manages/oversees the ARMS program under the Contract.

“Government Assets” consist of plant equipment, buildings, land and infrastructure.

“Government Property” means all property (real or personal) owned by or leased to the Government or acquired by the Government at the GOCO.

“Plant Equipment” means personal property of a capital nature used in manufacturing supplies, in performing services, or for any administrative or general plant purpose. It does not include special tooling or special test equipment.

“Request for Use of Facility (RUF)” is a proposal provided to the Government by the Contractor for tenant use of Government assets. JMC Regulation 715-7 provides the approval process for ARMS program use of Government assets by the Contractor at the GOCO on a non-interference basis.

“Revenue” is total (cash) consideration generated at the GOCO as a result of the ARMS program.

“Tenant” can refer to an ARMS commercial tenant, a Government entity or the Contractor.

“Tenant Use Agreement (TUA)” is an agreement/contract between the Contractor and a tenant that authorizes the use of Government assets by the tenant and documents the resulting compensation from the tenant.

“Third party” refers to the Contractor’s direct sales of products or services to the Government.

“Usage period” is the time period during which Government property is approved for use. It includes time to set up the property for such purposes, perform required maintenance, and restore the property to its condition code (less fair wear and tear), where applicable.

APPENDIX B

ARMS IMMEDIATE USE REQUEST FORM

ARMS IMMEDIATE USE REQUEST FORM

FACILITY NAME: DATE SUBMITTED:

EXISTING OR POTENTIAL TENANT: REQUIRED OCCUPANCY DATE:

BUSINESS DESCRIPTION:

SCOPE OF WORK

a. WORK TO BE ACCOMPLISHED:

b. PERFORMANCE OF WORK:

_______ IN-HOUSE

_______ COMPETITION

c. CONTRACTOR:

d. JOB SITE:

e. DATE/LENGTH OF PERFORMANCE:

f. REQUIREMENT FOR WORK/URGENCY STATEMENT:

BENEFITS TO GOVERNMENT

a. JOBS CREATED/DURATION:

b. REDUCTION IN FACILITY COST:

c. OTHER GOVERNMENT BENEFITS:

COST BREAKOUT

a. MATERIAL:

b. LABOR:

c. OVERHEAD:

d. FEE:

TOTAL FUNDS

REQUESTED:

CONTRACTOR SIGNATURE:

DATE:

ACO REVIEW

CATEGORY APPROVE DISAPPROVE

1. Technical Evaluation

2. Verification of Rates/Costs

3.

COMMENTS:

ACO SIGNATURE: DATE:

ARMS REVIEW

1. Appropriateness of SOW

2. Reasonableness of Costs

3. Availability of Funds

4. ARMS Team Recommendation

FUNDS AVAILABLE AND AUTHORIZED FOR THIS PROJECT:

ARMS PROJECT OFFICER SIGNATURE: DATE:

PCO REVIEW

1. Funds Available

2. Authority to Proceed

PCO SIGNATURE: DATE: