9
New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

Embed Size (px)

Citation preview

Page 1: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

New Opportunities for P3s on Military Installations

NCPPP ConferenceJuly 2014

Barry ScribnerCo-President, Public InstitutionsJLL

Page 2: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

2

Context of the Current Environment

• Significant funding reductions• Demands for efficiency• Post-9/11 security requirements• Force reductions = excess

infrastructure• Future BRAC ???• Multiple directives for energy

efficiencies and energy security

• Public Private Partnerships• Infrastructure optimization• Enhanced Use Leasing• Sharing services with local

communities• Privatization• Innovative Financing

Page 3: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

3

Military Installations: A SWOT Analysis

  Helpful to the Mission Harmful to the MissionInternal

Strengths People – strong leaders and experienced

workforce Ownership of an enormous and valuable

portfolio Massive recent recapitalization of

infrastructure portfolio

Weaknesses Sub-optimized stationing footprint across the

enterprise Sub-optimized footprints on individual

installations Limited expertise in understanding and working

with capital markets (“deal making skills”) Institutional aversion to risk; not entrepreneurial

External

Opportunities Create optimum mission-based arrangement Mothball energy inefficient facilities Make unused/non-excess facilities available

for uses that complement the mission Partnering on large-scale renewable energy Energy Savings Performance Contracting Share redundant services across installation

boundaries

Threats Historically inadequate funding No legislative support for a new BRAC process Reduction in Basic Allowance for Housing (BAH) Unpredictable national-level capital budgeting

process Vulnerable power grid Vulnerable cyber infrastructure Incomplete / constraining suite of authorities

Page 4: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

4

Mutual Benefits from Partnerships

Benefits to the DoD• Leap-ahead innovation (best

practices)• Innovative financing from capital

markets• Benefit from industry’s efficiencies• Benefit from industry’s deal

making skills• Industry has other skills and

experience not resident in the federal workforce

• Reduce overhead costs• Reduce long-term personnel costs• Create a surge capacity

Benefits to Industry/Communities• Competitive business

environment drives efficiencies• Government is a good credit

risk?????• Federal business can be

counter-cyclical to national economic trends

• Potentially large untapped market

• Creates great opportunities for small business

Page 5: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

Potential Partnership Opportunities

Services

• Base Operations Support

• Information Technology

• Security

• Finance and Accounting

• Morale, Welfare, Recreation

• Medical Services

• Transportation Services

• Library Services

• Vehicle & Aviation Maintenance

• Training and Education

• Lodging

Facilities/Infrastructure

• Barracks Modernization

• Office Space

• US Army Corps of Engineers Civil Works Infrastructure

• Divesting of Unused Assets

• Enhanced Use Leases

Utilities

• Water Supply

• Wastewater Treatment

• Energy Security

• Renewable Energy

5

Page 6: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

Challenges to Partnering

Organizational• Identifying predictable

revenue stream• “Inherently Governmental”• Aversion to Risk• Lack of trust between

government and industry• Memories of the A-76

process• Resistance to change• Least cost mentality vs. best

lifecycle value– Asset Management is critical

Human Capital• Training in private sector

finance and capital markets• Threat to job security• Trending losses of experienced

personnel (retirements, etc).• Limited deal making skills• Mismatch of skills and

emerging requirements

Legislative/Policy• Authorities• Budget Scoring• Policy• Federal procurement process

Page 7: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

7

Elements of a Successful Partnership

Market Demand(Programs/Cash Flow/Savings Opportunities)

Technical and Financial Expertise

(Skills) Investment(Money)

Page 8: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

8

Competing Interests within a Partnership

Capital Programmatic and Quality Control

Private Sector Interests Quick financial return Building to commercial standards Discipline of market forces

Government Interests Patience, long-term view Building to institutional standards “No fail” reliable operations Operate in incremental funding

environment

Page 9: New Opportunities for P3s on Military Installations NCPPP Conference July 2014 Barry Scribner Co-President, Public Institutions JLL

9

Conclusion

Process

• We need to remove obstacles to creating partnerships (the Army, Navy, Air Force, Marines, Industry, and National Policy Makers)

• Invest in advanced Asset Management capability to maximize efficiency

People

• Identify senior champions for every partnership

• Be aware of potential pending “brain drain”

• Retain the best deal structuring expertise available

Profit

• In a partnership, profits are shared

• Seek maximum opportunities within the DoD environment