Maintenance Trends and Full Cost Reimbursement

1. Maintenance Trends and Full Cost Reimbursement Ivan Graff, PE, PMP, CFM, CCE, LEED AP Office of Property Management Office of Acquisition and Project Management

2. Agenda • Motivation for tracking maintenance • “Work for others:” • Origins • Allowable expenses • Current trends in maintenance (thru 2012) Property Management Workshop

3. What’s Our Motivation? • Executive Order 13327 Federal Real Property Asset Management • Sec. 4(b): “The [Federal Real Property] Council shall consider, as appropriate, the following performance measures . . . • (i) life-cycle cost estimations associated with the agency‘s prioritized actions . . . • (iv) the operating, maintenance, and security costs at Federal properties, including but not limited to the costs of utility services at unoccupied properties” Property Management Workshop

4. What’s Our Motivation? • 41 CFR §102-84 Annual Real Property Inventories • Establishes the reporting requirement and its applicability • Federal Real Property Profile Guidance for Real Property Inventory Reporting • Based on EO 13327 and 41 CFR § 102-84 • Updated annually • Defines reporting element “Repair Needs” Repair Needs: the amount necessary to ensure that a constructed asset is restored to a condition substantially equivalent to the originally intended and designed capacity, efficiency, or capability. Property Management Workshop

5. “Why bother maintaining assets?” “[M]aintenance will be used to ensure real property asset availability for planned use . . .” – O430.1B § 4(d)(5) Answer: to sustain the mission • Perception: “Deferred maintenance • makes us look • irresponsible” Property Management Workshop

6. What’s Our Motivation? • DOE O 430.1B Real Property Asset Management • Section 4(d) Maintenance and Recapitalization • “Real property assets will be maintained in a manner that promotes operational safety, worker health, environmental protection and compliance, property preservation, and cost-effectiveness while meeting the program missions.” • Section 4(g)(2) Performance Goals and Measures • “Asset Condition Index . . . is the Department’s corporate measure of the condition of its facility assets. The ACI reflects the outcomes of real property maintenance and recapitalization policy, planning, and resource decisions.” Property Management Workshop

7. Deferred Maintenance in O 430.1B • O 430.1B, § 4(d)(1) states: • The maintenance program will include: • Condition assessments of real property assets, • A work control system, • Management of deferred maintenance, • A method to prioritize maintenance projects, and • Cost accounting systems to budget and track maintenance expenditures. Property Management Workshop

8. Work for Others: Origins • DOE Order 481.1C • The Economy Act (1932) • Purpose: reduce government spending • Applies – • To all federal agencies and only federal agencies • When an agency has funds in hand • When recipient - • Has needed authority and expertise • Will cost less than a private contract • Must have a written agreement with partnering Federal agencies Property Management Workshop

9. Economy Act Questions Are operations and maintenance allowable expenses? Are such expenses direct or indirect? Must the recipient have on hand all needed property? Who keeps the property? May the agency in need apply funds in advance? Does that obligate the funds? Property Management Workshop

10. WFO: Private Entities • Source - The Atomic Energy Act [amended] (1954), Section 33 [42 USC 2053] • Authorizes the Department to perform Research and Development for private entities. • Assumes the Department has sufficient resources to meet the private entities’ needs. Property Management Workshop

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12. What you are about to see . . . A whole lot of charts • Assumptions • Owned • Operating status • Buildings, trailers, and structures • Not programmatic structures (3000 series) 1 Operating 2 Operational Standby 6 Operating Pending D&D Property Management Workshop

13. Deferred Maintenance: FY 2012 Bottom Line: Reported to CFO a DM total of $4.719 B with 69%in acceptable condition Property Management Workshop

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17. Distribution of Deferred Maintenance

18. Includes owned, active assets (buildings, OSFs, and trailers) with corresponding property sequence numbers in FY 11 and 12

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21. Questions & Comments ivan.graff@hq.doe.gov 202-586-8120 Property Management Workshop

22. Backup Material Property Management Workshop

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30. Finding DM Contentment • We have learned to live with deferred maintenance, but . . . • We still conduct condition assessments at least quinquennially, • Even for leased assets when we maintain them, • We seek out the technologies that allow for better inspections, • We focus on mission critical and mission dependent before non-mission dependant, • We wish age were just a number, but • Fully funding maintenance will stabilize backlogs. Property Management Workshop