The Army and Air Force Exchange Service

We go where you go to improve the quality of your lives through goods and services we provide

Society of American Military Engineers - 2020 Conference

Our Mission, Vision and Core Values

We go where you go to improve the quality of your lives

through goods and services we provide

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MISSION

VISION

CORE VALUES

Family serving family

Respect everyone

Courage to use good judgment

Be the preferred retail and service provider for the Military family through extraordinary customer experiences and value pricing

36COUNTRIES

Exchange By the Numbers

$8.7 Billion

REVENUE FY 2018 (includes concessions)

$2.4 Billion

In dividends over last 10 years

2.6 Million

School lunches served every year

Exchange Associates connected to military85%

1,250Wounded Warriors hired since 2010

$386Million EARNINGS FY 2018

$223 Million

Dividend to Soldiers, Airmen and their families

2,500FACILITIES

WORLDWIDE

1.1 Million

Combat uniforms outfitted in 2017

4,600 Associates deployed to combat zones since 9/11

Providing bakery goods/bottled water to support military overseas

7Plants

107Million

Meals served at Exchange restaurants

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DEMOGRAPHICS

Active Duty 1,407,891

Retiree 2,517,651

Guard & Reserve 1,080,874

Family Members 6,943,154

Civilians/Other* 1,030,945

Veterans 271,050

Total 13,251,565

*DoD civilians and eligible international military members

Serving the Military Family

RETIREE

FAMILY MEMBERS

ACTIVE DUTYGUARD/

RESERVECIVILIANS/

OTHER

2% 52%19%11%8%

VETERANS

8%

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Benefits Support Service Members & Families

100% of earnings are reinvested in military communities

• Quality of Life• Enable Readiness• Sense of Community

FY18 Sales (With Concessions)

FY18 Net Earnings FY18 Dividend

$8.7B $386M $223M

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Organizational Structure

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Construction Division (VP)

Gus Elliott

elliottgu@aafes.comCOM: 214-312-3911

ConstructionRichard Kourajian

RenovationsJ.P. Page

Darrin Rogers

EnergyBrian Lally

Contracting Division

Mitchell Burnett

burnettmi@aafes.comCOM: 214-312-3447

Construction

A-E Services

Leases

Equipment

Facility Management

Support Services

Real Estate (SVP)

Mike Smietana

smietanam@aafes.comCOM: 214-312-6579

Planning Division (VP)

Beth Goodman-Bluhm

goodman@aafes.comCOM: 214-312-6890

Business AnalysisShabeeb Tayara

Fixtures & EquipmentCasandra Winbush

Master PlanningDan Warner

Military Programs CPT James Green

Finance & Accounting

Janet Milum

milumj@aafes.comCOM: 214-312-3068

Capital Expenditures

Project Accounting

Fixed Assets

Utilities

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Operations Division Command Engineer

COL Juan Saldivar

saldivarjm@aafes.comCOM: 214-312-2107

Regional Facilities Management

Moises Pinedo

pinedom@aafes.comCOM: 214-312-6757

EnvironmentalRobert Largent

Greg Smith

Military ProgramsMAJ Thomas Piazze

Regional Support

MissionPlan, Develop, Construct and Maintain Exchange Real Estate Assets

VisionBe a Catalyst for Sustained, Long-Term Business Growth

Real Estate (RE) Directorate

1,730 Exchange Trailers

340 Exchange Tractors

14M Miles Driven

12th Largest Retail Private Fleet in U.S.

Our Logistics Operations Span the Globe

The Exchange is the Third Largest Shipper in the Defense Transportation System

10 Distribution Centers

48M Cases Shipped

2,527 Associates

35,835 Containers Exported

4,096 Containers Imported

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▪ RE interfaces with DoD installation leadership at all levels

▪ OSD, Army, AF

▪ Wing/Garrison, MAJCOM/IMCOM, Pentagon, Secretariat, DeCA

▪ Facility projects need BoD and Service approval (DD 1391)

▪ The Exchange is subject to DODI, AR & AFI rules on facilities &support

▪ Inter-Service Support Agreements

▪ Sharing 5-yr LRCP

We Build Partnerships

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We Build Partnerships

U.S. Congress

Army/Air Force

Exchange Board of Directors

Exchange CEO

Senior Vice President

Real Estate Directorate

OCONUS Commanders, Region SVP

CONUS Region SVPs

Office of the Secretary of DefenseOversight:

Construction Cost > $1M

Capital Cost > $1.5M

Capital Cost </= $200K

Capital Cost </= $100K

Capital Program Authority

110816 10

Investment Capital Cost < $1.5MSustainment Capital Cost < $5M

Capital Program Authority

ProjectInitiated

(PPQ)Project Authorized

(Charter)

Scope Definition

Design and Approval

ConstructionApproval and Commitment

Scope Defined(35% Design)

ConstructionCompleted

(Grand Opening)

BoDApproval

CongressionalRelease

YEAR 1 YEAR 2 YEAR 3+

BoD ViabilityReconfirmation

PlanningInitiation

Construction

Project Life-cycle

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Project Life-Cycle

PPQ – Project Planning Questionnaire

Sep-Oct Develop DD1391; coordinate w/BCEs & DPWs

Nov Exchange FY NAF Program Approved by BoD

Jan - Mar Finalize 1391s

Apr Submit to Services

May Services send to OSD

Jun Brief OSD on Program

Aug Brief Congress

Jan - May Program Approved

Project Approval Timeline

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Project Approval Timeline

Master PlanningAnalysis on 10-year cycle w/ installation

Continuous requirements validation

Requirements

Image Updates - Sales/Sq. Ft. basis (stress), facility age & condition

Shopping Centers – renovate vs new; MD concept shops; ship-from-store

Express Stores – QSR expansion; healthy snack options

Restaurants – Support food transformation (healthy alternatives & popular brands)

Locally identified needs

Where Projects Come From

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Where Projects Come From

MD – Merchandise Directorate

QSR – Quick Serve Restaurants

Factors Affecting IRRFactors Impacting IRR

A financially marginal project7% - 9.9%

Below 7%

10% and above

A financially desired project

A financially acceptable project

Retained earnings is source for capital investment

Each projects evaluated as a capital investment

Portfolio return must be positive -> GENERATE MWR DIVIDEND

Factors impacting IRR/NPV

APF support

Demographics, housing & proj military strength

Sales trends & existing condition

Affected facilities

Intra-urban location patterns –competitors; complementary activities

Dispersion vs comparison good clustering (DECA, nearby gas & restaurants, etc)

Urban growth

Transportation network

TOTAL Net Present Value = $10.8M

Total NPV = $7.7M (profit)

ExpressDual FoodMini-Mall

Project Cost IRR NPV$4.3M 19.0% $4.4M$3.3M 16.7% $2.6M$11.8M 15.5% $3.8M

ExchangeMini-Mall

Project Cost IRR NPV$20.6M 3.8% - $2.0M$3.8M 4.0% - $1.1M

TOTAL Net Present Value = - $3.1M

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Long Range Capital Program

030520 15

Long Range Capital Program

030520

$578

LRCP Planned Project Starts

As of 10MAR2020

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2020-2021 LRCP Project Starts

Facility Type of Work CY 2020CY 2021

(Proposed)

Shopping Center New / Expand / Renovate -0- -0-

Shopping Center Image Update 7 / $45M 8 / $75M

Express New / Expand / Renovate 1 / $7M 1 / $3M

Food Projects New / Expand / Renovate 1 / $2M -0-

Special Projects Build / Equip / Upgrade 6 / $19M 3 / $15M

Project Totals 15 / $73M 12 / $93M

Planned LRCP Projects (BoD Yr.. 2021)*

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10

1

Sustainment

Investment

*Proposed Project Start 2021-2022NC – new constructionIU – image updateMCS – military clothing sales store

2021 PROJECT

Ft Hamilton, NY NC Express Kiosk w/ Gas

RAF Lakenheath, UK IU – Shopping Center

JBER – Elmendorf, AK IU – Shopping Center/MCS

Andersen AB, Guam IU – Shopping Center

Stuttgart Panzer, Germany IU – Shopping Center

Yokota AB, Japan Construct DC Cold Storage

Ft Wainwright, AK IU – Mall/Food Court

Ft Irwin, CA IU – Shopping Center

Bolling AFB, MD IU – Shopping Center

Maxwell AFB, AL IU – Shopping Center

JBSA - Ft Sam Houston, TX IU – Repurpose PXtra

Conceived LRCP Projects (BoD Yr. 2022)*

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8

3

Sustainment

Investment

*Proposed Project Start 2022-2024NC – new constructionIU – image updateMCS – military clothing sales storeH&G – home & gardenCCC – Car Care Center

2022 PROJECT

Wiesbaden Hainerberg, AAF, Germany NC Express/Gas

Ft Gordon, GA NC Express/Gas

Camp Roberts, CA NC Express

JBMDL Dix, NJ IU – Shopping Center

JBLM McChord, WA IU – Shopping Center

Aviano AB, Italy IU – Shopping Center

Patrick AFB, FL IU – Shopping Center

Columbus AFB, MS IU – Shopping Center/Relocate Express/Gas

Charleston AFB, SC IU – Shopping Center

Misawa AB, Japan IU – Shopping Center/MCS

JBSA Randolph, TX IU – H&G/CCC

Ft Riley, KS IU – Shopping Center

Wright-Patterson AFB, OH IU – Home & Garden

Moody AFB, GA IU – Shopping Center

Ft Carson, CO IU – Furniture Store

USAF Academy, CO IU – Shopping Center

Fairchild AFB, WA IU – Shopping Center

Construction / AE Services

Data / Geo (Title 1) / Design (Title 2)

Construction Management (Title 3)

New Construction / Renovation

Environmental / Energy

Store Support Services

Facilities Management Office (FMO)

Equipment / Fixtures

NBFF and In-house Food Equipment

Retail Store Fixtures

Office Furniture

Store Carpet and Flooring

Gas Dispensing

Fixture Logistics Installation Contract (FLIC)

Overseas Plants

Vehicles (non-GSA)

What We Procure

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What we Procure

NBFF – Name Brand Fast Food

A-E Contract Types

Small Projects – IDIQ Contracts

Set Hourly Rates

Individual Orders for each Project at FFP

Large Projects – Individual Contracts

FFP Contracts with design phases

Master Planning – IDIQ Contracts

Set Hourly Rates

Individual Orders for each Project at FFP

Environmental – IDIQ and Individual Orders

Energy Management – IDIQ and Individual Orders

FFP = Firm Fixed PriceIDIQ = Indefinite Delivery/Indefinite Quantity

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A-E Contract Types

Doing Business with the Exchange

http://www.shopmyexchange.com

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Doing Business with the Exchange

Thank You