CON 280: Source Selection and the Administration of Service Contracts Market Research Exhibit IOSS Requirements

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Market Segmentation Facilities support services (NAICS code 561210, PSC code 33620) IOSS requirements may include the following services: landscaping, housing, transportation/motor pool management, engineering, janitorial, personnel management, security protection, financial management, food services, airfield management, port support Market Size $22B market Market Growth Market is projected to be entering a period of recovery Market Share Over 1500 firms total 4 largest firms account for 27.6% of sales Government Market There has been a tendency for federal government to self-perform some of these services Pressure to reduce costs could lead to increased outsourcing, if the financial case can be made Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Value Chain Basic services value chain, with inputs of Time, Knowledge, Equipment, and Systems Cost Structure Labor is the major cost component Cost Drivers Local and job-specific wage rates Use of labor-saving equipment Pricing May vary by specific service component Cost plus incentive fee was the most common type of contract in the commercial sector Encourages continuous process improvements Promotes supplier-customer partnership Flexibility in responding to emergency or crisis Visibility into performance and costs Fixed overhead rate for life of contract has been used in some contracts 50-50 share ratio has been used in some contracts Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Pricing (cont’d) Typical Profit Margin rate: between 5% and 9% Typical G&A rate: 7% Typical Overhead rate (assumed to be indirect expenses/direct labor): 40% Industry standards for the fee percentage are between 2% and 8%, depending on company performance and risk Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Small Business Approximately 750 firms with fewer than 10 employees There is a high percentage of small businesses in many of the service industries included in IOSS requirements (e.g., 86% of landscaping firms have fewer than 10 employees) The small business size standard for NAICS code 561210 is $35.5 million Industry survey suggests a reasonable small business subcontracting participation target between 20 and 50%, with most responses in the 25-35% range Competitive Dynamics Management/service integration expertise is a potential barrier to entry for firms that want to handle large (>$100M) requirements Some firms provide service only within a specific geographic region Large firms are generally better positioned to provide the full range of services required; competition among these firms may be great Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Market Trends Decrease in small businesses serving as prime contractors (often due to the complexity of managing a large number of integrated services), with increased participation as subcontractors focused on a sub-set of the services required Best Practices Use of integrated service providers for IOSS requirements Broader range of skill sets across the labor pool, so workers become fungible resources Performance Metrics Specific performance metrics will vary by service but are generally based on : Customer satisfaction Performance results Response time (“regular” and emergency) Up-time/availability (e.g., for motor pool) For Government: Small Business goals Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Market Research Topics Data Performance Metrics (cont’d) Sample performance thresholds include: 100% availability of essential base infrastructure services Acceptable Quality Levels (AQLs) 99% achieved 25% base operating cost reduction over 5 year period Source: www.census.gov, IBIS World; Censeo Analysis

Market Research: IOSS Requirements (cont’d) Potential Sources Company Size Interest Aleut Facilities Support Services Alaska Native Prime or Subcontractor Applied Planning Internations Inc, WO, SDB Partner or Subcontractor Arctic Slope World Services/DBA ASWS Bechtel National, Inc Large C. Martin Company, Inc 8(a) CSC Applied Technologies LLC Del-Jen Inc Prime Diversitech, Inc Dyncorp International EG&G Technical Services, Inc H&S Resources Corp WO Subcontractor ITT Systems Division Jacobs Engineering Group, Inc JanKell, Inc. Kellogg Brown &Root Services, Inc Largo, Inc. Lockheed Martin Mission Services ManTech NEDCO SDB Northrop Grumman Technical Services Parsons Raytheon Science Applications International Corp Sierra Lobo, Inc SIP, Inc. TEDCO Yang Enterprises Inc CON 280, Day 2

Market Research: IOSS Requirements ddd Market Research: IOSS Requirements Key Implications for the Acquisition Since many of the services included in IOSS requirements are in industries with a high percentage of small businesses, there may be political issues if small businesses risk being displaced by an IOSS contract The industry is projected to be entering a period of recovery, so key players may be hungry for additional business There is a high level of competition among large firms in the industry, which is generally good for potential buyers If our required service levels are higher than average, we may be a more expensive customer to serve and should therefore consider changing our requirements to be better aligned with Industry