GRU, Alm.del - 2017-18 - Bilag 25: Oversendelse af notater om Servicekontrakten på Thulebasen, i forlængelse af samrådet den 18. december 2017 om samrådsspørgsmål A og B, fra udenrigsministeren

Grønlandsudvalget 2017-18
GRU Alm.del Bilag 25
Offentligt

Introduction

Background

This report provides a review of Danish participation in United States (US) Defense

Projects at Thule Air Base (AB), Greenland during US Government Fiscal Year 2016

(FY16) - 1 October 2015 through 30 September 2016. This report is used as a basis for

discussion at the annual Permanent Committee meetings between the Kingdom of

Denmark and the US.

Part I

of this report provides a narrative analysis of expenditures made to Danish and

US vendors during FY16. Additionally, historical data is provided in table and figure

format for FY15 through FY16. An itemization, which provides a comparison between

the FY15 and FY16 elements, is provided in narrative form in Part I.

Part II

of this report includes a summary of expenditures for FY16. The Parts covered

are: (a) Base O&M; (b) Other Appropriated Funds; (c) Non-Appropriated Funds; (d)

Construction, Repair and Maintenance.

Part III

provides the future construction projections to include projected special base

construction, repair, maintenance and minor construction projects. The estimates for

FY17 through FY19 are based on the Danish Kroner (DKK) planning rate of DKK

6.7076 for FY17 and DKK 6.7738 for FY18 and FY19 = $1.00.

Exchange Rates

Generally, contract awards are made and funding is obligated in the market currency.

Figures contained in this report are based on then-year Danish Kroner (DKK) or US

Dollars (USD).

For Department of Defense (DoD) funding that is covered by the Foreign Currency

Fluctuations Defense program, the Office Secretary of Defense (OSD) establishes

foreign currency exchange rates to be used. The OSD exchange rate is established

prior to the beginning of the fiscal year, but can also be updated during the year of

execution. In FY16 the OSD established exchange rate was DKK 5.5561=$1.00. OSD

updated the exchange rate for obligations made after 1 February 2016 to DKK

6.7523=$1.00. The mid-year updated exchange rate was closer to the daily currency

exchange rates observed in FY16.

Summaries of total expenditures consist of multiple exchange rates and may not divide

evenly by any single exchange rate. The historical exchange rates for previous years

are provided in Part II of this report.

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GRU, Alm.del - 2017-18 - Bilag 25: Oversendelse af notater om Servicekontrakten på Thulebasen, i forlængelse af samrådet den 18. december 2017 om samrådsspørgsmål A og B, fra udenrigsministeren

Part I

Narrative Analysis

FY16 Danish participation in US Defense Projects at Thule AB totaled DKK

861,283,955 ($132,831,370 USD). This is a 9.83% decrease in DKK (2.92% decrease

in USD) from the FY15 figures of DKK 955,130,691 ($136,824,042 USD). The

decrease in DKK and USD was primarily due to the price change of the base

maintenance contract, some of which was offset due to the increase in construction

projects awarded to Danish firms.

The overall US participation at Thule AB for FY16 was $58,997,019 which was a

160.55% increase from the FY15 amount of $22,643,016. This increase was due to the

award of the High Altitude Electromagnetic Pulse (HEMP) Protection project at the Early

Warning Radar site to a US firm.

FY01-FY16 Data

Table 1 provides a comparison of Danish and US participation in percentages.

Table 1. Danish and US Participation

(Percentage comparison)

FY01

Danish

82%

18%

FY09

Danish

79%

21%

FY02

81%

19%

FY10

82%

18%

FY03

80%

20%

FY11

80%

20%

FY04

75%

25%

FY12

82%

18%

FY05

75%

25%

FY13

82%

18%

FY06

78%

22%

FY14

86%

14%

FY07

81%

19%

FY15

89%

11%

FY08

80%

20%

FY16

69%

31%

FY16 Itemization

Part II(a) Base Operation and Maintenance (O&M) Services

FY16 Danish Base O&M Services totaled DKK 406,257,784 ($64,807,677 USD). This

is a 51.08% decrease in DKK (44.08% decrease in USD) from the FY15 figure of DKK

830,389,542 ($115,894,182 USD). The difference in cost from FY15 was primarily due

to contract change which significantly reduced the cost of O&M services. The FY16

base contract cost was for DKK 392,784,867 ($62,811,159 USD). Additional funds

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GRU, Alm.del - 2017-18 - Bilag 25: Oversendelse af notater om Servicekontrakten på Thulebasen, i forlængelse af samrådet den 18. december 2017 om samrådsspørgsmål A og B, fra udenrigsministeren

were added throughout FY16 for additional supplies and materials at DKK 13,472,917

($1,996,518 USD). There were no O&M contract projects performed in FY16.

Danish and Greenlandic O&M labor decreased from

positions total in FY15 to

positions in FY16. As part of that total, part-time positions increased from

positions

in FY15 to

positions in FY16. The Base Maintenance Contract (BMC) is a non-

personal services, performance-based contract and the BMC contractor is solely

responsible for the number of personnel needed to perform the service.

Part II(b) Other Appropriated Funds

Other Appropriated Funds included expenditures for passenger and subsistence, airlift

with Air Greenland, ocean transportation with Royal Arctic Lines and telecommunication

services with TeleGreenland. Total Danish, participation in Appropriated Funds

expenditures for FY16 was DKK 42,426,518 ($6,805,069 USD), representing a 6.96%

decrease in DKK (9.09% decrease in USD) from the FY15 amounts of DKK 45,600,047

($7,485,653 USD). The decrease was primarily due to the fact that the US Government

reached the ceiling established in the Danish Sealift contract (shipping from Denmark to

Thule).

US participation in Appropriated Funds expenditures for US airlift and sealift for the

transportation of passengers and cargo from the US to Thule Air Base in FY16 was

$8,938,250 USD, a 27.24% decrease from the FY15 amount of $12,283,958 USD. The

decrease was partially due to the airfield runway project and the use of US Government

airlift versus the use of the airlift service contract during a period of time in FY16, and an

overall decrease in the cargo shipped to Thule using these US services contracts.

Part II(c) Non-Appropriated Funds

All items procured with Non-Appropriated Funds were in support of the Top of the World

(TOW) Club, Billeting, Morale, Welfare and Recreation activities, and the Base

Exchange (BX). Danish participation in Non-Appropriated Funds totaled DKK 6,895,979

($1,023,688 USD) in FY16, a 10.02% decrease in DKK (25.85% decrease in USD) from

the FY15 amount of DKK 7,663,988 ($1,380,526 USD).

US participation in Non-Appropriated Funds totaled $2,008,945 USD in FY16, a 22.02%

increase from the FY15 amount of $1,646,430 USD.

In FY16 the use of individual services contracts for TOW club food service workers was

ceased due to US Air Force regulations. This resulted in a direct decrease of Danish

expenditures. Other changes in the procurement of goods was based upon customer

demand.

Part II(d) Construction, Repair and Maintenance

FY16 Danish participation in Construction, Repair and Maintenance expenditures

increased from the FY15 expenditures of DKK 71,477,114 ($12,063,681 USD) to DKK

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GRU, Alm.del - 2017-18 - Bilag 25: Oversendelse af notater om Servicekontrakten på Thulebasen, i forlængelse af samrådet den 18. december 2017 om samrådsspørgsmål A og B, fra udenrigsministeren

405,687,406 ($60,194,937 USD), an increase in DKK of 467.58% (398.98% increase in

USD). This was due to the increase of new construction project activities such as the

construction of Thule Consolidation 1, renovations for dormitory Building 97, and repairs

of airfield pavement. These contracts were all awarded in FY16 and some will span

over two or more years with decreasing cost in the later years.

US participation in FY16 Construction, Repair and Maintenance expenditures was

$38,218,708 and an award was made to a United Kingdom (UK) based vendor for

$796,828, making the total non-Danish expenditures $39,015,536. This significant

increase from the FY15 expenditures of $0 was due to an award of a major construction

project, the High Altitude Electromagnetic Pulse (HEMP) Protection project at the Early

Warning Radar site. The award to the UK vendor was accomplished due to a lack of

Danish or Greenlandic bids received for a specific fuel hose product needed for

operations at Thule.

Part III Projected Special Base Construction, Repair, Maintenance and Minor

Construction Projects

Projected construction projects for FY17 through FY19 are summarized in Part III of this

year’s report. This includes new facilities construction, flattop renovations, mission

upgrades, consolidation efforts and other facility infrastructure projects. These

projections are merely estimates and are subject to change depending upon availability

of funding and prioritization of projects.

Employment

Total FY16 Danish employment represented in this report consisted of

employees

of which

were part-time/seasonal employees. Total FY16 US employment

represented in this report consisted of

employees of which none were a part-time.

Contracts at Thule are non-personal services, performance-based contracts and the

contractors are solely responsible for the number of personnel needed to perform the

service.

Summary

Thule’s location and support capabilities make it suitable to operate the Air Force’s vital

space superiority missions as well as conduct a variety of resupply and arctic research

operations by agencies of the US, Danish and Canadian Governments, academia, and

private organizations. Our enduring relationship with the Kingdom of Denmark makes it

possible for us to continue our partnership and accomplish critical missions.

On a daily basis, four cultures, American, Danish, Greenlandic and Canadian, work

together to ensure mission success. This requires quality work and tremendous effort

from each and every member of Team Thule in one of the most challenging

environments anywhere on Earth. Thule AB is an extraordinary base, with an

extraordinary mission, operated and maintained by extraordinary people.

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