Alamo Academies. Advanced Technology and Manufacturing Companies The Cities:

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1 Alamo Academies An Industry- Driven, Higher Education Program of Studies, Workforce and Economic Development Partnership: Solving the School- to- Careers Pipeline! The Alamo Academies is a national award winning, innovative, Science, Technology, Engineering and Mathematics (STEM) based instructional model operated by the Alamo Area Academies Inc., a non- profit organization, in partnership with industry, the Alamo Colleges, area high schools and cities providing America s youth with tuition- free career pathways into critical demand technical STEM occupations. Since inception in 2001, nearly 1,000 graduates received training utilizing contextualized industry- driven curricula resulting in 94% of graduates entering higher education or high- wage careers in Aerospace, Advanced Manufacturing, IT & Security, Nursing and Heavy Equipment. The San Antonio Express- News reported the Alamo Academies is, Perhaps the biggest education success story of the past decade in San Antonio. San Antonio was one of the first communities in the country to address the skills- gap issue through this unique partnership by founding the Alamo Academies a model recognized and commended by the U.S. Department of Labor, Manufacturing Skill Standards Council (MSSC), Texas Higher Education Coordinating Board (THECB), Texas Governor s Office and the Federal Reserve Bank of Dallas. The National Journal cited the Alamo Academies as one of the top workforce innovations in the country. The Academies provide the region a high- tech, high- skilled labor force by developing a pipeline of skilled technicians to staff new jobs and replace a retiring workforce in our targeted industry clusters. The program provides a college pathway for high school juniors and seniors to attain industry and academic certificates that lead to high- wage jobs or to further higher education while addressing critical workforce industry needs. Joe Wilson, Lockheed Martin, stated that We were trying to develop a strategy to replace a retiring workforce. We wanted to make sure we transferred the knowledge and experience employees had before they retired. We partnered with the Alamo Colleges to develop a pipeline of young workers prepared to take jobs in our industry. The rest is history. Conceptual Model: The Academies is a demand based education model. The process is triggered by industry engagement when they set target enrollment levels based on projected/quantifiable workforce demand. This is followed by a collaborative process identifying the curriculum pathway, recruitment, matriculation, and support systems utilizing a dual credit career academy model that allows students to complete high school and college graduation requirements in one of the demand occupations (Aerospace, Advanced Manufacturing, IT & Security, Nursing and Heavy Equipment). Students are bussed to the Alamo Colleges campus daily where they engage in 2 ½ hours of instruction needed to complete a one year technical college program of studies, as part of the Associate of Applied Science (AAS) degree pathway. During the 2 year program, students earn college credits at no personal cost allowing them to receive both a college degree and high school diploma and in addition are paid almost $3,000 through an industry internship. The program is universal so the only eligibility criteria is for students to be in good standing, be college ready, and desire to participate in target occupational pathways. To enrich their high school experience and build teamwork skills, students retain University Interscholastic League eligibility and many participate in extra- curricular athletic or academic activities. Upon graduation, students can either attain a high- wage/high- skill career in a demand occupation or continue with their higher education pathway. Partnerships: ALAMO ACADEMIES: An Industry- Driven, Higher Education Program of Studies, Workforce and Economic Development Partnership: Solving the School- to- Careers Pipeline! The Alamo Colleges Advanced Technology and Manufacturing Companies The Cities: The San Antonio Manufacturers Association San Antonio, New Braunfels, Seguin The New Braunfels Manufacturers Association School Districts: The Seguin Economic Development Council All greater San Antonio area school districts Health Care Industry and Local Hospitals Many private and charter schools Heavy Equipment Companies Bexar County Chambers of Commerce Port San Antonio The Greater San Antonio Chamber of Commerce Workforce Solutions Alamo San Antonio Hispanic Chamber of Commerce Aerospace Companies New Braunfels Chamber of Commerce Seguin Area Chamber of Commerce Information Technology Firms Each partner brings a unique contribution to the Academies. Alamo Colleges provide facilities, equipment and instruction; ISDs provide textbooks and round trip transportation; employers pay their intern s salaries; and cities fund operating

2 costs. Testament to the community support is the City of San Antonio- Alamo Colleges Interlocal Agreement that provides funds annually for Academies operations. The city council ordnance notes that "The Academies represent a cost- effective economic development investment for the City and also reinforces the stated goals of the City's Strategic Plan for Enhanced Economic Development." Academies students are preparing for careers in five of the six industry clusters identified by Workforce Solutions Alamo as high- wage, high- skill growth industries essential to the region s prosperity. Industry- Paid Internships: The Alamo Academies offer students an industry- paid internship in the summer between their junior and senior years. Students work full time for 8 weeks for a participating employer, earning approximately $3,000 for the summer. Local industries have agreed to provide hiring preference to successful interns after graduation and the majority of our industry partners have tuition reimbursement programs for our graduates. The following chart identifies just a few of the partners. Companies Providing Paid Internships to Alamo Academies Boeing* Rackspace* Toyota* Lockheed Martin* City of San Antonio* ITM* Valero Holt Cat 24 th Air Force Martin Marietta Materials CPS Energy HEB Chromalloy Gore Design DPT Laboratories PSI Chism Co. Standard Aero ASCO Alamo Industrial Hexcel Corp. Minigrip CMC Steel ROMCO Star Manufacturing *Alamo Area Academies Inc. Board Members Program Results: Several Major State and National Awards and Recognition: THECB Star Award for exceptional contributions meeting the state s higher education goals 2012 Cyber Patriot National Champions, the premier cyber competition created inspiring high school students toward careers in cyber security or other STEM disciplines MSSC Best Practices : The Alamo Academies program has developed one of the most successful models in the U.S. in integrating the courses and industry- recognized credentials offered by the national [MSSC] into their academic, for- credit curriculum. The Alamo Academies program is a model of the kind of community- wide strategy that, in MSSC s experience, provides the best framework for successful MSSC implementation. NSF- Automotive Manufacturing Training and Education Consortium selected the Academies one of five exemplary career pathway programs in the nation, stating in their report, The Alamo Academies model is the best program seen worldwide executing all major characteristics of a pathway model. U.S. Secretary of Labor Hilda Solis visited the Academies last year tweeting to her followers: Success stories at Alamo Academies today! Good hi- tech jobs await the students. The Community College Futures Assembly 2013 Bellwether and 2014 Legacy Award finalist. Over 1,000 industry certificates awarded. Data on Academies Graduates: 862 graduates. 94% continued: Higher education [community college/4- year institution] Obtained jobs with the Aerospace, Advanced Technology and Manufacturing or IT Industries Joined the Military Class 2013 earned over $420,000 scholarships to date. Last 4 classes over $2.0 Million in Scholarships. Graduates starting pay approximately $42,700: Salary: $30,500 ($14.65 x 2080 hrs) plus ~ $12,200 benefits Ethnicity: Gender: Hispanic: 67% African- American: 5% Males: 81% Caucasian: 26% Asian: 2% Female: 19% Academies (Year of Founding in Parenthesis) Immediate Post- Graduation Placements: Graduates Targeted Industry Careers Other/ Moved Military Aerospace Academy (2001) Information Technology & Security Academy (2002) Advanced Technology & Manufacturing Academy (2004) Health Professions Academy (2009) Heavy Equipment Academy (Starting Fall 2014) N/A N/A N/A N/A N/A Total Percentage 29% 7% 5% 59% Visit the Academies website: Higher Ed

3 AEROSPACE ISSUE PAPER Will Garrett Vice President Economic Development San Antonio Chamber of Commerce REAUTHORIZATION OF THE EXPORT-IMPORT BANK Request: Reauthorize the Export-Import Bank for four or more years to ensure U.S. manufacturing competitiveness and future opportunities for San Antonio commercial aerospace Background: The U.S. Export-Import Bank (Ex-Im) supports billions of dollars of U.S. exports and hundreds of thousands of export-related U.S. jobs each year. It does so by providing credit guarantees and other financial services that help foreign customers of U.S. companies secure the financing they need from commercial lenders to buy American products. The Export-Import (Ex-Im) Bank is the official export credit agency of the United States federal government. It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered in 2006 with five-year expiration. In 2012, the charter was temporarily extended to Ex-Im charges those foreign customers for its services, so it not only covers all of its operating expenses but earns a profit for American taxpayers. Ex-Im also has an excellent track record for risk assessment. The bank s current default rate is less than two percent. Here s a look at some key 2013 statistics that tell the Ex-Im story: Ex-Im supported export sales of over $700M in the San Antonio area in Ex-Im financing created or supported an estimated 205,000 export-related U.S. jobs. Ex-Im Bank authorized financing for a record high 3,842 export transactions, which totaled an estimated export value of $37.4 billion. Ex-Im Bank approved 3,413 small-business authorizations the highest number of small-business authorizations in the Bank s history. Ex-Im Bank provided over $1 billion to the U.S. Treasury from financing profits.

4 In the last five years (FY 09 to FY 13), Ex-Im Bank has assisted in financing more than $188 billion of U.S. exports and supported 1.2 million American jobs. Manufacturing was the industry with the highest authorized amount at $8.4 billion, surpassing Aircraft for the first time since Reasons to Support Reauthorization of the Ex-Im Bank Reason 1: The Ex-Im Bank provides businesses with the liquidity and confidence to accept new international contracts, to include industries such as aerospace, manufacturing and the oil & gas industry. The Ex-Im Bank s traditional financing for export products support businesses both large and small and include export credit insurance, working capital loans, loan guarantees and project finance loans. The Ex-Im Bank also provides express export finance products tailored to address short-term financing needs, liquidity and small business security. This helps finance manufacturing exports within the aerospace industry to include large commercial aircraft, helicopters, general aviation aircraft, and related goods. Reason 2: The Ex-Im Bank export credit support has helped U.S. companies compete successfully for major foreign sales of U.S. civilian aircraft. The biggest beneficiaries of these sales are small and mid-sized companies that supply major manufacturers with parts, systems and equipment. The aerospace industry benefits both from the initial sale to the original equipment manufacturer and even more so with aftermarket sales for maintenance, repair and overhaul. In the current federal budgetary environment, commercial export opportunities represent critical revenue diversification for aerospace suppliers. Reason 3: The Ex-Im Bank helps level the playing field for America s aerospace manufacturers who are competing with foreign companies backed by the low interest rates and government support. Aerospace companies are a critical element of our national and economic security. Ex-Im Bank support is important to U.S. aerospace manufacturers to compete in the global market place. Why is Renewal of the Export-Import Bank Important for San Antonio? San Antonio has long played, and continues to play, an important role in the global aerospace industry. From the nation s first military flight at Fort Sam Houston in 1910, Copyright 20XX Boeing. All rights reserved.

5 through the founding of Kelly Air Force Base in 1917 and its nearly 80 years of operation, to the establishment of Port San Antonio, San Antonio has served as an important asset in US defense aerospace MRO. However, defense aerospace MRO is declining while commercial aerospace is forecasted to grow significantly world-wide. The aerospace industry at Port San Antonio is aggressively moving to integrate commercial MRO into its business model. Therefore, the Ex-Im Bank s support of commercial airline sales, MRO and manufacturing overseas will provide increase commercial MRO business opportunities to San Antonio s aerospace industry. Aerospace is a long-standing and important industry in San Antonio, providing an economic impact of more than $5 billion annually. It is also an industry that provides an excellent source of good paying jobs and market opportunities for career and educational advancement. In 2010, the aerospace industry in San Antonio provided a $5.4 billion economic impact and employed over 13,000 workers with an average annual wage of over $58,000. In addition, employment in the aerospace industry provides excellent career opportunities. The aerospace industry s long-term success in San Antonio is tied to the growth of commercial maintenance repair and overhaul (MRO) through the continued sale of U.S. commercial aircraft and engines. Copyright 20XX Boeing. All rights reserved.

6 AEROSPACE ISSUE PAPER Will Garrett Vice President Economic Development San Antonio Chamber of Commerce T56 Engine Workload Status Background: Kelly Aviation Center (KAC) has performed T56 engine Maintenance, Repair and Overhaul (MRO) in San Antonio under a contract with the Oklahoma City Air Logistics Center located at Tinker Air Force Base, OK for the last 15 years. The T56 engine powers the USAF C-130H fleet. The current contract for the T56 workload ends in February KAC and their principle subcontractor, StandardAero, have achieved a highly successful T56 MRO performance record: o Excellent ratings from the USAF for the last 14 years o Mission readiness for the engine consistently meets or exceeds USAF requirements o During this period, engine time on wing has increased 40% o Repair turnaround times have been cut by 50% with near 100% on-time delivery and 99.9% defect free quality This MRO work provides over 800 highly skilled, high-paying jobs with an annual economic impact of over $160M to the San Antonio community. For the last three years, the Texas congressional delegation has forestalled the threat of directly insourcing the T56 work to Tinker Air Force Base, OK at the conclusion of the current contract. The USAF in 2013 conducted a competition among private sector companies to select the contractor for a new T56 engine contract. The new T56 contract will be for a two-year base contract with five one-year options and a six-month transition period. The KAC team submitted a contract bid last April that offered a 22% more affordable solution than the current contract. The USAF competitive solicitation included elements to facilitate insourcing the workload to the public depot at Tinker Air Force Base during any of the option years: o Winning bidder must provide training and process data o Defense Logistics Agency must be used as a directed source of supply, adding $100M in cost to a 7 year contract o Provisions associated with use of government furnished equipment adding $20M in cost. In late November 2013, the USAF informed KAC that they could not award because KAC was the sole bidder and price reasonableness could not be determined. The USAF offered an Undefinitized Contract Action (UCA) to address a potential gap in readiness coverage that KAC was willing to accept conditionally. 1

7 Following the UCA offer, the USAF requested a new proposal requiring Certified Cost and Pricing Data and invoking business system auditing requirements that, as commercial businesses, have never been performed on our systems. According to the USAF timeline, contract award will be delayed eight to twelve months, denying the USAF and taxpayer immediate savings of over $1.0M per week. KAC is advocating a swift award based on our submitted proposal and the execution of the valid competition in 2013, as provided by the Federal Acquisition Regulations. Concerns The USAF has retained insourcing as an option with some parts of the USAF pushing to insource the T56 engine workload to Oklahoma City at the conclusion of the two-year base contract or sometime thereafter. The T56 competition mandated a compete and compare provision that calls for a comparison of the industry-winning bid to the estimated price of performing the work in a depot based on a USAF business case analysis (BCA) that is not made public and is not subject to review. If the USAF developed estimate suggests they can perform the work at a lower price, past experience indicates the USAF will recommend the T56 be insourced to the public depot. The solicitation included costly provisions designed to ease insourcing. These provisions added $120M in costs to the private sector bid. It is vitally important that in the compete and compare process all public sector costs are accounted for and that there is full transparency for all public sector costs associated with the BCA and the ultimate comparison to private sector costs. It is also important to consider the transition risk of a large and complex workload from a high performance supplier as part of the decision process. Key Messages Port San Antonio and the entire San Antonio community are deeply appreciative of the congressional delegation s commitment over the last three years to provide the opportunity for the KAC & Standard Aero team to compete for the T56 engine workload. There are lingering questions regarding the BCA being conducted as part of the compete and compare process in light of the apparent intent of the USAF to insource at the conclusion of the two-year base contract or soon thereafter: o Will the USAF BCA for the T56 workload account for total public sector costs? o Since the T56 RFP structure drives up industry costs, will the comparison include the benefit of the additional $120M in cost savings available by eliminating those RFP provisions that facilitate insourcing? o Will transition risk be included in the insourcing analysis? These questions require ongoing vigilance on the part of all San Antonio stakeholders with an interest in the T56 workload and the high quality, high paying jobs that it brings to our community. If cost comparisons are measured on a level playing field, we will have a fair opportunity to retain these aerospace and defense jobs in San Antonio. We ask for the continued support of the delegation to ensure these comparisons are fairly performed and account for depot costs and transition risks in their entirety.