Executive Summary
Current State Proposed Response
> HQ space too large and expensive
Too much space per employee
> Too expensive per square foot
> Field footprint too large and inefficient
> Field cost per FTE are 2x HQ costs
- high real
estate and support costs for very small offices
> More mobile, technology-enabled deployment
model can significantly improve productivity
> Major opportunities to reduce
recurring opex with technology
Over reliance on expensive contractors
> Very expensive to maintain aged IT (many systems
more than 10 years old)
> Using expensive downtown Washington real estate
for back-office functions that could be offsite
> Section 9 fee payors shouldering lion's
share of requested budget increase
> Relentless attention to cost efficiency:
• Manage to even lower FTE levels - decline by 37 for
2016, first FCC budget in a decade to not ask for more
• Proposed consolidation of our field offices - saving
$9m annually without diluting mission effectiveness
• Reduce contractors; down from 483 to 435 by 2016
• Reduce HQ lease cost; save $11 9m over 15 years
> $84m requested increase for 2016 has 3
components:
Unavoidable (70%) - $60m for move, inflation, OIG
IT (20%) - $1 7m to modernize and close security gaps
• Mandates (10%) - $7m for broadcaster repacking,
National Broadband Map, and PSAP registry
> Align sources of funds with uses to
maximize fairness:
• Base collections from general regulatory fees ($388m)
• Auctions costs from auctions proceeds ($11 7rn)
• USF costs from USF fees ($25m)
2
FYs 2015 & 2016 Projected
Cumulative Volume Growth
FY2010-2014
Licenses Received 24%
Licenses Reviewed 26°o
Experimental Licensing Received 4000
Experimental Licensing Processed
Equipment Authorizations
NALs Issued
I I
I I
20°o
0% 10% 20% 30% 40% 50% 60% 70% 80%
Equipment Authorizations includes FCC Preauthorized and TCBs
NALs issued increased 20% but the overall EB actions decreased by 22%
4
Workload Volume Grows While FTEs Decline
FTEs for FYs 2015 and 2016 are estimates.
> FTE reductions
• Attrition management (no automatic backfihls) - since Jan 2014, 199 staff have left, only 145 replaced
• Additional efforts underway to identify available workforce restructuring opportunities
> Field offices consolidation
• Proposal currently on circulation to Commissioners to reduce field offices
• Savings from reduced real estate, administrative overhead, and support costs
• Post-restructuring, FCC would retain engineers/vehicles on the ground combined with a "tiger team"
quickly deployable anywhere in the U.S.
• One-day response time for 80% of U.S. population
• Higher coverage than today for the rest of the country
> Contractor drawdown
• FCC-wide contractors currently at 483, down fromover 600 since 2012, and trending to 435 in 2016
• IT modernization investments essential for continued progress; will support significant reduction in
expensive (2x), on-site contractors for infrastructure management and software development
• Additional contractor reductions available via use of IT automation to replace labor-intensive processes
> Continuing, ongoing efficiency review
• Office of Managing Director is assessing every part of the FCC for additional efficiency opportunities
5
Cost Saving Steps Underway Today
$millions
FY20 15 Budget Authority
Requested FY2016
• Office move (to save $11 9m)
• Inflationlcontractual cost increases
• OIG request
• IT Modernization
• Cybersecurity fixes
• Reallocation of USF support
• Mission mandates
• National Broadband Map
• PSAP do-not-call registry
• Broadcaster relocation fund oversight
Total
Fee-generated
340
Activity-generated
Auction USF
106 N/A
44 7
7
1
15
2
(25)
3
1
3
25
388
6
117 25
More Than 70% of Requested FY 2016 Spending Increase* Is
for "Unavoidable" Costs
* Note: Total $84m requested spending increase is the sum of requests for Salary & Expenses ($48m, from $340m to $388m), Auctions ($llin, from $106m to
$1 17m), and USF Transfer ($25m). Without USF Transfer, S&E requested level would grow from $388m to $413m.
7
Significantly Improve Speed, Security, and Quality
From: Over 200 on premises, antiquated servers
occupying expensive downtown real estate
To: 100% off-premise, cloud-based deployment in a
secure multi-agency facility; savings of $1 -2m per yr
From: 100,000 unique data objects, 43 Tb of stove-
piped, inaccessible and non-reusable dataData > To: Single data architecture for ALL internal and
external data, significantly enhanced transparency
From: 207 systems, typical $600,000 cost for new
projects, 6 months to complete, very high ongoing
maintenanc e/support
To: Handful of core systems supporting multiple
front end applications, 50-75% lower cost / faster
timelines per project; savings of $1 -2m per year
8
New FCC Lease Projected to Save $119m over 15 Years
Cumulative (costs) and lease savings
Millions
$150
SI 09
$100
$50
Move costs, FY2016 & 2017
- costs consistent with
similar recent agency
moves (NIH, NLRB, FWS)
- must be funded in order to
move lease process forward
/
$0 --
-$50 I --
--
-S70
-$100
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S85
S72
S59
S46
S33
S20 ri
S7
2 2! '23 '24 '25 '26 '27 28 '29 '30 '31 '32
.-S6
-S18
±JJi
Projected $13m savings per year
under new lease:
- smaller footprint
- less costly per square foot
9
Estimated move costs
Millions
Note: assumes utilization rate = 180; estimated tenant improvement allowance of$13rn
10
y-in-Place