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And the Survey Says...The Effectiveness of DOD Outsourcing and Privatization Efforts

Abstract : The Department of Defense (DoD) is implementing a Revolution in Business Affairs (RBA) with the purpose of freeing resources for the Revolution in Military Affairs (RMA). The goal of the RBA is to transform how DoD conducts business. As part of this RBA, DoD has undertaken outsourcing studies using the Office of Management and Budget (OMB) Circular A-76 and related initiatives. The objective of these initiatives is to generate the cost savings needed to fuel the RMA. Survey responses indicated a high degree of dissatisfaction with A-76 and other cost-based outsourcing initiatives. However, it should be noted the sample population was quite small and was skewed toward installation commanders, the executors of current outsourcing policies. Thirteen hundred surveys were sent out and 234 responses were received. Of these 234 responses, 111 identified themselves as being in a position of command (30 Army, 63 Air Force, and 18 Navy/ Marine Corps). The nature of the responses received indicates that there are significant issues the Department must address. In the course of their research, the authors have noted that DoD focuses almost exclusively on efficiency when conducting business operations. Almost no emphasis is given to devising effective business strategies or examining efficiencies in terms of a value proposition. This drive to the "bottom line" assumes DoD already has an effective business strategy and it merely needs to fine-tune the operation. Rather, DoD should garner the most performance for every dollar spent rather than spending the least amount of dollars. In complex integrated systems, aggregate and not isolated efficiencies must be the focus. By ignoring this, there is an inherent risk that tactical pursuit of cost reductions at the business unit level will drive adverse strategic outcomes.