One Way to Extend the Pentagon Dollar

By , Robert Costello is a senior research fellow at Hudson Institute in Indianapolis. He has served the Under Secretary of Defense (acquisition) and was responsible for carrying out the recommendations of the Packard Commission to reform the Pentagon procurement process.

THE Military Service Life Extension Program - SLEP - can be a gold mine for the US taxpayer. If misused or distorted, it becomes a gold mine for the contractor chosen to build brand new equipment that's not needed. The SLEP concept is simple - take equipment that still has a useful life and remanufacture it so that it's as good as or better than new. The concept has worked effectively for ships, airplanes, tanks, and a wide assortment of other equipment.

But, most people in industry and the services don't like the idea. They would rather hold onto their old equipment and build more to add to their inventory. In many cases, we don't need more equipment, but can use improved versions of what we do have. Scrapping just adds to the solid waste disposal problems in the country anyway - let's reuse, not create refuse.

My first exposure to SLEP was in connection with the Navy F-14 fighter. Navy aviation depots on both coasts were engaged in remanufacturing these planes. On their own they had undertaken an approach to quality management that paid off. The remanufacturing of F-14s was done in Navy facilities - keeping them ready to operate in emergencies - at a cost as much as 30 percent below previous levels. The Navy had planes better than the original at costs 50 percent below new equipment. Navy facilities and employees were performing and improving the process. True, not all were happy. Grumman wanted to build new planes. Some admirals wanted more planes. But taxpayers got what they needed: the right number of planes at lower costs.

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Now it may be the Army's turn. The Army has trucks - tens of thousands of them. They are not modern, fuel efficient, or easy to drive. They can be economically modernized, but that would not give the Army new or more trucks in the inventory. It would only give them what they need - manufactured, fuel efficient trucks with automatic transmissions. How can one turn down an idea like this? Easily. Convince the Secretary of the Army that it costs too much to remanufacture old trucks.

There are some catches. It may not cost 60 to 70 percent of the cost of a new truck to remanufacture an old one. But, it will if new transmissions are purchased at a cost of $13,000 to $14,000 - instead of using a commercial equivalent for only $2,500. So the right figures on which to make decisions are needed. We can manufacture inexpensively, effectively, and meet many needs this way.

In the case of trucks, the work can be done at government facilities - the Detroit Tank Plant, for example. The factory would stay in operation even if tank production were stopped. The remanufacture of tens of thousands of trucks would keep the plant up, running, and productive for years.

Service Life Extension Programs - SLEPs - are good for everyone. Let's use them where they can pay big dividends for all of us.

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