Uncle Sam Wants To Recruit a Few Good Contractors

Pentagon adopts 'outsourcing' to save money

IN sunny, coastal Corpus Christi, Texas, the Army depot is the largest employer in town. Nearly 3,000 federal workers strip down helicopters that have flown one mission too many and bang them back into shape.

But the Pentagon may be handing more of this work over to private contractors in the future.

Outsourcing - the current buzzword in American business - lately has become fashionable at the Pentagon.

Last week, the Department of Defense announced a plan that would expand the amount of work that contractors can bid on, including accounting, education, and equipment maintenance.

Efficiency move

"From a taxpayer's point of view and efficiency point of view, it makes a great deal of sense," says Lawrence Korb, a former assistant secretary of defense who is now a senior fellow at the Brookings Institution in Washington.

About two-thirds of the $12.5 billion in depot maintenance, such as the work done in Corpus Christi, is done by public employees, so this area offers the greatest potential for savings - and the most controversy. Under the new plan, roughly 50 percent of the work would be outsourced.

But such a plan requires a change in US law, which mandates that no less than 60 percent of depot work to be done by federal employees. Currently, the Army, Navy, Marine Corps, and Air Force employ 89,000 workers at 35 depots around the country. And a coalition of congressmen with depots in their districts intends to keep it that way.

"Nothing justifies pursuing the high-risk strategy of privatization," says Rep. Solomon Ortiz (D) of Texas. "Every single dollar spent on misguided privatization initiatives is a dollar we can't spend on modernization or readiness."

But Capt. Joseph Peak, a spokesman for the Department of the Army says a recent study by the Army found that 47 percent of its depot maintenance could be done by private contractors.

The Pentagon claims that moves toward privatization are currently saving taxpayers $1.5 billion per year. And at a press conference last Thursday, defense officials claimed the new outsourcing policy could save 10 times that amount.

Base-saving strategy

Outsourcing is also a key element in the Clinton administration's plan to keep open as many bases and depots as possible. Even though the Base Closure Commission recommended that the US military close down two bases, in San Antonio, Texas, and Sacramento, Calif., President Clinton instead urged the military to turn to private contractors and thereby cut costs.

Mr. Korb says outsourcing in a time of shrinking budgets makes economic sense. Fewer weapons are being purchased and there is not "enough procurement to go around," he says. "Letting defense companies do maintenance will help them stay in business. It helps keeps the workers on the payroll and maintain those skills."

The US military has employed contractors for decades. During the Vietnam War, a variety of companies were hired to build landing strips, military bases, and other projects in South Vietnam.

Today in Bosnia, Houston-based Brown & Root is acting as the military's quartermaster. Rather than call up logistics units from the military reserves, the Army Corps of Engineers is relying on Brown & Root to build and operate two dozen camps in the region.

At the beginning of March, the company was employing more than 6,000 workers, who were fixing roads, cooking meals, and disposing of trash.

Brown & Root has been doing logistics work for the Pentagon since 1992. Since that time, the company has done more than $270 million worth of support work for American GIs stationed in places like Rwanda, Somalia, Haiti, and Saudi Arabia.

The move toward outsourcing is "overdue by a long time," says Dick Stubbing, a professor at Duke University in Durham, N.C.

Mr. Stubbing, who monitored defense spending at the Office of Management and Budget for 20 years, says the idea has been floating around the Pentagon since the 1960s, but that the different branches of the military continually put up barriers to it.

"The word that underlies most defense issues is jobs," says Stubbing, who adds that congressional resistance to outsourcing defense-related tasks come from "an attempt to protect the ongoing system. They are protecting the jobs of civil servants and other workers in their district."

Smoke and mirrors?

Wallace Thies, an associate professor of politics at Catholic University of America in Washington, says the outsourcing move may actually cost money.

"There's a smoke-and-mirrors quality to this whole privatization issue," says Mr. Thies. "It's extraordinarily hard to figure out what the savings are from these sorts of changes."

For an example, Thies points to the recent base closures, a move that was supposed to save money. He said closing Carswell Air Force Base in Texas was supposed to save the Pentagon $156 million. Instead, he says the government spent $200 million to build new facilities at the base for the Navy and now spends $197 million per year to operate it.

"Political points accrue from making the announcement that 'we will save the government money.'" Thies said. "Nobody gets points by coming in after that and saying 'those savings didn't happen.'"

The Pentagon will present its final proposal to Congress next week.

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