Research for Competition
January 1, 1997
This study was sponsored by the Deputy Chief of Naval Operations for Logistics (N4) who asked us to assemble the lessons learned in outsourcing and privatization. Earlier work for this study identified new opportunities for the Navy and identified initial lessons learned at a Navy technical center. This study also identified specific ways to streamline the competition process required by OMB Circular A-76, and initial findings of five outsourcing and competition case studies reported in earlier reports issued from this project. In this final report, we focus on privatization, as distinct from outsourcing. We make the distinction clearer in the body of the paper. For this report, we reviewed the economics literature to determine whether (and if so, why) public sector firms are inherently less efficient that private sector firms. We conducted case studies of the office of Personnel Management (OPM) privatization of its background investigations unit, and the Naval Air Warfare Center (NAWC) - Indianapolis privatization. We also examined the competition program run by the City of Indianapolis for many of its city services, including the outsourcing of the local wastewater treatment plant. Finally, we collected information on other privatization, both in the United States and abroad.
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December 1, 1996
In 1955, the Office of Management and Budget (OMB) implemented a policy known as the Commercial Activities (CA) Program. This program enables the private sector to compete with government organizations in providing goods and services when it is appropriate and economical to do so. The objective is to promote an efficient support structure through competition. This research memorandum is part of a CNA-initiated research effort examining the DoD Commercial Activities program. Most of our previous research has examined the Navy CA program. This paper presents the results of all completed DoD comprehensive A076 competitions between 1978 and 1994.
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July 1, 1996
Outsourcing is one way, although not the only way, to increase efficiency. Outsourcing, or more generally, competition (whether public or private) provides cost visibility - customers begin to see what they pay for goods and services. It also can provide alternative sources, enhance flexibility, introduce better business practices, and take advantage of emerging technologies and innovations. Outsourcing and competition are sometimes considered something new and untested, as experiments. In fact, they are not. The public sector has relied on the private sector for years. Although it is hard to write contacts for something as risky as developing and manufacturing a major weapon system, the Department of Defense (DOD) has done it repeatedly. DOD has outsourced successfully functions as complex as acquisition, and as straightforward as laundry services. This is not uncharted territory. The purpose of this paper is to take a first look at what outsourcing opportunities exist and what types of cost savings are possible. To glean some insights into implementation, we look at how one naval technical center has outsourced various functions. We consulted several databases to quantify good candidates.
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May 1, 1996
As part of the Outsourcing Options study, N4 asked CNA to look across the services and DoD agencies to evaluate different practices and lessons learned in implementing A-76 procedures. Earlier work suggested that big savings are possible if the Navy chooses to start large-scale competitions. Since OMB is revising - rather than withdrawing - its A-76 policies, CNA focused on how the process could be streamlined to maximize savings. In this brief, we first review the evidence of competition savings found across DoD. We then discuss what role senior Navy leadership can play in easing implementation, as well as specific ways to streamline the process. We also suggest best contracting practices. Finally, we touch on employee transition issues.
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May 1, 1996
In a period of shrinking resource, the Navy is searching for ways to reduce the costs of operating and supporting its forces. Those savings can be used to help recapitalize the Navy as the turn of the century approaches. Past efforts at reducing support costs have often focused on outsourcing or privatizing work that can be done commercially. Evidence from past research indicates that savings are available form outsourcing work and from public-private competitions. The evidence indicates that the pressure of competition, among private sector firms and between government activities and the private sector, is the source of those savings. In the Program Objectives Memorandum (POM) process, resource sponsors pay a price for each billet they authorize. The Navy has begun to include more explicit personnel costs in the POM process. This paper considers the potential for how that cost information may improve manpower resource decisions and examines broader decision-making frameworks as well.
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April 1, 1996
Outsourcing is one way, although not the only way, to increase efficiency. Outsourcing, or more generally, competition (whether public or private) provides cost visibility - customers begin to see what they pay for goods and services. It also can provide alternative sources, enhance flexibility, introduce better business practices, and take advantage of emerging technologies and innovations. Outsourcing and competition are sometimes considered something new and untested, as experiments. In fact, they are not. The public sector has relied on the private sector for years. Although it is hard to write contacts for something as risky as developing and manufacturing a major weapon system, the Department of Defense (DOD) has done it repeatedly. DOD has outsourced successfully functions as complex as acquisition, and as straightforward as laundry services. This is not uncharted territory. The purpose of this paper is to take a first look at what outsourcing opportunities exist and what types of cost savings are possible. To glean some insights into implementation, we look at how one naval technical center has outsourced various functions. We consulted several databases to quantify good candidates.
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April 1, 1994
In this report, we examine the question of where the Navy's depot maintenance should be done. In FY 1992, the Department of the Navy spent $7.5 billion on depot maintenance, and most of that work was done at naval depots. Now that the workload is declining, however, the Department of the Navy and the Department of Defense are looking at the possibility of doing more of that work at private facilities.
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November 1, 1992
The end of the cold War and the breakup of the Soviet Union have many global implications, the most interesting of which is the potential for lasting peace. Lasting peace can allow the United States to change politically, militarily, and economically. One obvious concern is that this transition be as efficient as possible. Resources that are being freed up from defense-related endeavors can be shifted to alternative uses. How can we, as a society, ensure that the transition is smooth and efficient? If there is a 'dividend' of peace, are there government policies that will use the dividend most effectively? This paper addresses the economic implications of peace for the United States.
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April 1, 1987
An evaluation of current Navy practices for assessing the cost effects of production competition in programs using dual production sources is presented. Weapon system cost analysis practices are presented first as a baseline, followed by discussion of particular methods used when two production sources are expected. The scope of the evaluation was limited to cost analysis practices at the headquarters level in the three hardware systems commands and at what is now the Naval Center for Cost Analysis.
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November 1, 1986
The results of exploratory research on models and techniques used in estimating the effects of competition as well as several other variables in weapon system production contract prices are reported. The purpose of this effort was to examine the use of pooled cross-section, time-series data in modeling the acquisition program and its environment. The approach is not tied specifically to competitive acquisitions; however, the primary aim of the research was to examine models used to estimate the effects of competition.
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