Research for Costs

CNA prepared this briefing for the Department of the Navy's Rightsourcing Process Action Team, under the auspices of the Total Ownership Cost Goal Management Board of the Assistant Secretary of the Navy (Research, Development, and Acquisition) (ASN(RD&A)). In this briefing, we review the background of the study and our approach, identify those companies and activities that participated in our study, summarize the factors that we found affect rightsourcing decisions, and describe our key findings.

To improve the quality of life of service members and increase overall efficiency, the Deputy Assistant Secretary of the Navy for Installations and Facilities asked CNA to examine Department of the Navy (DON) housing processes, identify options and alternatives to the current system, and evaluate these options. In this paper, we present our analysis of current DON housing practices. Its purpose is to describe the current state of housing benefits, including costs, conditions, processes, and value to the service members. These descriptions will serve as a baseline for comparison with proposed alternatives to the current housing system. This paper has five parts. In the first, we give a short overview of current DON housing benefits and summarize the results of the study. In the three sections that follow, we discuss current family housing, bachelor housing, and off-base allowances. In the last section, we list our conclusions.

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.

The debate continues as to whether use of the private sector really lowers cost. Some opponents say that outsourcing and privatizaiton actually increase costs, but experience argues the opposite. In this report, we survey selected recent initiatives on privatization, competition, and outsourcing in both government and nongovernment sectors. We draw from a variety of publications and reports by the Defense Science Board, the Commission on Roles and Missions, and the General Accounting Office, as well as CNA's prior work and the work of other research organizations.