Research for Defense Economics

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.

N1's Sponsor Program Proposal of 12 April 1994 recommended paying sailors to stay in sea duty beyond five years. In this briefing, we analyze that proposal as well as a modified proposal that we present as an alternative. Our modified proposal offers two fine-tuning changes to what we believe is a good and workable original proposal by N1. We think of these proposal as experiments because until such a program is instituted, we have no estimates of how many sailors would extend their sea duty in exchange for a bonus. Thus, the early stages of any such program would be experimental in nature.

Some activities performed by government employees are similar to those performed in the private sector. Government policy -- outlined in Office of Management Budget circular A-76 -- is to allow private sector companies to compete with government organizations for this work. The goal is to use competition to encourage efficiency -- whether the function is contracted out or not. The Navy's Commercial Activities (CA) program is responsible for implementing this competition program within the Navy. Over the last decade, the Navy has studied about 1,000 activities -- covering about 29,000 billets (both civilian and military). Due to changes in legislation, the Navy is not doing any CA studies at this time. In this research memorandum, we examine: (a) the savings achieved as a result of CA studies; (b) whether the initial savings diminished over time; and (c) the prospect for future studies. Full documentation of this work appears in CRM 92-226.10, 'Analysis of the Navy's Commercial Activities Program.'

The Gulf War was an impressive demonstration of air power in action. Coalition air forces seized control of the air in the first hours, then devastated military facilities in Iraq and Iraqi forces in the field -- paving the way for the remarkable 100-hour victory by coalition ground forces. Airpower did not win the war by itself, but it was the foundation for projecting U.S. military power and overcoming numerical disadvantages on the ground. Airpower is likely to play a similar key role in the next major regional conflict. Thus, the U.S. must maintain its superiority in airpower despite rising costs and declining budgets. The issues are complex and controversial, but ignoring issues will not make them go away. This paper discusses policy and concept issues that need debate and examines two broad strategies for dealing with affordability problems.