Avoiding a logistics death spiral

The Pentagon is under fire from lawmakers for controversial logistics policies,

including logistics reform, outsourcing and allowing contractors on the

battlefield.

Logistics — the process of deploying, supplying and maintaining troops

and equipment — will cost the government $84 billion in 2000. The military

is undergoing hundreds of individual efforts to modernize the process and

reduce the time it takes for deployment, resupply and maintenance. Military

officials hope to imitate commercial successes and allow customers to order

items online, track the orders from the warehouse and expect on-time delivery.

But they acknowledge that failing equipment and parts shortages still present

problems.

"In defense logistics, advances have been moving much more slowly, largely

due to institutional resistance, outdated systems and numbing bureaucratic

delays," said Jacques Gansler, under-secretary of Defense for acquisition,

technology and logistics, during a June 27 hearing of the House Armed Services

Committee's subcommittee on readiness. "Consequently, our operations and

maintenance costs will continue to escalate. This results in reduced readiness,

yet increasing costs. Unless we reverse the trend quickly and deliberately,

we face a death spiral."

Last year the military established 10 pilot programs within each of

the three services to test logistics re-engineering concepts. However, officials

from the General Accounting Office said the Pentagon still has work to do

in this area.

According to GAO officials, the Pentagon lacks an overarching plan to

integrate service re-engineering efforts; plans to test, evaluate and implement

new strategies before 2006 are unlikely to provide information in time for

decision-making deadlines; some pilot programs have multiple objectives,

making it difficult to link results and savings to specific concepts; and

the Pentagon has no estimated costs or budget plan for logistics re-engineering.

At the hearing, lawmakers argued that the growing popularity of outsourcing

encourages the military to favor commercial contractors over government

workers, that commercial employees might abandon their jobs in battle situations

and that it's unclear how much the military is responsible for ensuring

the safety of contractors.

"I've been sitting here thinking about the situation back during Korea

when you had thousands and thousands of Chinese pouring across the battlefield,"

said Rep. Bob Riley (R-Ala.). "I cannot imagine being a private contractor

over there. How do you deal with something like that?"

Gansler said contractors are unlikely to be on the front lines. "None

of the 30 pilot programs include contractors on the battlefield," Gansler

said.

The Joint Chiefs of Staff tackled the contentious issue in the recently

released Doctrine for Logistics Support for Joint Operations, saying that

in most cases the responsibility for contractor protection lies solely with

the employer. "Force protection responsibility for DOD contractor employees

is a contractor responsibility, unless valid contract terms place that responsibility

with another party (e.g., the geographic commander in chief or chief of

mission)," the doctrine states.

Riley also complained that the Pentagon eliminates competition by awarding

contracts to sole-source commercial contractors. Critics contend that sole-

sourcing — awarding contracts without competition — results in inefficiency,

whether the contractors are government depots or commercial companies. "Giving

sole-source work to the government is still sole-source," Gansler said.

But Riley disagreed, pointing out that a contractor — unlike a government

agency — does the work for profit, making it a very different proposition.

"If you don't recognize that, then we have a real fundamental problem here,"

Riley said.

Gansler responded that recent sole-source contracts with government

depots have proven to be less efficient than contracts awarded through competition.