The number of Defense Department employees who will be forced to defend their jobs in competition with private contractors continues to rise, the Pentagon's second-ranking official announced Thursday, as the one-year anniversary of the Defense Reform Initiative approaches.
Deputy Defense Secretary John Hamre said 237,000 DoD employees will participate in public-private competitions from 1997 to 2003. That number is up from the 150,000 jobs the Pentagon said it would target in November 1997, when Hamre started the Defense Reform Initiative, a four-pronged effort to lower DoD's infrastructure costs.
Public-private competitions, one of the four reform strategies, are proceeding slower than Pentagon leaders would like, Hamre said.
"It is not easy to compete jobs," Hamre said. "We're asking organizations who think they do a good job now to put their necks on the line and potentially lose the work they are now doing."
Hamre pointed to several examples where DoD is already saving money because of competitions. In San Diego, a private contractor runs family service centers for 35 percent less than when the Navy ran them. Communications maintenance workers at Florida's Patrick Air Force Base beat private contractors by reducing costs and cutting their workforce by 40 percent.
A second reform strategy, downsizing headquarters staff, is also improving operations, Hamre said. Defense Secretary William Cohen has pledged to cut his 3,000-employee office by a third. So far, 780 of the 1,000 targeted positions have been eliminated. Many of those employees have been transferred to field operations.
The third strategy, streamlining business processes, is proving to be successful, Hamre said. An online mall is up and running to speed up purchases and a central program office to coordinate electronic commerce efforts has been established. Hamre also noted that 85 percent of purchases below $2,500 are now made using a commercial credit card. DoD saves more than 50 percent on internal processing costs when DoD employees use credit cards.
Base closing, the fourth strategy of DoD reform, failed this year. Congress was unwilling to approve two additional rounds of base closures the Pentagon requested.
"I'm not sure what we're going to do," Hamre said. "It's not an issue Congress was willing to entertain."
Erik Pages, an analyst at Business Executives for National Security, a coalition of private-sector officials, said the Defense Department "is not moving quickly enough" on business reform.
"There are two major impediments," Pages said. "One is Congress. The other is a sense of 'business as usual' in the department. The top ranks of the Pentagon have fully bought into this message, but the further away you get from Cohen, the less support there is for business reforms."
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