Downsizing at Army Materiel Command targets 16,000

The Army Materiel Command will downsize by 16,000 workers from 1997 to 2005, the General Accounting Office reports.

The command, which develops and manages the Army's equipment and supplies, plans to cut back from 62,000 employees in 1997 to 46,000 in 2005. That's following a massive downsizing from 1989 to 1997, during which AMC cut 40,000 workers from its 1989 base of 102,000 employees.

AMC is still working out the details of how it will eliminate 16,000 more positions. In the 1997 Quadrennial Defense Review, the Army called on the agency to downsize 8,530 positions by 2004. Prior to that, the Army had already planned on eliminating 6,000 positions by 2003. Since the Quadrennial Defense Review, the Army has targeted another 2,000 positions for downsizing by 2005.

In a new report, "Quadrennial Defense Review: Status of Efforts to Implement Personnel Reductions in the Army Materiel Command" (NSIAD-99-123), the General Accounting Office found that AMC plans to use public-private competitions and reorganizations to meet the downsizing targets.

In public-private competitions, agency employees compete against private contractors for the work that the in-house staff perform. Even if the employees win the competitions, some jobs are usually eliminated. About 9,200 AMC employees are undergoing public-private competitions already. As many as 20,800 additional positions may be subject to such competitions in the coming years.

AMC is using several other methods to downsize its workforce. For example, in 1999, the agency plans to eliminate several dozen vacant positions in its headquarters. AMC is also planning to merge two of its subordinate commands, consolidate some of its sites in Europe, decentralize management responsibilities, and restructure its research, development and engineering centers and several other subordinate commands.

The Army expects to save $1.4 billion from 1999 to 2004 from Quadrennial Defense Review-directed reductions, followed by $589 million a year in recurring savings after that. But GAO questioned the savings estimates.

"While these reductions are expected to achieve savings, our work indicates that savings in both the short and long term are likely to be less than expected and take longer to be realized," GAO said.

For example, the average cost of "separating" an employee is $21,000, according to the Army. But AMC only included separation costs for 7,000 employees in its calculations, even though as many as 15,000 positions may be eliminated as a result of public-private competitions. Furthermore, the AMC's estimated savings did not include all investment costs, such as the cost of new security equipment at sites where the number of security guards is reduced.

The Army is considering a broader reorganization of AMC, but the details of such an effort have not been worked out yet, GAO said.