DoD Bridging Gap Between Eras

hen you think of the many challenges in managing your enterprise, it's OK to be envious of John Hamre, the Defense Department's deputy secretary and chief operating officer. After all, how many other executives have 800,000 civilians and 1.4 million service members helping them run their operations?

What's that, you say, about span of control? Maybe I am being a bit simplistic about the benefits of so many helpers. An enterprise as large, widespread and diverse as Defense poses some interesting problems for communicating a vision.

Hamre's overall responsibility for the business affairs of the department put him directly in the middle of changes in technology, methods of operation and personnel. He must grapple with the contentious issue of who should provide departmental services (federal employees or contractors), the tenor of the relationship between government and industry, and the burgeoning world of e-commerce.

Hamre's views are tempered by a lengthy government career. His empathy for Defense employees hamstrung by "antiquated computers, aging facilities, and obsolete business practices" is clear-cut. Hamre believes employees have learned to work around these problems, but solutions are neither quick nor easy. Nevertheless, he is optimistic about the changes under way.

The 15-year span of ever-shrinking Defense budgets has been the catalyst for a number of hard business decisions. Important among them was the determination to contract work out to the private sector. Having witnessed this effort from prior positions as a Senate Armed Services Committee staffer and then as Defense comptroller, Hamre says the move toward outsourcing is driven largely by dollars. He's not sanguine about the process and is concerned that the average two-year time frame for deciding on a government or private-sector winner leaves people hanging for far too long.

Federal employees frequently see "competitive sourcing" as a one-way street, Hamre says, with all the work going out and no new work coming in. And government employees complain that contractors don't stay competitive after they get the work. In spite of skepticism about the process, Hamre takes pride in Defense's efforts to make competition as fair as possible. He advocates getting federal unions involved as early as possible.

Hamre's familiar with contractor charges that competitive sourcing solicitations are often poorly worded and structured, effectively precluding a contractor win and, in some cases, even a bid. Industry critics recently targeted a Defense Finance and Accounting Service statement of work relating to payroll services. DoD is taking these complaints to heart and acting on them, Hamre says, citing the agency's redo of the solicitation as an example.

However, the contracting-out process is a painful one, Hamre says. The October 1998 Federal Activities Inventory Reform Act (FAIR) requires agencies to list their commercial-type activities, in anticipation of further outsourcing. The law makes Hamre's goals of shortening time frames and leveling the playing field even more urgent.

While Defense over the years has been the leader in outsourcing, the numbers of positions actually contracted out have been relatively few and the savings small. Will the FAIR Act radically transform the department by compelling contracting out of a host of additional positions? Defense efforts already far outshine any previously done, and the number of positions already slated for contracting out through the Defense Reform Initiative is more than 200,000. So hundreds of thousands more is unlikely.

Competitive sourcing is but one of many ways DoD interacts with the private sector. Over the past decade this relationship has shifted from what has traditionally been called "arm's length" to one that is more often characterized as a partnership.

Hamre acknowledges that the relationship between government and industry shouldn't be adversarial. However, he cautions that the government shouldn't shirk its oversight responsibilities or throw away proven business practices. A recent rash of space launch failures raised the issue of whether Defense may have taken away too much oversight and quality assurance. "The [partnership] philosophy is right," he says, "but we can't close our eyes to our fiduciary and management responsibilities."

Regarding e-commerce, Hamre still sees much to be done. He believes the Internet offers the best means for handling the hundreds of thousands of contracts DoD produces annually. In fact, electronic contracting has finally begun to put a small dent in those 15 linear miles of paper filling shelves at Defense's finance center in Columbus, Ohio.

Hamre has noted that at the Pentagon you can see real-time video images of Bosnia, while 1930s sorting-wheel technology is still used in Columbus to handle the thousands of documents sent there each day.

As much as anything, this dichotomy between the sorting wheels of the 1930s and the Buck Rogers imaging technology points up the challenges of operating in the Defense Department today. Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington.