Commercial Practices Save Federal Dollars But Aren’t Always The Best Solution

Although you would not know it from the current political debate in Washington on federal spending, the government does try to save money. One way of reducing costs is by adopting commercial practices and standards. Another way is by buying commercial products and systems.

The Department of Defense (DoD) has led the way in leveraging the skills and capabilities of America’s private sector to cut costs. This is particularly the case in military logistics and sustainment. The Defense Logistics Agency buys many of its commodity items such as fuel and food through commercial prime vendors. U.S. Transportation Command turned over to a commercial logistics provider responsibility for much of the movement of cargo across the continental United States. U.S. forces in Afghanistan are sustained at the end of an 8,000 mile supply chain provided by commercial companies such as Maersk Line Limited and APL.

DoD has even sought to acquire major combat systems that are derived from commercial products. There have been some great successes such as the Navy’s new P-8 maritime patrol aircraft which is based on Boeing’s 737 and the Army’s UH-72 utility helicopter which is basically the Eurocopter EC145. The Pentagon has been encouraging its acquisition system to look for ways to make greater use of commercial off-the-shelf items and to ensure that networks employ open architectures to allow for maximum flexibility and the use of commercial hardware and software.

There are a number of cases where DoD’s efforts to “go commercial” in order to cut costs has run afoul of standards and rules that exist because of the department’s unique missions and responsibilities. This can apply to things as simple as small caliber ammunition and cold weather clothing or as complex as naval combatants and space launch vehicles. DoD’s standards for small caliber ammunition are more exacting than for the equivalent commercial products because our soldiers operate in environments that would deter even the most ardent sport shooters. The right cold weather gear can be a force multiplier when it comes to battling the Taliban in the mountains of Afghanistan.

The Navy’s concept for the Littoral Combat Ship (LCS) was that it would be a small, fast, maneuverable and relatively inexpensive combatant to deal with emerging threats. In order to reduce costs, the Navy decided not to build the ship at a traditional naval shipyard but in a commercial yard and to apply commercial construction standards. As a result, in part, the initial projected costs for the LCS were extremely low. However, when it came time to certify the first ships, the design ran afoul of the existing standards for the design of Navy ships, called Naval Vessel Rules. These rules exist because, to quote John Wayne, the Navy needs “fast ships going in harm’s way.” In the end the design had to be revised and construction standards somewhat altered. The result was a significant increase in price but also two LCS designs that are so good that the Navy decided to buy both.

An emerging case where the drive to reduce costs in government programs may run counter to necessary standards is in the area of space launch. Faced with escalating costs for the nation’s next generation space transportation system, the Obama Administration decided to take a chance by investing in new private sector ventures that promise a lower cost solution not only for launch of commercial payloads but also for military systems and even human beings. The problem is that government standards for certification of a launcher to transport human beings or lift critical national security payloads are more exacting than those for commercial payloads. A system designed for commercial launchers can be relatively cheap; this is not likely the case for one that can safely carry astronauts into space.

Lots of politicians and business people complain about the rising cost of government regulation. In many cases these concerns are justified. However, when it comes to military systems or those that perform vital national missions such as transporting people into space, standards are important. Yes, there is room for improvement in the standards and regulations used by DoD or NASA. But there are reasons for paying the additional costs if they keep people safe or ensure that our warfighters can be successful in combat.