Defense Logistics: Global Reach, Global Power (1)

Issue Brief

With an award expected this summer for U.S. Transportation Command’s major new procurement, DTCI, it is a good time to look at the progress the American military has made outsourcing and privatizing key functions of government.

From Iraq and Afghanistan to our Army and Air Force maintenance depots, major logistics and technical services projects are being handled by the private sector. These reforms are taking long-term financial pressure off the taxpayer, and are improving the delivery of government services. They have been initiated by military and government leaders like the Army’s Paul Kern and Nathan Hill, and Air Force reformers like Don Wetekam and Grover Dunn. In some cases the government has even been willing to both compete and team with private companies on important products and services, and would have taken even more liberalizing steps had the Congress not blocked them.

DTCI, which stands for Defense Transportation Coordination Initiative, will turn over the management of major military transport activities to the private sector. Leading teams organized around Northrop Grumman and UPS are competing for this contract. It will start inside the continental U.S., and eventually expand to global operations.

The pieces are already in place to make DTCI a success. DHL and FedEx are making daily deliveries to U.S. bases in Iraq. Maersk Line, the largest private operator of vessels for the U.S. Government, runs 30 ships for the military, including preposition and ammunition ships. That company will be the major private sector player if and when we depart Iraq. APL, another global shipper, pioneered the overland route to Afghanistan, while DHL all but ran the Baghdad airport in the early months of the war (you may remember the DHL plane that had its wing hit by a rebel surface-to-air missile in late 2003).

Having a robust contractor presence on the battlefield is a new and dangerous dimension to modern warfare. KBR has lost 105 dead and 300 wounded in Iraq and Afghanistan. Contractors are often used now for difficult convoy missions because they are better able to work security issues with local tribes (51% of contractors in Iraq are Iraqis). And embedded repair teams from companies like General Dynamics and BAE Systems keep armored vehicles in fighting condition for this brutal war.

None of this comes without problems. The government probably turned over too much acquisition power to the private sector after the cold war, so the Coast Guard and Navy are rebuilding their ability to organically evaluate and execute difficult modernization programs. And there are gripes in the field when better paid contractors are embedded with the deployed military. However, it is doubtful that military personnel have run the numbers on the full value of their pension, housing and health-care benefits, which likely dwarf anything a private contractor is collecting.

The reach of American global military power is only matched since the dawn of time by the Romans and the British Empire. And now private sector productivity and technical expertise in the age of globalization are adding to this remarkable warfighting capability.