Public-Private Partnerships and the Future of the Army Industrial Enterprise

Research Study

At the heart of the Department of Defense’s (DoD) acquisition and logistics transformation are Public-Private Partnerships (P3). This transformational effort recognizes the unique elements that both the organic base and private industry bring to the table — the organic base being known for unique industrial capabilities and a wealth of experience, and private industry acknowledged for its expertise in business practices, supply chain management and advanced design.

DoD is pursuing innovative Public-Private Partnerships to maintain and improve core competencies at organic depot facilities and to make its facilities and workforce available to partner in industry initiatives, for either military or industrial activities. The DoD is marketing these competencies, its reduced cost of labor and its renewed — and in some cases highly unique — industrial capabilities directly to industry as a means to keep industrial skills and facilities at the ready. As draw-down and reset occur from Operations Enduring Freedom and Iraqi Freedom, such partnerships will become even more critical in keeping the organic industrial enterprise at a high level of preparedness for future conflicts.

Why partner? Both the government and industry can benefit from each community’s skills, knowledge and approach to doing business. The types of P3s are diverse and flexible, ranging from work sharing, teaming, facility and equipment leasing, to Performance Based Logistics (PBL). To date there have been numerous successes with P3s, inclusive of PBLs such as the one between Anniston Army Depot and General Dynamics, and the highly effective partnership between Lake City Ammunition Plant and Alliant Techsystems. These partnerships have led to more advanced skills for depot workers and brought leading-edge repair technologies in-house.

Despite the fact that the organic and private sector bases have been working side-by-side for many years, there are difficulties based on laws and regulations that may need some reform to accommodate the transformation initiatives under Force-centric Logistics Enterprise, P3 and PBL. The single largest failure with this transformational effort is that the DoD is not being aggressive, imaginative or expansive enough.

It is ironic, however, that the government is seeking a closer relationship with the private sector to take advantage of precisely those skills and methods that can make industry difficult to work with. The government’s requirement to operate under established laws and regulations can make cooperation between the government and the private sector difficult.

The DoD and Congress must make efforts to rid the system of legislative, financial, cultural and educational impediments. Incentives must exist to entice the private industry to enter partnerships. Legislation needs to reform the accounting system, the working capital funds, the contract process and the debate over “colors of money.” Furthermore, the DoD must begin an education campaign for all the major stakeholders to highlight the value of P3s and the full scope of the law. These actions will fully transform the acquisition and logistics process and bring total life-cycle systems management to fruition.

The initial draft of this report was written by Ms. Carrie Hunter. Members of the Logistics Working Group had an opportunity to review and modify the final report.

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