Roles of the Public and Private Sectors

The Federal Government relies upon the private sector to perform non-inherently governmental functions to increase efficiency and efficacy in carrying out its missions. While much attention is placed on “insourcing” or “outsourcing”, the real challenge for government is attaining the proper mix of each sector to provide the best return on taxpayer dollars. This proves especially challenging due to the fact that the government, unlike contractors, is unable to calculate the fully burdened rate of its employees. NDIA applauds language in the Fiscal Year 2016 National Defense Authorization Act requiring the Department of Defense (DoD) to update its manpower cost comparison instructions to include the full cost of manpower, to avoid further use of an “apples-to-oranges” comparison. In the past, competitive sourcing through the Office of Management and Budget Circular A-76 process provided significant cost and performance benefits, while only leading to involuntary separation of about 5% of affected federal employees. However, a moratorium was later placed on its use.

This issue is particularly consequential for depot-level maintenance of weapon systems. Statutes require DoD to retain government-owned and government-operated core logistics capabilities to maintain and repair weapons systems and military equipment and provide surge capability, and set a limit on the percentage of depot-level maintenance that can be contracted out. Moving forward in a cost constrained environment, DoD must leverage the strengths of each sector through various arrangements, such as Public-Private Partnerships or performance-based logistics, to improve efficiencies in sustainment and reduce infrastructure, which is currently in excess of 22%.