Public-Private Partnerships Offer Smart Alternative to Sweeping Defense Cuts
Maxford Nelsen /
There is little disagreement that looming cuts in the defense budget set to take place in January are ill-advised, though there is intense debate over how to prevent them. However, one way to improve the defense budget without sequestration, downsizing, or raising taxes is to increase partnerships between the military and private industry.
Public–private partnerships are part of a larger approach known as performance-based logistics, which seeks to improve efficiency in defense projects by focusing on outcomes.
A partnership between Anniston Army Depot and General Dynamics Ground Systems has produced very impressive results in maintaining and repairing the Army’s fleet of Stryker armored vehicles. Beginning in 2002, the partnership has grown into what the Lexington Institute’s Loren Thompson calls a “model of efficiency” worthy of replication, with General Dynamics and Anniston splitting the workload 50/50, cross-training employees, and ensuring access to the necessary replacement and maintenance parts.
Lee Waldron, General Dynamics’s plant manager at Anniston, describes the partnership as “a win-win situation for both partners.”
As evident at Anniston, public–private partnerships can benefit the government by decreasing overall maintenance costs while also providing additional contract work for industry partners.
Building public–private partnerships decreases cost by mitigating, among other things, the high cost of federal labor. As Thompson argues:
There are numerous reasons why it would make fiscal and economic sense for the Pentagon to award most depot maintenance to the same companies that developed and manufactured weapons systems. The current approach of building in the private sector and maintaining in the public sector increases federal costs, fractures product life-cycles, diminishes economies of scale, impedes technological innovation and undermines trade competitiveness.
Furthermore, as Thompson mentions, partnerships take the expertise of the companies that create the weapons systems and put it to good use in maintaining the systems in military depots.
Logistics and material management take up a large chunk of defense spending, totaling $80 billion a year. While public–private partnerships like the one between General Dynamics and Anniston exist on a small scale, expanding them has the potential to save the government billions of dollars in logistics and maintenance without compromising military readiness.
Under sequestration, the Pentagon will have funding for all programs cut by about 12 percent. Officials have described sequestration as a “meat axe” that would be “devastating” to the Department of Defense. But the benefits of expanding performance-based logistics through vehicles like public–private partnerships prove that there are far more responsible ways for Congress to achieve savings in the defense budget than wholesale cuts that threaten national security.
Maxford Nelsen is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.