Senate Armed Services Subcommittee on Readiness and Management Support Holds Hearing on FY2004 Defense Authorization

BEN NELSON:

Thank you very much, Mr. Chairman. In looking at the reforming of the acquisition process, clearly, as a former governor, I know how—and I have experience with—wanting to streamline the process to make things work faster, work better and better serve the taxpayers. And ultimately, we also want to make sure that those who are the users of the product or the services are going to benefit from any streamlining of the process as well.

So I commend the effort to try to do that.

And I'm also encouraged by the discussion that cost will always be part of it. And as I say this, I'm not going to use any eraser words—but—in connection with that suggestion that it's important.

In the process also, though, you have to think not simply of cost, but you have to think of whether or not there truly is an increased quality, increased serviceability, increase in availability, a number of other considerations. Getting the best value, I think, was the words that I heard being expressed.

I also spent time debating between privatization, challenging for private-public competition or private-private competition. I hope that the effort toward improving quality—best quality—is not just simply a drive toward the road of total privatization.

I hope that there is a retention of the goal of getting the best quality, whether it comes from the public or the private side, and that in any effort to create competition between private and private or private and public, that every effort is made to be sure that it's fair, with respect to the rules and the opportunities. Because that's the only way that you can get, I think, the best deal for our taxpayers, as well as the best available services or serviceability of products for the users—in this case, the military. No one wants to think about the possibility of lowest price, lowest cost, least value being achieved, favoring either the public or the private side.

Are you convinced that the efforts—and I'll ask this to the three of you—are you convinced that the efforts that you've made thus far truly push for best value, not weighing the balance in favor of one group versus the other, private or public?

ALDRDIGE:

Senator Nelson, let me begin by describing a little bit of the process by which the number of positions are available for the competition. The Department of Defense goes through a process in asking each of the military departments and the commanders of the various facilities what jobs here could be done by the private sector and what jobs could not be done by the private sector. In other words, those core functions that he, as a military commander, with a mission to perform, believes have to be inherently governmental jobs.

And then he looks at those. And he then provides a list of those which could be privately competed for the purpose—and not part of the core function necessarily of his mission.

Then those are identified. And that's the number we've heard about -- 452,000 jobs have been identified within the Department of Defense for the private sector, for competition, for sourcing competition.

We then identified through OMB, we said, "Look, let's try to get—let's make a plan to compete for 50 percent of those," which comes out to be the 226,000 that will be open for competition. And we will phase that over time because it takes an enormous amount of time.

Then those are competed in a plan. It so happens, about 60 percent of the time, the government wins the competition, but in every case—every case -- 25 to 30 percent savings for doing the function that was previously being performed by the government. So competition, in fact, works.

BEN NELSON:

That's the cost factor. What about best value?

ALDRIDGE:

Well, the process is that up until now, it has been a cost process. And that's what the OMB Circular is all about is: let's change that from a cost-only competition to a best value competition. And we have not exercised that yet because the process won't permit us to do so.

BEN NELSON:

Mr. Walker?

WALKER:

My answer would be: it's too early to tell. I think that their intention is to do that. There's two aspects of it. One is design. What is the design of the new process. Director Styles has not yet finalized what that final process is going to be. So I think we have to see what the final design is going to be.

And as we all know, implementation is key. Because you can have, you know, a design that looks good on paper. But the real key is how does it actually get implemented in the real world?

So I think it's too early to tell. Clearly, I think the intent is to do that. And I expect that we will be involved in trying to look at the actual application over time.

STYLES:

We have tried to be very clear from the beginning that this initiative is about bringing value to the taxpayer. We have said from day one that we don't care who wins. We care about competition.

We are so committed to that fundamental principle that we have actually changed a policy—or we have proposed to change a policy—for the federal government that's been in place for 50 years that says, "If it's commercial, the private sector can do it better."

And we have said, "No, if it's commercial, let's determine which sector can do it better, which sector can do it for a better value and, oftentimes, for a lower cost." When I talk about best value in service, there are many services that you don't want to be based on a low-cost determination, which is why we're trying to make these changes in the circular.

There are, however, a lot of things that you do want based on low cost. We want grass mowing to be determined based on low cost. So we don't want to preclude that by changing the circular and saying everything is going to be a tradeoff between cost and technical reasons.

BEN NELSON:

My time has expired. Thank you very much. Thank you, Mr. Chairman.