Bill targets logistics outsourcing

The House has hogtied the Army's $1 billion program to modernize its logistics operations, with obscure language tucked into its version of the fiscal 1999 Defense authorization bill.

The story of the Wholesale Logistics Modernization Program (WLMP) highlights the political battle that sets those who want to keep jobs against the job-cutting reforms needed to help the Defense Department in a tight budget.

The Army anticipates using WLMP to save money by modernizing its logistics systems and by privatizing software centers in St. Louis and Chambersburg, Pa., both of which support Army legacy systems. Although DOD would shift only 517 civilian jobs to private companies through WLMP, industry sources and consultants said Congress views the shift as "the tip of the iceberg" in the outsourcing and privatization of DOD operations.

The WLMP procurement is managed by the Army Communications-Electronics Command (Cecom) at Fort Monmouth, N.J., the subordinate command of the Army Materiel Command, which has 60,000 employees scattered at depots nationwide. Many of the depots are in small communities where AMC is the largest employer. The congressionally mandated "Commission on Roles and Missions of the Armed Forces'' report, which was issued in 1995, called for outsourcing of many of the functions the depots perform.

WLMP has spawned what an industry source called a "congressional firestorm" created by Army employees in St. Louis, part of which is in the congressional district of House Minority Leader Richard Gephardt. Gephardt has repeatedly pressed Cecom and AMC to modify or delay the program, according to informed industry sources. Gephardt could not be reached for comment.

Rep. Herbert Bateman (R-Va.), whose district includes Fort Lee, home of the Army's retail software logistics support activity, also has opposed WLMP. In a letter to Jayson Spiegel, acting assistant secretary of the Army for manpower and reserve affairs, Bateman, who is a member of the House National Security Committee (HNSC), said WLMP's planned outsourcing in St. Louis and Chambersburg "places national security at risk." Bateman asked Spiegel to require the Army Audit Agency to conduct an "intensive" study of the outsourcing/privatization planned under WLMP.

Bateman also asked the Army to postpone any actions that would lead to the outsourcing of jobs at the Logistics Systems Support Center in St. Louis and the Industrial Logistics Support Center in Chambersburg. The House DOD authorization bill contains language that effectively precludes the privatization of those central software design activities, which is a key component of the WLMP program.

If this language survives into the final DOD authorization bill, "WLMP will be dead on arrival,'' one industry source said. A Cecom spokesman said the Army is conducting the audit requested by Bateman, and it will review the WLMP schedule when that study is completed.

Thomas Michelli, a former Cecom manager who is now a consultant who has followed WLMP closely, believes Congress views the program "as the beginning of efforts to get DOD out of the business of doing what can be done by industry." But Michelli said he believes the program "is salvageable" if the Army can demonstrate to Congress that privatization does not mean unemployment for its constituents.

Erik Pages, vice president of Business Executives for National Security, said Congress does not have to look far to find a privatization success story. Last year, Pages said, Hughes Electronics took over operation of the Naval Air Warfare Center in Indianapolis "with only 13 employees displaced out of more than a thousand, and it's better to have a private employer there because it's going to bring in more work and more jobs." Congress "wants to have it both ways.They say they want reform, but then they don't want to make the tough decisions reform requires. No one is going to save money by maintaining the status quo,'' he said.

Tom Hewitt, chief executive officer of Federal Sources Inc., believes Congress is sending the wrong message with its actions to halt WLMP. "Our government seems to be unique in ignoring the business advantages of outsourcing to save a few jobs— jobs that would move to the private sector with better pay and benefits in many cases."

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