Aldridge letter to OMB

26 Dec 01 MEMORANDUM FOR DEPUTY DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET SUBJECT: Management Initiatives for the FY 2002 Budget; Expanding A-76 Competitions Your March 9, 2001 memo directed the competion of public-private competitions or direct conversions by the end of FY 2002 on not less than 5% of the positions listed in the DoD FAIR inventory. Your July 13, 2001 budget guidance increased this to 10% in FY 2003, for a cumulative total of 15%. Your October 30, 2001 memo and associated standards for success on the Executive Branch Management Scorecard expand the requirement to 50%.

The Quadrennial Defense Review (QDR) altered our defense strategy and placed particular emphasis on homeland defense. The effect of these actions on our manpower structure is still under review. Rather than pursuing narrowly defined A-76 targets, we propose to step back and not confine our approach to only A-76. We will look for the best instrument available-whether through competitive sourcing, re-engineering, divestiture, privatization, public-private competition, public/private partnering, diversification, etc.-to determine the most efficient and effective way to do government business better. Such a reassessment may very well show we have already contracted out capabilities to the private sector, that are essential to our mission or that divestiture of some activities may be more appropriate than public-private competitions or direct conversions.

We share the goal of driving more efficiencies throughout DoD, but we must have the flexibility to determine and manage the most cost-effective mix of their total work force (civilian employee, military, and contractor personnel), consistent with military requirements and readiness. Focusing on only a portion of the in-house workforce has two shortcomings: (1) it ignores the total workforce (inherently governmental, reviewable, contractor) and (2) it doesn't consider both labor and non-labor factors. Our preferred approach, as discussed in the QDR, involves emphasizing divestitures of non-core missions, regardless of who is performing them, whether military, civilian employee or contract employee. Resulting savings would be available to reinvest in higher priority programs within the Department. We will use the wide variety of tools or technology that are available to achieve additional efficiencies.

As I discussed at the November 15 Commercial Activities Panel (CAP), the Secretary has established the Business Initiative Council (BIC), charged with changing our business processes to improve mission effectiveness and reduce costs. The BIC, which I chair, includes the Service Secretaries and the Vice Chairman of the Joint Chiefs of Staff. Responding to the Secretary's imperative to find more efficient/effective processes and savings, especially in light of September 11, 2001, the Services are undertaking a post-September 11 assessment of their requirements, in light of QDR guidance, the Efficient Facilities Initiative process and the efforts of the CAP.

Because gaining overall efficiencies is even more crucial since September 11, we will expand our focus to generating savings, not just taking manpower reductions. The BIC is developing a plan for achieving business efficiencies across the Department, concurrent with the CAP initiative, to incentivize high performance, government-wide. The BIC will develop quantifiable methods for documenting savings, so they may be incorporated into the FY 04 President's Budget. We have already identified some quick hit initiatives, which are just the beginning of a more detailed set of initiatives we will see as this process matures.

Secretary Rumsfeld is committed to improving the efficiency of the Department and ensuring resources are allocated to high priority programs. To do this, we must have the freedom to manage limited resources in ways that best support our strategic objectives and evolving national security strategy.

(signed) E.C. Aldridge, Jr.

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