Arsenal goes head-to-head with private firms

Weapons subcontractors, get ready. You've got a new competitor for defense dollars.

Rock Island Arsenal--the largest government-owned weapons manufacturing arsenal in the western world--is competing with private companies for the first time ever.

In the 1998 Defense Authorization Act, Congress gave Rock Island the go-ahead to see what life is like in the marketplace. The act authorizes a two-year trial period, during which the Defense Department's inspector general will evaluate the pilot program. Rock Island is only allowed to compete as a subcontractor for private companies holding DoD weapons contracts. The arsenal cannot be a prime contractor and cannot compete for non-weapons contracts.

But Rock Island is happy to at least dip its foot in the competitive waters. Outside the pilot program, the arsenal operates under strict rules designed to prevent it from taking business away from private companies.

Current statutes require that prime contractors interested in subcontracting work to Rock Island must first provide DoD with a "certification of commercial non-availability." The prime contractors must show that they attempted to find the products or services in the private sector and explain why they couldn't find them.

Brent Langley, a business development specialist at Rock Island, says the intent of the pilot program is to eliminate the burden on prime contractors to prepare the certification of commercial non-availability.

The certification requirement still applies to many of the arsenal's business lines, including logistics and base support.

The arsenal must also follow strict cost accounting rules aimed at preventing government entities from hiding overhead costs, a practice that would give them a competitive advantage over private companies.

"We are under very strict costing requirements such as the Anti-Deficiency Act and other statutory and regulatory accounting requirements," says Larry Manecke, an attorney at the arsenal. "We tend to be more conservative in our costing so as not to be in violation of any statutes and rules."

Langley says the pilot program will make it easier to bring in new business. But first the arsenal must get the word out to prime contractors about the pilot program.

Two other arsenals, McAlester Army Ammunition Plant in Oklahoma and Watervliet Arsenal in New York, have also been authorized to compete for subcontracts.