Author: Lou

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Food Stamps and Decisons

I’ve had the opportunity and honor to meet with Marines and Sailors in the field, working hard and doing the incredibly difficult things they do….all with enthusiasm and a smile. My first thought was, “It’s good to be way outside the Beltway!”  But that’s nothing new.  Somewhere in the attic filled with the boxes of all the command plaques and farewell pictures that I’m not allowed to put on the walls is my favorite, the ubiquitous “Pentagon in the Rear View Mirror” farewell picture, signed by all my shipmates who were so sorry to see me go.  My recent flight to freedom outside the Beltway has caused me to reflect on just how hard it is for many of the leaders in the Pentagon to leave their commands, far removed from the self-generated controversies  inside the Beltway, and plunge themselves back into the budget battles, policy proliferation and day-to-day crises that erupt in the Pentagon.  No wonder they are  happy  when they escape, even if only for a brief while.

 

 

So this is a round-about way to get to today’s topic, which is really all about decisions and an appreciation for just how difficult making them can be.  I remember listening to Bill Lynn, former Deputy Secretary of Defense, at a briefing where he was opining about some of the challenges he faced.  His point was that it’s really tough being the DEPSECDEF, because all of the easy decisions have be made by people below him in the chain of command.  He wasn’t complaining about that and I don’t blame him.  If you are in a leadership role and you find yourself making easy decisions, then I would submit something’s wrong.  Your value to the organization is in making those tough decisions that no one else can or wants to make.  That’s your “value proposition.”  I used to tell my staff that I was willing to make any decision they asked me to make, but the ground rules were once they came to me and I made a decision, they were stuck with it.  They were out of options.  That tended to weed out the easy ones. (I’ve always hoped that it wasn’t because my decisions were so egregiously bad, by the way) There’s a great book which has had a substantial impact (see my course on Ethical Decision Making) on my life as a leader entitled “How Good People Make Tough Choices” by Dr. Rushworth Kidder.  I commend it to you.  The basic premise is that just about anyone can decide issues of right and wrong, black or white, legal or illegal, but the ability of leaders to decide between two equally “right” options is essential and requires the special talents of a leader.  As a leader, you should strive to prepare yourself to make those types of decisions and reflect on the factors you consider when making them.  One example is a simple one.  It’s made every day in thousands of households every day:  Do I take the family out to dinner tonight, or do I save the money and put it in the college fund?  Both answers are equally good, I suppose.  I teach a class on ethical decision making based on Dr. Kidder’s book and I always ask the question,”When you are driving in the countryside eating an apple, do you toss the core out when finished?”  After all it’s biodegradable and some hungy creature might enjoy the treat.  It will actually help the environment.  Most people will say that they have done that.  But it’s always interesting when I ask if before they do it, do they wait until there’s no car behind them. Hmmmm. If it’s a good decision, why wait?

Here is an example of they types of tough decisions faced by the leadership: Do we cut Commissary subsidies to free up money for operations and procurement? The dilemma here is that DoD needs the money to fund and modernize weapons systems, but at the same time troops used over $103.6 Million in food stamps at base commissaries in 2013.  That’s a tough question to which either answer, yes or no, is correct.  Dr. Kidder points out that in the process one should first check and see it there might not be a third option that isn’t readily apparent.  Decision makers sometime get so focused on two options, they sometime overlook others.  For instance, with over $100 Billon in working capital funds throughout the DoD, if they set a goal to become just 1 per cent more efficient, they would generate the money for commissary subsidies.  I know our leaders have to make hundreds of these decisions each day.  I respect that and trust their judgement.  I only hope that in making their tough decisions they don’t become so focused on “yes or no”, that there might be a third alternative out there somewhere that was overlooked.

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Send Up The Count!

“Send up the count.”  I remember those words from my Second Class summer training as a midshipman.  We were spending a week in Quantico learning about the Marines by pretending to be Marines.  I remember our little band of about 15 mids crawling through the tick-infested forests around Quantico, being lead by none other than Captain Oliver North, USMC.  We thought this guy was God.  He introduced himself to us by repelling out of an H-46, decked out in camo paint and blowing up a bunker full of bad guys.  In order to keep track of everyone in the field, Capt North would send back the command, “Send up the count,” and the last guy would start with “one”, each person adding a number in turn, until the last guy would say, “Fifteen.”  The problem was the number rarely wound up at fifteen because someone was always getting lost.  Old Ollie would roll his eyes, curse under his breath and make us all stay put while he went searching for the wayward mids.  Eventually he would round us all up and off we would go, only to have the next count short a number or two and the whole scene would repeat itself Groundhog Day style.

That’s what came to mind as I was reading that the Secretary of the Navy has notified Congress that he’s changing the ship counting rules.  As I get it, he’s adding the 10 Patrol Craft deployed in 5th Fleet, reducing the number of Mine Countermeasures ships by 3, adding 1 High Speed Transport ship  2 hospital ships.  Here’s a copy of his letter to Congress.  So we have new rules……or do we?  I can’t seem to find what rules the SECNAV is changing.  In fact, when I was the N8, no one could produce the official rules.  I frankly don’t think they exist.  So I was somewhat amused to hear that the “rules” were changing.  Nowhere in his letter does he cite the document he is changing…..he’s just changing.  Remember the 600 ship Navy dream of the 80’s?  Here’s a link to a CBO study which actually lists the ships in the count.

  • 15 Carriers
  • 4 Battleships
  • 137 Escorts
  • 101 Frigates
  • 100 Attack Subs
  • 75 Amphibious ships
  • 31 Mine Warfare Ships
  • 69 Replenishment Ships
  • 27 Material Support Ships
  • 33 Fleet Support Ships
  • Classified number of Ballistic Missile Submarines

Total> 600 (Ahh for the good `ole days!)

The rationale used was “Only those ships that contribute to the Navy’s wartime mission through combat or direct combat support” will be counted.  That’s clear enough, although when looking at the list I have to wonder how Fleet Tugs contributed to combat support.

So I tried to find out exactly where the Navy number comes from today.  The Navy Today website says the Navy has 289 ships as of 12 March 2014.  What’s in the count you ask?  Well, that’s a hard thing to find out.  I finally got to a page which lists the names of all active ships and here’s what I found out (the numbers are probably off by one or two, but close).

  • 11 Carriers
  • 0 Battleships
  • 82 Escorts (CGs and DDGs)
  • 20 Frigates (17 FFGs and 3 LCS’)
  • 68 Attack Submarines ( includes 4 SSGNs)
  • 13 SSBNs
  • 34 Amphibious Ships ( includes 2 LCCs)
  • 12 Patrol Craft
  • 45 Replenishment Ships
  • 13 Mine Countermeasures Ships
  • 9 Joint High Speed Vessels
  • 9 Maritime PrePositioning Ships
  • 19 TAKRs (They are Ro/Ro’s that move the Army around)
  • 1 LSV
  • 2 Hospital Ships
  • 30 or so Cats and Dogs

Total= ~ 368 ships

If I take out Cats and Dogs and PC’s, JHSVs, etc I get a number that’s close to the advertised of 289.  Does it really matter?  Are we talking about how many angels on the head of a pin?  I suppose so, but it’s confusing to our supporters on the Hill and gives ammunition to our detractors on the Hill.  I think it would be a good thing to publish all the counting rules so that the number is not quite so mysterious.

This drill shows there’s plenty of room to fiddle around with the numbers to make them say just about anything.  I am really curious to see the authoritative document that delineates exactly how the Navy counts its ships. I don’t think it’s the 30 year shipbuilding plan and it can’t be found in the POM.

So far, the only thing I’ve seen is SECNAV’s latest letter which adds 10 PCs, 1 HST, 2 Hospital Ships and 8 Mine Countermeasures Ships=21.  I’ll spot the carriers, combatants, amphibs, subs, and supply ships for another 269.  That brings us up to 289.  That’s not counting JHSVs, and Maritime Prepo ships, TAGOS ships, Army Supply Ships, and a host of ships beginning with the letter “T” or “A”

So I am curious about the rules.  How about it Navy?  Send Up The Count!

 

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Risky Business

After getting wrapped around the axle yesterday on the tried and true budget method of “Salami Slicing” I never got around to opining on risk, so here goes!  During much of my early career, risk didn’t enter into my decision making process, at least not consciously.  Of course, flying from aircraft carriers is all about risk and how to manage it, but risk management is already baked in.  The “powers that be” know that if you have a certain number of practice landings, maintain technical currency in your aircraft and fly regularly, the risk of an accident is minimized.  Over the years I’ve seen the Navy’s thinking about risk mature.  The time was, when one went on deployment, you could expect to lose a couple of airplanes and several aviators in a typical 6-7 month cruise.  Because of a focus on managing risk, the loss of a single aircraft or crew member is a rarity.  (keep that thought in mind).  On a personal level,  as one moves up the leadership ladder, the onus for managing risk shifts from the institution to the individual leader.  My opinion is that one of the reasons people become effective leaders is that they concentrate on minimizing risk to the people and equipment under their command, not on minimizing personal risk to their themselves (careers). Of course, there’s always a healthy tension between accomplishing the mission and minimizing the risks associated with it.  Safety is paramount!!! But if safety were really paramount, we would never fly, because it’s a dangerous business!  That’s where leaders earn their pay—making the trade off between risk and reward.  In the Navy, it’s interesting to see how the various warfare communities manage risks.  In the Surface Navy,  the decisions on risk rest principally with the Commanding Officer.  The CO does this by being intimately involved in planning and executing the training, day-to-day operations and mission execution of the ship.  The CO has the Officer of the Deck and his Tactical Action Officer to do the minute-by-minute execution, but the CO is always available for problems as they arrive.  An aviation CO has to worry about many of the same things at the surface CO, but must depend on his crews to exercise judgment when hundreds of miles away for the ship. Hopefully the aviation CO has instilled a good sense of risk management in the aircrews when they have to make risk decisions without his/her advice.

The point of my little blurb is to highlight that operationally, commanders do a great job of managing mission accomplishment and risk so that mission is maximized and risk is mitigated, minimized or eliminated.  Fast forward to the Pentagon.  Now those commanders who were so good at minimizing operational risk must deal with a new risk, budget execution risk, or said another way, “What are the chances that this program will be successful, given the level of funding?”  I was one of those commanders.  As an operational commander, I insisted on making sure all risks associated with a mission had been considered and mitigated…….no less than about 98% chance of safe success was tolerated.  But when it came to taking risks associated with the Navy budget, I was far more tolerant.  For instance, “What’s the chance that an LCS will only cost $220 Million?”, I would ask the Program Manager.  When the answer came back,”About 20%”, I would say, “OK.  Guess we will have to go with that.”  Why was my risk tolerance so much greater as a budgeteer?  Most likely it was because most of the decisions affected events far in the future and I would not be around when programs matured.  That attitude was reinforced by the excessive optimism that always goes with budget building.  This notion of budgetary risk is not new nor mine.

Former CNO Vern Clark once asked me as the N81 (Navy’s Ops Research group) if we could characterize the risk built into the budget and it was a very hard thing to do.  I don’t remember all the details but as I recall we came up with several categories of risk:

  1. Institutional Risk.  The degree of support by leadership of a particular program.
  2. Execution Risk.  The degree to which a program was underfunded
  3. Political Risk.  The degree to which this program was supported by the Administration or Congress
  4. Financial Risk.  The degree to which the assumed efficiencies built into the budget were achieved
  5. Economic Risk.  the degree to which the economy would support the Five Year Defense Plan

Some of these risks were subjective and others data-based.  The aggregation of them would give the CNO an idea of how much risk was being carried by a particular program.  Financial risk was the most interesting of the four.  It turned out we discovered that we had assumed away tens of Billions of dollars in efficiencies, but never went back to see if we achieved the saving associated with the efficiencies.  In a sense, it didn’t matter because once we take the money, it is never put back.  I’ll end up by saying the FY15 budget on the Hill now has a fair chunk of “Efficiencies” in it.  Will they be achieved?  What exactly is being done to put these efficiencies in place?  How will you know if the efficiencies were achieved and what will you do if they are not? Are these efficiencies or wedges (unexplained cuts)? These are the questions the Hill should be asking the risk-takers in the Pentagon.

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The DoD Budget Deli: One Slice of Salami, Please.

There were several good articles in the papers regarding the DoD budget over the weekend. The Washington Post had a good one that provided a pretty good summary.  As an old Intruder guy I have to point out that the article notes the cancellation of the A6 Intruder, with a nifty link to some information on the Venerable Intruder. It’s not often one gets to scoop the vast reporting resources of the WaPo so here goes:A6 Intruder
Dear WaPo Editorial Board,

The Intruder was retired on 28 February 1997 and most of them are either in an underwater reef of the coast of St. Augustine (known as Intruder Reef), collecting dust at Davis-Monthan AFB or residing on a stick at some NAS front gate.  It is hard to believe  you confused the handsome, sleek Intruder with the Warthog, but to ensure future OpEds are factually accurate, I offer my services (at the standard rate!).

OK, that’s off my chest!  Back to the 21st Century. The Post article was entitled  “A  Defense Budget Based on Hope” and outlines some disconnects between rhetoric and reality.  As those of you non-military folks who read my musing know:  Hope is not a strategy, and that is just as true in the budget world as it is in the tactical world.  To be sure the building of the DoD budget is a complex spider web of interconnecting elements, each of which is generally independent of most others.  Each element is likely to have an evangelist associated with it (Congress, Combatant Commander, Contractor, Administration, Special Interest Group, Service Chief or Secretary, etc.) and each evangelist has some varying degree of  veto power.  Most decisions, especially the big ones, require consensus, so you can imagine how difficult it is to make  cuts to any one program.  That’s why the preferred method of budget cutting is the tried and true salami slice.  By the way, sequestration was just a salami slice, albeit a big one.  One of DoD’s points when countering sequestration was they weren’t allowed to make the decisions.  I contend that even if Congress had just handed DoD an undefined cut, given the decision making rules, in the end, DoD would have sliced the salami, just in a different way.  It’s the only thing that works because the “salami slice” method requires no accountability, affects all programs equally, doesn’t usually kill anything and makes all equally unhappy.  The art to surviving “Salami Slice” budgeting is to demonstrate that your program is so critical to national defense that it should be exempted  (usually personnel, health care, etc).  In the Navy, these were described as “Flagship Programs.”  Not only were Flagship Programs exempt from cuts, you generally had to plus them up.  Of course, all exemptions do is off-load a larger part of the bill to those programs who were not smart enough to come up with a reason for exemption.

As one of the old Dinosaurs, I was accused of always reverting back to the Salami Slice, despite the well-meaning intentions of all to make the budget process all about informed choices, analysis and supporting the strategy.  I tried but failed.  In the end the people who cried loudest about being allowed to make choices were unable to do so.  As the Head Miller of the Budget Grist Mill, I was required to grind whatever grist the mill required to submit the budget on-time (which is no longer apparently the case).  That required a trip to the deli, slicing the salami and living with unhappy people ever after. All in a day’s work.  Bob’s your uncle.  That’s that!!!!!!!

By the way, this isn’t what I wanted to write about today, but I got lost in the salami thing, so bear with me.  Tomorrow’s topic: Budget Risk and How I Learned to Love It.

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Top Shoe! General Powell was Right!

I was very pleased to see a piece in San Diego Union-Tribune this morning about the establishment Ship Turn a Top Gun-type school for our Surface Warriors.  VADM Tom Copeland, Commander of Naval Surface Forces established  “Top Shoe” (my term, not his) to foster a generation of young surface warriors who really know their craft, not just their weapons systems.  For those outside of the Navy, there are a few terms which you should probably know. Aviators are know as  “Brown Shoes” because they wore brown shoes with their working uniforms and their aviation green dress uniform (which was reserved for aviation only).   Aviators commonly referred to the Surface Lou's Photo Warfare community as “Black Shoes” because they  wore the traditional black shoes with everything, including their pajamas.  They also seemed to have penchant for wearing those thick plastic, black-framed eye glasses that no self-respecting Brown Shoe  would be caught dead in.  Over the years, aviators tended to drop the Black from the equation and generally used the term “Shoes” to describe their beloved surface counterparts.  I don’t know what’s happened in the last few years with aviator uniforms, but I know the Aviation Greens are gone and thankfully, so are the black glasses.

When I was on the Joint Staff during the time that General Powell was the Chairman of the Joint Chiefs, I remember receiving bits of wisdom on the occasions that I happened to be in a meeting with him.  There are the famous 13 rules for leaders ( in any position, military or otherwise) that General Powell is known for and worth repeating here:

  1. It ain’t as bad as you think.  It will look better tomorrow.
  2. Get mad, then get over it. (my personal favorite)
  3. Avoid having your ego so close to your position that when your position fails, your ego goes with it.
  4. It can be done.
  5. Be careful what you choose: you may get it.
  6. Don’t let adverse facts stand in the way of a good decision.
  7. You can’t make someone else’s decisions.  You shouldn’t let someone else make yours.
  8. Check the small things.
  9. Share credit.
  10. Remain calm.  Be kind.
  11. Have a vision. Be demanding.
  12. Don’t take counsel of your fears or naysayers.
  13. Perpetual optimism is a force multiplier.

I also seem to recall a few others that didn’t get so well publicized.  I can’t vouch for their authenticity, but with all due respect to one of my greatest role models, I have always attributed these two to the good General as well.

  1. There are no rumors in the Pentagon.  Sooner or later everything comes true.
  2. There’s nothing new in the Pentagon.  It’s all been seen before.

The establishment of the “Top Shoe” school reminds me of the second unofficial rule.  As a young lad I was very lucky to be assigned to a “Black Shoe” staff as one of the few aviators aboard (back then it was called a Cruisier-Destroyer Group) and  part of my training was to attend the dreaded Tactical Action Officer School (TAO).  It was the most intense six weeks of training I have ever experienced.  But when I graduated, I knew just about everything about operating the combat systems, the threat, tactics and the logistics of running combat operations.  In my mind it was a “Top Gun” for Surface Warriors.  Over the years I think that TAO training was scaled back in favor of more technical subjects.  With the  establishment of the new school it appears the emphasis is back and I think it’s a great idea. Let’s hope it doesn’t fall prey to the budget axe.

But remember…with all due respect to my surface buddies……..there’s nothing like launching from a carrier, zipping around at Mach 1, turning and burning against a worthy adversary, and winning the fight (Fox 2, You’re Dead!).  And after all that, you still have to come back and land your 20 ton machine of death on a pitching and rolling deck before you can brag about your victory in the ready room. That’s Top Gun!!!!!

 

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Was the QDR Written by a Presbyterian?

I commented last week on my expectations concerning the QDR and I wasn’t disappointed 2014 QDRwhen I got around to reading it yesterday.  After reading it through a couple of times (available here), I was still pretty much confused about what it was trying to say.  And it didn’t look much like a strategy document to me…mostly filled with budget numbers and reasons why we couldn’t do this or that because of it.  In the end, it’s definitely a document very much “informed” by the realities of the budget.  I came away with the impression that it was less about strategy and more about money, especially given the frequent references to budget woes.  I stand by my comments in the recent Q•D•Arrggghh  article about the difference between “constrained” and “informed.  I can’t tell the difference, nor apparently, can the authors of this tome.  It was pretty much more of the same from the last QDR…….nothing jumped out at me.

For fun, I wrote down a few of “Pentagonisms” from the Executive Summary which I thought I would share along with a short definition in normal-speak:

  • New Presence Paradigm: Overseas Bases
  • Hybrid Contingencies: Kludges
  • Proxy Groups: Terrorists
  • Dynamic Environment: The Real World
  • Asymmetric Approaches: More with less
  • Rebalance Tooth-to-Tail: Cut contractors
  • Win Decisively: Win
  • Rebalance: Cut
  • “Opportunity, Growth, and Security” Initiative: Slush Fund
  • Innovation:  Not in DoD dictionary 
  • Multi-lateral Security Architecture: Treaty
  • Force Planning Construct: Size
  • Efficiencies: Negative Budget Wedges

Well, I grow weary of writing them down.  I’ll say one thing for the document….It’s a Presbyterian minister’s dream.  Presbyterians are well know for their penchant for ORDER, ORDER, ORDER!!!!  Sermons are typically organized into three points with two or more sub-points and a healthy dose of references to Bonhoeffer and Kierkegaard.  My favorite Kierkegaard quote is “People demand freedom of speech as a compensation for freedom of thought, which they seldom use.”  As I read through it, I was trying to capture the taxonomy of thought.  Let’s see, we have 3 Strategic Pillars, 4 Core National Interests, 4 Strategic Imperatives, 3 Areas of Risk, etc.   And they are all interrelated and interdependent!  I can’t keep it all straight.

Anyway, the QDR is out and we can all tune back into Duck Dynasty, The Voice, or whatever other twisted view of reality you may retreat into every night.  And why is all this Energy stuff in there? Since when is the DoD the EPA?  (Sorry for the random comment but I just had to get it of my chest!) Perhaps the best part of the whole schmegegge is the Chairman’s Assessment at the end.  At least he puts out a list to which I can relate.  In the end what does it all mean and what are our real priorities?  According  to the plain language of General Dempsey:

  1. The survival of the Nation
  2. The prevention of catastrophic attack against U.S. territory
  3. The security of the global economic system
  4. The security, confidence, and reliability of our allies
  5. The protection of American citizens abroad
  6. The preservation and extension of universal values.

AMEN

(Why didn’t we say that in the beginning and omit the other 63 pages?)

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Meatball, Lineup & Angle of Attack

The House Intelligence Committee is looking into the apparently surprising Russian response to the crisis in the Ukraine.  I’m only a junior assistant policy wonk (one tour on Joint Staff as a policy guy) but as I heard this news on the radio this morning, a few random thoughts popped into my head which I thought I would share.

The first thought that came to mind is the similarly between intelligence analysts and meteorologists.  In the end their forecasts are just a guess…albeit an educated one.  It seems as though regardless of the accuracy of their reports, they seem to get a pass because, after all, “It’s just a guess.”  I grew up on a farm and I remember my father hanging on every word the weather guy on TV had to say because he had to make  some big decisions based on their forecast. If the weatherman said it was going to happen, my father believed him.  If it turned out he was wrong, my dad shrugged his shoulders and said “You can’t control the weather.” As a Battle Group Commander at sea, the first thing I wanted to hear in my morning briefing was the weather forecast so I could keep my ships and crews out of harm’s way and still accomplish the mission we were assigned.  I think the same thing is true in the intelligence world.  We can only make educated guesses into what may or may not happen, because in the end, we just don’t know. Given that we spend lots more money on intelligence (probably over $80 Billion a year) than on meteorology (NOAA’s FY 14 budget request was around $4 Billion), I would expect a higher degree of accuracy and more “education” (and coherence)  in the intelligence community’s guesses.  I expected my weather guesser to begin his briefing each morning with what he predicted yesterday and to give himself a grade on how he did.  Guess what?  The quality of his forecasts improved.  I would expect the Intelligence Oversight  Committees to do the same thing.  Otherwise the intelligence community is an “out of control” system with no accountability.  To be fair, Intel community leaders say they provided lots of information on the situation to the leadership, albeit conflicting in some cases.  I don’t know what I would have done if I had two meteorologists giving me conflicting information.  It’s gonna rain!….No, it’s gonna be sunny!    NO, it might be a hurricane!   Isn’t that part of the problem though?….Too many people with too much information, presenting confusing and often conflicting analysis?    My one take-away is that given the amount of money we spend on intel, it seems that we have more surprises than we should:  9/11,  Arab Spring, Russian intervention in Ukraine, etc.

So the big question on the Hill relates to the previous paragraph: How is it that given our vast intelligence resources, we are still surprised?  Despite the unpredictability of world events, I think it comes down to what we would refer to in the aviation community as a “breakdown in the scan pattern.”  The week I reported to my initial training in the A-6 Intruder at Oceana Naval Air Station in 1975 an A-6 crashed right next to the airfield in an area now known as Lynnhaven Mall.  It seems that they ran out of gas while trying to get their landing gear UP!   The gear worked fine in the “down-and-locked” position and they could have landed anytime. But they ran out of gas, orbiting 2000 feet overhead the field and all the while taking to the Skipper, OPs Officer and the Safety Officer.  How did that happen?  The crew, both airborne and in the Ready Room, were so focused on the gear problem, they forgot to check the gas….despite warning lights and alarms… and they flamed out.  I would suggest that the Intelligence Community also had just  a bit of a “breakdown in scan.”  We have become so focused on al Qaeda and the strategic “Swing to the Asia-Pacific” that we lost focus on other potential hot spots. Intelligence is all about expecting the unexpected…….the expected information comes from open sources.  I would hope that we use this latest surprise as an opportunity to re-examine our intelligence scan to make sure we don’t focus excessively on any one area.  Ask any carrier-based Naval Aviator and they will say a successful carrier landing is all about scan: “Meatball, line-up and angle of attack!” (and a little luck doesn’t hurt).

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$40 Billion: One Million at a Time?

As I was reading the morning news, I saw a piece in The Hill about SECNAV Mabus’ comments regarding the savings associated with “scrubbing” the $ 40 Billion or so the Navy spends on service contracts.  Service contracts can be just about anything from feeding Sailors in the chow hall to fixing the leaky toilets at the 4 Star’s headquarters building.  SECNAV says “We know we can save significant amounts of money just by setting up things like contract courts, which require … contracting officers to come in every year and justify the contracts.”  I don’t know about you, but I don’t think “scrubbing” every service contract, every year sounds like a way to save money.  Given the thousands of service contracts the Navy has, it would take an army (should I say Navy?) of contracting officers to  review and reissue these contracts.  I suppose I should say we already have a fair number of contracting officers so we would need more than the army we already have.  Each contract soaks up hundreds of man-hours to prepare, vet and issue on the government side, and just as many hours to prepare proposals in response from the contractor’s side.  That doesn’t sound like a very efficient way to administer service contracts…..one year at a time, one contract at a time?  I don’t think so.  Reissuing contracts year-to-year is a sure way to increase costs and increase the workload on an already overworked acquisition force.  Why would SECNAV say that?  It’s because the evil “Contractors” are easy targets and it’s a great way to deflect scrutiny away from the real issues, like the shipbuilding plan or the cost of maintaining 11 carriers, etc.  Here’s a plan: Focus less on individual contracts and focus more on how to administer them more efficiently and how to get the requirements generation process fixed.

The requirements process for service-related contracts doesn’t have to be that hard.  When the decision was made to “privatize” many of the mundane and non-warfighting related service tasks, the die was cast. The powers that be have decided that the people who stepped in to do those jobs (contractors) are one of the reason the Services can’t get their budget house in order.  Not so, I contend.  Service contractors are now an integral part of the military, performing those tasks that are  seen as part of the “tail” in the tooth-to-tail debate former SECDEF Rumsfeld initiated.  If you are not tooth, you are a candidate for a service contract.  I don’t think the average Joe in middle America has an appreciation for all the things these contractors do……Feeding Midshipmen at the Naval Academy, providing medical care for dependents, servicing and maintaining aircraft in the training commands, sailing our Military Sea Lift Command ships (yep, they are contractors), fixing leaky faucets, and building our warships!  They are all contractors.  And as mentioned by SECNAV, they cut the grass too!  But despite the intuitive feeling that it doesn’t have to be hard to know what the requirements are, it can be very hard to actually determine requirements.  Take for instance the maintenance of our bases…..mowing the grass, landscaping the entrance at the front gate, emptying the dumpsters, etc.  I recall that the Navy had a great system for determining how much “base maintenance” was needed.  It was an elaborate system of service levels, with each level being defined in minute detail….in the case of base maintenance, Level 4 might be mowing the grass once a week, emptying the dumpsters twice a week and fixing up the entrance at the front gate a couple of times a year.  Level 2, on the other hand, might be mowing the grass once a month, emptying the dumpsters when they were overflowing and never sprucing up the commissary parking lot.  Each level had a cost associated with it.  I recall during a budget session one year that the decision was made to go with Level 2.  Sound good?  We all thought so until the CNO make his first base visit of the year………Guess what?  When he got back there was a big dust up because the grass hadn’t been mowed in weeks, the dumpsters were full and the Commissary parking lot looked like the back lot of a disaster movie.  Lesson learned.   While it’s easy to talk about reductions in services, especially those related to quality of life, in practice it is difficult to live with the consequences.  So rather than get wrapped around the axle of rethinking the requirements every year, going through the machinations of issuing yearly Requests for Proposals, requiring vendors to produce proposals in response and spend lots and lots of money on both sides in the process, why don’t we figure out a way to get the requirements correct once and for all, issue efficient, multi-year contracts and put precious executive attention on the things that really matter, like how many ships the Navy needs, and how to pay for them.  That’s where the Secretary adds value, not in determining how often to mow the grass.

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Stealth works in the Budget Too!

First thing: Yesterday’s blog on Shared Services fell flat on the website with only a handful of hits.  I take it the world of Shared Services is not so hot on the list of “interesting” topics.  But there’s still a lot of money to be saved there.  In fact, I would contend that there’s a lot of money floating around in areas that most people don’t find so interesting.  It’s the uninteresting that ironically is the most interesting in terms of budget cutting.  They escape scrutiny during the year-to-year  budget battles, floundering in cash. The big programs which matter, act like a Black Hole, sucking up more and more money with less and less light escaping.  On the other side of the coin, the programs with marginal dollars become the darling of the Pentagon budget cutters.  It’s ooh  so easy to cut a Billion or so from the commissary subsidy program, but try and take $10 Million from the JSF and the fan starts getting hit with “not-so-nice stuff.”  With leaders unwilling to take on the issues that really matter and foolishly focusing instead on the margins, I would suggest that they take a look at the “stealth” portions of the budget, those areas with relatively large dollars, but never targeted for cuts.  Forcing agencies into a shared service environment is one of those areas. (There, I said it and I promise never to write another word on Shared Services!).  When looking at these stealthy programs, there’s virtually no risk of offending a large defense corporation, a Congressman or Senator, or even another Service because they have no constituency.  When I did the budget for the Navy I used to think that out of the $130 Billion or so under my control, every Million had a evangelist waiting in the wings to mount the pulpit and extoll the value of their million over the remaining 129,999 million.

How about the family of Defense Working Capital Funds (WCF) and Revolving Funds?  These funds exist  in the shadows, out of public scrutiny, but with lots of dollars associated with them.  For those of you not familiar with working capital funds I suppose you could relate them to petty cash, or “Walking Around” money.  It’s the corpus of operating cash the Department uses to pay  bills day-to-day.  Here’s a link to short list of many of the DoD funds and what’s in them.  In simple terms, when  Organization A provides a service or item to Organization B, it uses the WCF funds to pay their costs and they bill Organization B, using rates set at the beginning of the year.  A takes money from the WCF and B pays it back (at least in theory).  How much money is in these accounts you ask?  North of $100 Billion…..Yep, that’s correct…$100 Billion!!  That’s roughly 20 per cent of the budget.  One of the reasons there’s so much money in these funds is the requirement to carry 7-10 days of cash on-hand.  In this age of electronic accounting, ERPs and near-perfect connectivity I can’t for the life of me figure out why it has to be so much.  Most of these WCFs have their own accounting systems (Darn! I said I wasn’t going to mention Shared Services again).  To be fair, these funds are as close to being run like a commercial business as anything in DoD, and individually they are generally well managed.  But there’s not a lot of cross-talk, the rates don’t generally reflect the real costs of good and services and they are sometimes used as a cash cow to buy just about anything.

So the next time you hear the DoD poobahs whining about the cost of  benefits, people, etc.,  why not ask them about the Working Capital Funds and what they are doing to trim them back.  I’ll bet you they will have to take that question for the record!  Not in their scan because it’s stealthy money, they don’t understand how it works and would rather slash the margins because of their inability to slash the big ticket items.

 

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Play Nice and Share

Ever watch toddlers playing together?  It doesn’t take long for one of them to decide that something belongs to them and they jealously guard it.  Sometimes even hitting other children trying to take the toy.  That’s a lot like what sometimes happens in the world of Shared Services. Agencies are sometimes not all that anxious to share their IT systems.  babiesplayOn the flip side, other agencies are not usually begging to migrate their systems to someone else’s system.  There are bright spots in the Federal Government…just check out this website to see some great examples of Shared Services in action.

Why then do organizations continue to resist the sharing of IT-related services?  Mostly because of a perceived lack of control would be my guess.  “I don’t want to be at the mercy of something or someone that I can’t control,” seems to be the prevalent attitude.  Why, on the other hand, do agencies decide to set up Shared Services Centers?  It’s the money!  The prospect of using another agency’s money  to pay their bills in these times of tight government budgets is very tempting.  So regardless of the motivations, it’s a win-win.  Everybody gets to benefit from reduced costs in procuring, maintaining and upgrading the systems.  And the question of control is pretty silly don’t you think?  I have seen the same issues of control arise in my other life in the world of non-profits.  Admin and IT costs were eating our lunch, reducing the funds available to help our constituents. We decided to approach similar organizations and see if they would be interested in sharing back-office and IT functions.  We are all under the same financial pressures so you think it would be no brainer to share some things.  But a funny thing happened.  There were organizations that would rather just wither and die than to share anything.  That’s a rather short-sighted view and does a dis-service to those the organizations are supporting, don’t you think?  In the end, survival trumped control and the economics drove us to share back-office and IT functions, without losing our outward identity to the public.  Yet we reduced administrative costs by over half.  Survival can be a powerful motivator.

That’s what’s lacking in the Federal Shared Services arena–survival.  Survival is not an issue for most Federal organizations.  It doesn’t matter how poorly they are run or how woefully inadequate their budget is, they just keep on keeping on.  So I think the key to enforcing Federal Shared Service initiatives is to put an element of survival into the mix.  How to do that I leave up the the wonks, but I would suggest it’s all about the money.  Put someone in charge and give them the purse strings.  Then things will happen. Until then we will just jealousy guard all our toys, refusing to share with anyone. That’s not how I want my kids to be and it’s now how we should want our government to be.