Outsourcing : an examination of the Marine Forces Pacific Cost Reduction Initiative

Abstract

Department of Defense (DoD) has begun the revolution in business affairs by renewing initiatives for outsourcing as a means to meet an estimated $60 billion shortfall for force modernization. The Marine Corps has projected outsourcing to achieve $110 million in annual savings by FY 2004. The Commander, Marine Forces Pacific (MARFORPAC) has designed and is implementing a Cost Reduction Initiative (CRI) to save approximately $38 million annually by FY 2004. OMB Circular A-76 provides guidance for outsourcing commercial activities. This thesis examines previous DoD experience with outsourcing and the MARFORPAC CRI to determine the lessons learned that may be integrated during implementation of the CRI. This study analyzed outsourcing efforts of other services and developed criteria that may be applied to contracting out services throughout the Marine Corps. Lessons learned include the development of an accurate performance work statement; the use of multifunction studies to provide increased savings compared to several single function studies; the use of best value criteria and a performance-based contract to increase the probability for successful contract awards; command commitment to outsourcing is a key ingredient at the local level; and to keep employees well informed about potential outcomes during the outsourcing process.