Army Outsourcing Put on Hold
Plan for Jobs Came to Halt After White's Resignation

By Christopher Lee
Washington Post Staff Writer
Monday, January 5, 2004; Page A15

The Army has indefinitely suspended plans to contract out as many as 214,000 military and civilian positions, an effort begun last year by then-Army Secretary Thomas E. White as a way to focus more of the military's resources on national defense.

The plan, known as the "Third Wave" within the Pentagon, could have affected about one in six Army jobs around the world. It would have provided a major boost to the Bush administration's effort to move large blocks of government work into the private sector if it could be done better and more cheaply by contractors.

But the initiative came to a standstill in April when White resigned after a two-year tenure marked by strains with Defense Secretary Donald H. Rumsfeld. Air Force Secretary James G. Roche has been nominated to be the new Army secretary, but the Senate has not confirmed him. His plans for the initiative are unclear.

Even before White left, progress on the initiative had slowed as top officials coped with requests from lower-level managers that thousands of positions be exempted from the process.

"The Third Wave is on hold right now," Army spokeswoman Jennifer Gunn said late last month. "When former secretary White left, it was put on hold, and nothing has been done or sent up to the Army leadership about it. At this time, there is nothing going on."

In an Oct. 4, 2002, internal memo explaining the initiative, White wrote that the Army needed to direct as many resources as it could to anti-terrorism efforts and let support jobs go to the private sector. On the line were the jobs of 58,727 military personnel and 154,910 civilian employees who perform such support functions as accounting, legal counsel, maintenance and communications.

The Army, which conducted two other rounds of privatization in the 1980s and 1990s, employs about 1.3 million people, including 222,000 civilians.

The plan was philosophically in keeping with President Bush's directive two years ago that agencies increase the amount of work not "inherently governmental" that could be put up for competition between the public and private sectors. If the private sector demonstrates that it can do the jobs more efficiently, agencies are supposed to turn the work over to contractors.

In an October report, the Office of Management and Budget found that federal agencies are actively studying at least 103,412 jobs throughout the government to see whether contractors could do them better and more cheaply. In all, agencies have identified 434,820 jobs that are ripe for competitive sourcing studies over the next few years, according to the report.

Federal employee unions, no fans of the larger Bush initiative, denounced the Army plan last year as a thinly veiled attempt to do away with their jobs only to benefit defense contractors. John Gage, president of the American

Federation of Government Employees, the largest federal employee union, said recently that the Pentagon should abandon the Third Wave altogether.

"Perhaps the reality of fighting the war in Iraq and having to depend on so many unreliable contractors for logistics has sobered up officials who in the past seemed virtually intoxicated by thought of an almost wholly privatized Defense Department," Gage said in a statement.

Some analysts also have raised questions about the Defense Department's capability to adequately manage its growing workforce of contract personnel.

White, however, presented his plan as sound management in his memo.

"The Army must focus its energies and talents on our core competencies -- functions we perform better than anyone else -- and seek to obtain other needed products or services from the private sector where it makes sense," he wrote.

That process is likely to continue even if the Third Wave does not.

Rumsfeld sounded a similar theme in pushing Congress to rewrite personnel laws at the Defense Department last year so that managers would have more power to hire, fire and reassign workers. In an appearance last month before the National Conference of State Legislatures, Rumsfeld said Congress had granted the department new personnel authority that would permit officials to shift more than 300,000 service members out of jobs that could be done by civil servants or contractors.

The new law "is going to enable us to do a much better job using the civilian workforce and the contracting workforce rather than using military people for tasks that need not be performed by military people," he said.