Rethinking Governance of the Army's Arsenals and Ammunition Plants

By W. Michael Hix; Ellen M. Pint et al. | Go to book overview
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Chapter Six
FEDERAL GOVERNMENT CORPORATION OPTION

The last chapter addressed the privatization option. This chapter turns to the federal government corporation (FGC). We consider the FGC option an intermediate business arrangement that could lead to full privatization. As an intermediate arrangement the FGC option should simplify the managerial complexities of converting GOGO and GOCO facilities to private ownership. This chapter begins by providing some background on FGCs, briefly characterizing them and recounting the legislative underpinning for them. Then, using the two arsenals as an example, it describes how they might be converted into an FGC, suggesting a notional organization, corporate mission, charter, and exemplar business plan. As part of the business plan, the chapter analyzes the business areas that the arsenals could compete in, given their facilities and workforce. It also describes the level of efficiency the arsenals would have to achieve to compete with industry, and it makes some estimates of the revenues they might generate as an FGC.

The reader will note the absence in this chapter of a lengthy discourse on the potential objections to an FGC similar to that on costs and risks in the previous chapter on privatization. Such a section is unneeded in this chapter for two reasons. First, an FGC as an end state simply carries less than even the modest risk associated with privatization. This chapter deals with FGC costs in some detail. Second, if the Army decides to use the FGC as an interim solution on the way to privatization, the discussion in the previous chapter applies.


BACKGROUND

As explained briefly in Chapter Four, FGCs operate at the boundary between the public and private sectors and have some of the characteristics of both types of organization. Congress establishes federal government corporations to serve public purposes while acting free of many of the legal and regulatory constraints of executive branch agencies. They operate as self-sustaining commercial organizations that provide goods and services of national importance that are not provided adequately by the private sector. Unlike government

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