Rethinking Governance of the Army's Arsenals and Ammunition Plants

By W. Michael Hix; Ellen M. Pint et al. | Go to book overview

Chapter Five
THE PRIVATIZATION OPTION
The previous chapter proposed a strategic vision of the Army's industrial ordnance base and described four ways the Army might move toward achieving that vision. This chapter discusses one of those options—privatization—in more detail. It describes how privatization would be accomplished. It then lays out and discusses the arguments against privatizing: market conditions, cost, and risk of mission accomplishment.Since the GOCO ammunition plants employ relatively few government civilian workers, a sale of these facilities would be relatively straightforward. For the reasons laid out in Chapter Four, direct privatization of the GOGO ammunition plants and arsenals is infeasible, but eventual privatization of the arsenals could be possible after a transition stage as a federal government corporation. This chapter therefore concentrates on the privatization of the GOCO ammunition plants, but it also includes examples from the arsenals.As discussed in the Phase 2 report (Hix et al., 2003) and in Chapters Three and Four, our assessment takes as an underlying principle the imperative to rely on the private sector for the provision of ordnance materiel unless overriding considerations dictate to the contrary. In principle, privatization could resolve many of the problems described in Chapter Three.1 Its benefits include:
Removal of management distractions by divesting the Army of the organic industrial base, freeing military and civilian personnel to focus on issues more central to the Army's mission.
Ability of private-sector owners to bring in additional workload or to redeploy assets not currently used for ordnance production.
Increased visibility of the full costs of ordnance production by removing restrictions on competition associated with the Arsenal Act, under which the
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1
As one reviewer pointed out, privatization offers only the potential for achieving the benefits listed below. Outcomes depend on the actual relationship between the government and the contractor.

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