This report provides an overview of private-sector involvement in the provision of support services in the U.K. Ministry of Defence (MoD) and the U.S. Army. First, we provide an introduction to outsourcing and privatization initiatives in the United Kingdom. We then detail the application of these initiatives to housing, base operations, and logistics services in the United Kingdom and offer examples of comparable U.S. Army initiatives. Each chapter ends with “lessons learned,” summarizing problems encountered and recommending methods to integrate private-sector organizations and market institutions to improve the performance and reduce the cost of military support services.
The information in this report was originally prepared as background material for a three-day conference on Privatizing Military Installation Assets, Operations, and Services, held April 14–16, 2000, at Ditchley Park, Oxfordshire, U.K. The conference was sponsored by the Assistant Secretary of the Army for Installations and Environment. Participants included senior military leaders, government civilians, and industry representatives from the United States and the United Kingdom. The purpose of the conference was to discuss the British experience with privatization and explore its applicability to the U.S. Army.
In the United Kingdom, a wide range of military support services are performed by unified, cross-service agencies making substantial use of private suppliers and competitive mechanisms. Over the past 20 years, top-down initiatives undertaken by the governments of three Prime Ministers have provided the impetus for this high level of private-sector involvement.
These initiatives can be categorized into three broad types. The first type directly increases private-sector involvement in providing assets and services to MoD (these include Market Testing, Privatization, Competing for Quality [CFQ], the Private Finance Initiative [PFI], Public-Private Partnerships [PPP], and Trading into Wider Markets). The second type incorporates market-like mechanisms into public-sector organizations (these include Executive Agencies, Resource Accounting and Budgeting [RAB], and the implementation of recommendations generated by the Strategic Defence Review and Modernising Government). The third type changes the way MoD conceives and designs contracts with the private sector (these include the Levene Reforms, Building Down Barriers [BDB], the Smart Procurement Initiative, and Restructuring the Industrial Base).
Because of a lack of published data or follow-up studies, it is difficult to assess how these initiatives have affected the cost and performance of specific MoD services. However, there are some more general indicators of MoD's progress in implementing efficiency savings, procurement reforms, outsourcing,