Since 2010, as the U.S. military has transitioned from combat to sustainment operations in Iraq and Afghanistan, the workload at the installations that support, outfit, arm, equip, and feed American Soldiers – the Army Materiel Command organic industrial base, or OIB – has decreased by almost 40 percent.
According to Jim Dwyer, principal deputy chief of staff for Logistics and Operations Planning, U.S. Army Materiel Command (AMC), bringing Warfighters home has created a peace dividend for those in industry and academia with an interest in helping to sustain the OIB’s capabilities. “During the [Afghanistan] surge,” Dwyer said, “when we were running two to three shifts in all our organic facilities, our capacity to do work with partners was decreased. We had to produce the products for the Soldiers. That was our main objective. But now we have more capacity and we have the tooling, the buildings, and the highly skilled personnel, and our ability to partner with others has grown. As our organic workload comes down, we are open for business, and we have more capacity that we’re willing to share.”
A partnership is fundamentally different from a traditional defense contract, a transaction in which a private-sector vendor provides a product or service for a negotiated price.
The public-private partnership (P3) program of AMC allows an Army organization and one or more private industry entities to perform work or use Army facilities and equipment. The program has been in existence for more than 18 years, but in recent years the mutual advantages it offers to the military and private industry have made it a key strategic component in sustaining the Army’s organic industrial base: a unique enterprise, consisting of more than 20 installations and their specialized workforces, that offers critical capabilities and skill sets – some of them available nowhere else in the country.
During the wars, and particularly over the past 10 years, the Army has invested millions in its Capital Investment Program, or CIP – buying new tooling or software, in some cases redesigning facilities to make the industrial base more productive. “And now we have some very high-technology tooling that is now available for use in partnering contracts with folks from the civilian sector,” said Dwyer, “a billion-and-a-half [dollars] worth of tooling and facilities that are even more available for partnering contracts and relationships than before the war. Before industry spends any of their own money on facilities or tooling, they really ought to take a look at what the organic industrial base has to offer. That saves them money. It also saves us money, and keeps our skill levels high. So it’s a win-win.”
Types of Partnerships
“Partnering” is defined by AMC as an arrangement between government agencies, or between government agencies and one or more industry or educational partners, under which a government-owned, government-operated AMC depot, arsenal, R&D center, ammunition plant, or other facility provides products, services, development R&D, or use of facilities and equipment to a partner.
A partnership is fundamentally different from a traditional defense contract, a transaction in which a private-sector vendor provides a product or service for a negotiated price. It’s worth noting that the rules governing such contracts – codified in the Federal Acquisition Regulation, or FAR – require a sequence of solicitations and provisions that tend to be far more complex, and more costly, than the requirements for partnerships.
In fact, recent federal statutes have created and revised elements of the rules governing partnerships – codified in U.S.C. Title 10 – to make partnerships easier and more profitable than ever. For example:
- 10 USC 4544, the most “customer friendly” statute, allows all OIB organizations to enter into partnerships for facility use for the production of goods for commercial firms, and allows for different forms of payment;
- 10 USC 2474 encourages partnerships with AMC facilities designated as Department of Defense (DOD) Centers of Industrial and Technical Excellence (CITEs);
- 10 USC 2667 allows for the leasing of non-excess facilities and equipment; and
- 10 USC 2539b authorizes the sale of services for testing materials, equipment, models, computer software, and other items – a statute that, Dwyer pointed out, enables Army laboratories to partner with civilian universities and laboratories. “The statutes have really opened up what we can do,” he said. “It’s a continuum, from leasing building space to actually providing labor – and we can actually produce our finished goods as a subcontractor to a civilian firm. The aperture is extremely wide.”
Partnerships with AMC generally fall into one of three main categories:
- Teaming or work sharing, which incorporates a combination of Army depot and contractor facilities and employees to co-produce or repair weapon systems, equipment, and components. “A common example of a partnership is when we provide maintenance to either overhaul aircraft or ground systems,” said Dwyer. “And we partner with the OEM [original equipment manufacturer] to provide the labor. They provide the parts and kits – literally deliver them to the production line inside our depots or arsenals, or even to some of our ammo plants – and we turn the wrenches and produce the final product. That’s a very popular partnership type, where they provide the parts, we provide the labor in our facilities using our tooling, and then we produce the finished good.”