Outsourcing Base Operations Support Functions: The Laughlin Experience - Air Force

Program Manager, Jan, 2001 by Rene G. Rendon

In a recent DoD Acquisition Reform satellite broadcast, Stan Soloway, Deputy Under Secretary of Defense (Acquisition Reform), and Director, Defense Reform Initiative, stated that the A-76 cost comparison process and competitive sourcing is "a critical management tool ... and relies on the benefits of competition to determine the most effective and cost-efficient means to provide a wide range of services to support DoD's mission."

He went on to say that "A-76 cost comparisons have consistently concluded the obvious - competition drives better efficiency and higher performance and saves taxpayer dollars." [1] Indeed, as DoD continues down the right-sizing path, more and more base functions, normally performed by government personnel, are now being outsourced to industry. Inevitably, the effectiveness of the acquisition tools and processes used by the base in the outsourcing effort will have a direct effect on the success of the resulting contract and the accomplishment of the base's mission.

This article will describe the Air Force outsourcing program, focus on one base's experience with outsourcing, and then provide some lessons learned on outsourcing base operations support functions.

Outsourcing - AF Takes the Lead

Outsourcing, or "contracting out" is defined as the transferring of the performance of a function, previously accomplished in-house, to an outside provider. [2] An example of outsourcing is accomplishing an Air Force Base's airfield management function through a contractor rather than using Air Force personnel. Outsourcing entails competing a function currently performed in-house with an outside provider. When that competition shows outsourcing to be more efficient and effective, the Air Force contracts with a commercial provider. [3]

The Air Force outsourcing program is aimed at accomplishing one goal: institutionalizing the optimum use of public and private resources in support of the Air Force mission. The Air Force Outsourcing and Privatization (O&P) program, however, is focused on accomplishing four goals: sustaining readiness; finding opportunities to improve performance and reduce costs of commercial activities; generating savings for Air Force modernization priorities; and shifting more attention, personnel, and assets from non-core to core activities. [4]

While all of the DoD agencies have been implementing an outsourcing strategy to some extent, the Air Force has taken the lead. Over the past 20 years, the Service has netted annual savings of about $500 million. [5] Currently the Air Force is focusing on outsourcing depot maintenance, military family housing, and base operations support. Recently, the Air Force has outsourced base-level functions such as aircraft and engine maintenance, grounds maintenance, civil engineering operations, supply, and transportation.

The Laughlin Experience

Laughlin Air Force Base, located in Del Rio, Texas, about 150 miles west of San Antonio, is an Air Education and Training Command (AETC) base with a Specialized Undergraduate Pilot Training (SUPT) mission. The base provides pilot training to Air Force and international students in the T-37, T-38, and T-1 aircraft. Laughlin is also the site of AETC's regionalized jet engine intermediate maintenance facility, which provides engine maintenance on J69 and J85 engines for Laughlin, Randolph, Sheppard, and Vance Air Force Bases.

Laughlin began outsourcing in 1980 when its vehicle operations and maintenance (VOM) function was contacted out. Since then, five additional A-76 cost studies have been completed on the following functions: transient aircraft alert; grounds maintenance; aircraft maintenance; Base Operations Support (BOS), which includes civil engineering operations, supply fuels, and transportation; and jet engine maintenance.

Currently Laughlin manages over 20 major service contracts ranging from airfield management to food service management. One of Laughlin's two most recent outsourcing efforts is the multimillion dollar BOS contract. This contract is for civil engineering operations (facilities management, pest management, plumbing, utilities), supply transportation, fuels, and vehicle operations and maintenance. The contract, awarded in 1996, is a firm-fixed price contract for one basic year with four additional option years.

Laughlin's other recent major outsourcing project is the AETC Engine Regionalization Repair Contract (ERRC). This is a command-managed contract for the intermediate maintenance of engines for the T-37 and T-38 trainer aircraft of Laughlin, Randolph, Sheppard, and Vance Air Force Bases. This contract awarded in 1997, is a fixed-priced incentive contract with an award fee.

Lessons Learned

Laughlin's experiences with the BOS and ERRC contracts have provided AETC and the rest of the Air Force with some valuable lessons learned on outsourcing major services, These lessons learned deal not only with the obvious contracting processes, but also with the not-so-obvious indirect impact of outsourcing base functions. The remainder of this article will discuss some of Laughlin's experiences and the more significant lessons learned.