Army's logistics outsourcing effort is A-OK

Army's logistics outsourcing effort is A-OK


When news of the $680 million contract to overhaul the Army's antiquated wholesale logistics system filtered down to 400 Army Materiel Command employees in two software development centers in Pennsylvania and Missouri, they feared the worst.

Would they find new employment at comparable pay with Computer Sciences Corp., the chosen contractor? Would they retain their government benefits? Would they be promised long-term employment?

'There was a lot of trepidation about how they were going to be taken care of,' recalled Paul Capelli, program director for the Wholesale Logistics Modernization Program. Capelli manages the contract for the command and is based at the Communications and Electronics Command at Fort Monmouth, N.J., the first command to implement logistics modernization modules.

There was some reservation at CSC as well, said Gordon Thomas, the company's deputy program manager for LOGMOD. Some worried whether government workers would be technically astute.
Others at CSC feared the transition wouldn't run smoothly.

'This is about change for the better. Our users are going to have better tools. They'll be working in a more integrated environment.'
'Paul Capelli, LOGMOD program director

More than one year into the contract, program managers from the Army and CSC say the transition has gone better than expected.

'Now they're extremely happy at how things have worked out,' Capelli said of the 250 or so employees CSC hired. Roughly 70 employees stayed behind, and more than 100 either retired early or took other government jobs.

'These folks that we outsourced, we matched their government pay, we gave them a signing bonus, and we matched their retirement plan. Plus, we gave them a three-year guarantee of employment,' which is above what outsourced workers typically receive, Thomas said.

But make no mistake about it, in this deal, outsourced workers came out on top because of their unique skill set, said a defense policy analyst for the American Federation of Government Employees union in Washington. He asked not to be identified.

With LOGMOD, the Army bypassed an OMB Circular A-76 review, a move that the National Federation of Federal Employees, the union which represented the workers, opposed. The AFGE analyst said he had served as an adviser to NFFE.

'The workers became a very hot item,' the analyst said. 'This wasn't some benevolent gesture. They had a unique skill set that was needed. These guys are the keepers of the flame.'

CSC's federal sector defense group in Falls Church, Va., won the contract in December 1999. The workers began the transfers to CSC last July.

Today, CSC is in the integration phase of the 10-year performance-based contract, which calls for converting two Army legacy systems, the Commodity Command Standard System and the Standard Depot System, into an enterprise resource planning system using R3 and MySAP from SAP America Inc. of Newtown Square, Pa.

The new system will use a Web interface to access 22 SAP modules, said Thomas, who works at CSC offices in Moorestown, N.J. CSC is in the midst of mapping logistics processes. The next step is to convert process data to the SAP system, he said.

The contract is on schedule, Thomas said. Last month, CSC met deadlines for attaining two major reports.

LOGMOD will run until December 2009, with an option for the Army to extend the contract if needed, Capelli said. Under the contract, CSC gets paid only after it makes improvements to the system, he said.

Keeping it fresh

'A significant portion of the dollars are performance payments geared towards continuous improvements, not just rolling it out and keeping it as it is today,' Capelli said.

The conversion will give the Army a single source of logistics data across the Materiel Command, Capelli said.

Sustaining, overhauling and repairing everything from tanks to helicopters falls under the purview of the command, which heavily relies on its systems to keep track of parts inventories.

'Essentially, we're moving from business processes developed in the 1970s'batch processes that run on mainframes'to real-time information that's extremely reliable,' Capelli said. 'It increases the confidence in the decision-maker, and it increases our responsiveness in providing the parts when they're needed.'

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