U.S. Navy Taking a Page from the Private Sector
There are times when folks in the private sector look at government and marvel at its inefficiency. Businesses thrive on competition, innovation, exploration, and a focus on meeting a need as fast and inexpensively as possible. Government, however, rarely embraces these proven elements of success. With sole-sourced contracts, endless bureaucracy, and an acquisition process that looks like a plate of spaghetti, it’s a wonder the public sector ever gets anything done.
However, not all government is created equal. Last week, Secretary of the Navy Ray Mabus spoke at an American Enterprise Institute program, "Lasers, railguns, and drones: Navy Secretary Ray Mabus on the future of the Navy and Marine Corps." While lasers and railguns were unfortunately not mentioned even once in the Secretary’s remarks, Sec. Mabus nevertheless offered intriguing insight into how the U.S. Navy is using approaches frequently found in the private sector to build its capabilities. Some of the highlights include:
- Task Force Innovation: Sec. Mabus said the Navy is striving to “unlock innovation in the fleet.” One way is through Task Force Innovation, a collection of subject matter experts from across the Department of Navy creating an innovation agenda with short and long-term goals. More specifically, the Task Force will focus on fostering innovation in the areas of “adaptive force packages, unmanned systems, non-lethal weapons, directed energy weapons” and 3D printing.
- Secretary of the Navy Industry School: The Navy is sending some of its workforce out into the private sector. By embedding sailors in America’s best companies, the Secretary said, the Navy is aiming to bring back best practices in innovation, operation and efficiency. He also wanted to share some Navy experiences and insights with the private sector. In short, it’s a win-win relationship for all involved as both the company and the Navy will get to know each other a whole lot better.
- Profit Related to Offer: The Secretary offered a story of how the Navy used a competitive process called “Profit Related to Offer” (PRO) to drive down the cost of procuring Arleigh Burke-class DDG-51 Destroyers (a versatile, fast, really cool warship). There are only a handful of shipyards in the United States that can build warships, and only two of them can build a Destroyer. Through the PRO process, both shipyards were instructed to submit a bid for the estimated cost to build a Destroyer. While both shipyards were given a contract for one Destroyer, the lowest bidder received the contract with a higher profit margin. Conversely, the highest bidder received the contract with a lower profit margin. The result of this competitive process: the Navy saved $300 million per ship. That is the power of competition, and the Navy gets it.
- Partnering with the Private Sector: The Secretary spoke at some length on the concept of partnerships. The Navy is not a manufacturer; it does not build the things it uses. All of it comes from the private sector, one way or another. Given that, Sec. Mabus said the Navy owes industry three things: mature technology (not pie in the sky early stage innovation); stable designs (that don’t continually change over the course of a contract); and certainty (of how many of something the Navy will buy). These three points show an understanding of how difficult it can be to work with the government and how the Navy plans to improve that.
Overall, the Secretary’s talk revealed a thoughtful approach to strengthening and improving America’s Navy, applying many of the best practices and approaches that the private sector uses every day. One wonders what other government departments might find improved efficiency and better results if they took a page from industry. We have a long way to go in reforming how our government gets things done, but the remarks from Sec. Mabus show that the Navy at least is sailing towards a brighter horizon.