The Navy, challenged by budgetary shortfalls, continuing high tempo of operations and the need to make large investments in re-capitalization and equipment modernization, has been pursuing a program called the Infrastructure Reform Initiative. A key component of this initiative is DOD's Competitive Sourcing Program, a process for competing commercial activities outlined in Office of Management and Budget (OMB) Circular A-76. The Navy has been using innovative measures to reduce infrastructure and support costs since the 1997 Quadrennial Defense Review. The savings generated by these actions is re-programmed to higher priority needs. The Navy's Competitive Sourcing program began in April 1996 with a study by the Center for Naval Analysis. The study identified the potential for significant savings by outsourcing some of the Navy's functions to private industry through competition. In 1997, the Navy began pursuing a plan to generate saving for modernization and re-capitalization. The department set a projected savings goal of approximately $5 billion during fiscal years (FY) 1997-2005. In 1999, however, it became clear that competitive sourcing alone would not achieve the necessary savings. The Navy needed a broader, more systematic approach (and one consistent with the intent of the Revised OMB A-76 Supplemental Handbook) to achieve our goals. Thus, we took an approach called Strategic Sourcing.
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