Outsourcing: An Historical Review for the Projection of Future Savings

摘要

Because of continuing budget and personnel limitations and the need to fund weapons modernization, the Department of Defense has increased its emphasis on outsourcing support activities. Recent studies have suggested that aggressive outsourcing of support activities by the DoD could produce billions of dollars in savings. The overriding purpose behind this research was to determine to what extent projected savings can be substantiated. To explore the potential for savings, this thesis examines the evolution and impact of outsourcing and privatization in both the private and public sectors. Next it looks at the experiences of private and public sectors to identify characteristics of successful and unsuccessful outsourcing ventures. Finally, it examines the Department of Defense's past experience in achieving cost savings through outsourcing. The research revealed that savings have occurred through outsourcing and that most successful initiatives occur when the following conditions are present: (1) the requirement is specified unambiguously; (2) a competitive market exists; (3) the contractor's performance can be monitored; and (4) appropriate terms are included in the contract. DoD's previous outsourcing experience demonstrates that all of these conditions are not always satisfied and suggests that projected savings from current and planned initiatives may be overstated.