The Army is in the process of recompeting the contract for a private company to operate and maintain what is the foundation of its ammunition supply chain, the Radford Army Ammunition Plant (RFAAP) in southwest Virginia. RFAAP is a unique facility. It produces nitrocellulose, the key energetic ingredient for all the propellants used in U.S. ammunition from 5.56mm small-caliber rounds through the shells used in aircraft and helicopter cannons and the big rounds for U.S. tanks and artillery. RFAAP is the only North American source for Mil Spec nitrocellulose.
The Radford competition takes place against a backdrop of declining defense budgets, changing national security strategy and an evolving relationship between the Department of Defense (DoD) and the private sector. There is mounting evidence that DoD is looking at ways of “shaking things up” in the system. The Pentagon is reducing its dependence on contractor support services by 25 percent. Recent requests for proposals (RFPs) and contract awards have emphasized cost as an increasingly important variable. Critics have raised concerns that cost seems more important than past performance or evidence of technical competence.
We should take a hard look at the approach DoD is taking. In the past, this approach has led to awarding contracts to companies that were not qualified to do the work. Acquisition officials often made no plans for the impacts on programs and production lines of a change in the prime contractor. Best value calculations can be rapidly rendered irrelevant if a winning contractor cannot meet performance requirements. DoD cannot afford to make this same mistake again.
One area where the potential for mistakes is great is in the ammunition industrial base. This is particularly true for RFAAP. The Army’s program manager (PM) faces an enormous challenge in constructing the RFP and judging the competition. On the one hand, there is growing pressure to reduce costs, both in the management of the facility and in the products coming out of RFAAP. On the other hand, the PM cannot afford a break in production or any problems in operating or maintaining this large propellant and energetic manufacturing facility. The experience and capabilities of the bidders must be a paramount consideration. So too must be their ability to ensure the continuity of operations at RFAAP.
We are entering an era in which more and more of critical defense industrial production and know-how resides in single facilities or with a single company. There is no room for on the job learning that in the past produced program failures and massive cost overruns. This is particularly the case at Radford, where continuity of operations is vital to the warfighters. Yes, the PM must require that the winning contractor operate the facility efficiently. But the winner’s capability to maintain continuity of operations is even more important. While cost is important, it should not be the driving factor in the best value calculation. A production interruption or a serious problem in any of the critical functions at Radford would quickly result in costs to the government that would dwarf any anticipated savings.
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