Army considers privatizing its depots, ammo facilities.

• Author: Kennedy, Harold

The U.S. Army--under pressure from Defense Secretary Donald H. Rumsfeld to trim infrastructure--is mulling over proposals to privatize its arsenals, ammunition plants and repair depots.

Rand, a federally funded nonprofit research institute based in Santa Monica, Calif., has made a series of recommendations for privatizing the Army's industrial base, which includes seven arsenals, five repair depots and 14 ammunition plants across the nation. In a 2002 report, Rand proposed:

* Forming public-private partnerships to encourage corporations to invest in Army facilities.

* Using Army venture capital to persuade private industry to help develop innovative military technologies.

* Spinning off Army activities, such as arsenals and depots, into Federal Government Corporations, similar to Fannie Mae, the U.S. Postal Service and the Tennessee Valley Authority.

Another Rand study, which has not been published, recommended selling the Army's arsenals in Rock Island, Ill., and Watervliet, N.Y, and some of its ammunition plants to private industry.

The recommendations caught the attention of then-Army Secretary Thomas E. White Jr., who last fall directed the Army Materiel Command to draw up plans to implement them. The plans were to be part of the Army's larger "Third Wave" initiative to privatize up to 200,000 civilian and military jobs.

This initiative is called the Third Wave because it will be the Army's third effort in the past two decades to streamline itself by encouraging more interaction between public and private sectors.

Public-Private Partnerships

The Rand study argued, for example, that the Army's industrial facilities--its arsenals, ammunition plants and depots--are "obvious candidates for public-private partnerships."

One Army partnering program "already producing tangible results is the Armament Retooling and Manufacturing Support program," the report said. ARMS allows contractors to lease dormant facilities at Army ammunition plants to commercial enterprises.

According to one recent evaluation of the program, the Army had recovered $125 million of the $170 million it had invested in ARMS. Overall, the evaluation said, ARMS had resulted in an economic impact of more than $2.1 billion.

Other partnerships in the works include plans for leasing and developing buildings at Picatinny Arsenal, NJ.; construction of a contractor-support facility at Fort Leonard Wood, Mo.; development of a hot-weather test track at Yuma Proving Ground, Ariz., and...