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Recapitalizing The Navy
A Strategy for Managing the Infrastructure
Committee on Shore Installation Readiness and
Management
Naval Studies Board
Commission on Physical Sciences, Mathematics, and
Applications
National Research Council
NATIONAL ACADEMY PRESS
Washington, D.C. 1998
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Page ii
NOTICE: The project that is the subject of this report was
approved by the Governing Board of the National Research Council,
whose members are drawn from the councils of the National Academy
of Sciences, the National Academy of Engineering, and the Institute
of Medicine. The members of the committee responsible for the
report were chosen for their special competences and with regard
for appropriate balance.
The National Academy of Sciences is a private, nonprofit,
self-perpetuating society of distinguished scholars engaged in
scientific and engineering research, dedicated to the furtherance
of science and technology and to their use for the general welfare.
Upon the authority of the charter granted to it by the Congress in
1863, the Academy has a mandate that requires it to advise the
federal government on scientific and technical matters. Dr. Bruce
Alberts is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964,
under the charter of the National Academy of Sciences, as a
parallel organization of outstanding engineers. It is autonomous in
its administration and in the selection of its members, sharing
with the National Academy of Sciences the responsibility for
advising the federal government. The National Academy of
Engineering also sponsors engineering programs aimed at meeting
national needs, encourages education and research, and recognizes
the superior achievements of engineers. Dr. William A. Wulf is
president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the
National Academy of Sciences to secure the services of eminent
members of appropriate professions in the examination of policy
matters pertaining to the health of the public. The Institute acts
under the responsibility given to the National Academy of Sciences
by its congressional charter to be an adviser to the federal
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medical care, research, and education. Dr. Kenneth I. Shine is
president of the Institute of Medicine.
The National Research Council was organized by the National
Academy of Sciences in 1916 to associate the broad community of
science and technology with the Academy's purpose of furthering
knowledge and advising the federal government. Functioning in
accordance with general policies determined by the Academy, the
Council has become the principal operating agency of both the
National Academy of Sciences and the National Academy of
Engineering in providing services to the government, the public,
and the scientific and engineering communities. The Council is
administered jointly by both Academies and the Institute of
Medicine. Dr. Bruce Alberts and Dr. William A. Wulf are chairman
and vice chairman, respectively, of the National Research
Council.
This work was performed under Department of the Navy Contract
N00014-96-D-0169/0001 issued by the Office of Naval Research under
contract authority NR 201-124. However, the content does not
necessarily reflect the position or the policy of the Department of
the Navy or the government, and no official endorsement should be
inferred.
The United States Government has at least a royalty-free,
nonexclusive, and irrevocable license throughout the world for
government purposes to publish, translate, reproduce, deliver,
perform, and dispose of all or any of this work, and to authorize
others so to do.
Copyright 1998 by the National Academy of Sciences. All rights
reserved.
Copies available from:
Naval Studies Board
National Research Council
2101 Constitution Avenue, N.W.
Washington, D.C. 20418
Printed in the United States of America
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Page iii
COMMITTEE ON SHORE INSTALLATION READINESS AND
MANAGEMENT
JOHN D. CHRISTIE, Logistics Management Institute,
Co-Chair
JOHN F. EGAN, Nashua, New Hampshire, Co-Chair
JOHN W. ASHER III, Strategic Marketing and Analysis, Inc.
ALBERT J. BACIOCCO, JR., The Baciocco Group
LLOYD A. DUSCHA, Reston, Virginia
ELVIN R. HEIBERG III, Heiberg Associates
SAMUEL D. KLEINMAN, Center for Naval Analyses
GENIE McBURNETT, Falls Church, Virginia
NANCY Y. MOORE, RAND
GERALD NADLER, University of Southern California
SEAN O'KEEFE, Syracuse University
DAN R. OLSEN, JR., Carnegie Mellon University
MICHAEL W. O'NEILL, Deloitte & Touche, LLP
HERBERT RABIN, University of Maryland
JOSEPH B. REAGAN, Saratoga, California
JOHN M. STEWART, McKinsey & Company, Inc.
RAYMOND M. WALSH, Sonalysts, Inc.
MITZI M. WERTHEIM, Center for Naval Analyses
Naval Studies Board Liaison
Seymour J. Deitchman, Chevy Chase, Maryland
Navy Liaison Representatives
VADM W.J. Hancock, USN, Office of the
Chief of Naval Operations, N4 (through July 31, 1998)
VADM James F. Amerault, USN, Office of the
Chief of Naval Operations, N4 (as of August 3, 1998)
RADM John T. Scudi, USN, Office of the
Chief of Naval Operations, N46 (through August 17, 1998)
RADM Annette E. Brown, USN, Office of the
Chief of Naval Operations, N46 (as of October 26, 1998)
David M. Wennergren, Office of the Chief
of Naval Operations, N464 (through October 26, 1998)
Consultants
Sidney G. Reed, Jr.
James G. Wilson
Staff
Charles F. Draper, Program Officer
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NAVAL STUDIES BOARD
DAVID R. HEEBNER, Science Applications
International Corporation (retired), Chair
VINCENT VITTO, Charles S. Draper
Laboratory, Inc., Vice Chair
ALBERT J. BACIOCCO, JR., The Baciocco
Group, Inc.
ALAN BERMAN, Applied Research Laboratory,
Pennsylvania State University
NORMAN E. BETAQUE, Logistics Management
Institute
NORVAL L. BROOME, Mitre Corporation
GERALD A. CANN, Rockville, Maryland
PAUL K. DAVIS, RAND and RAND Graduate
School of Policy Studies
SEYMOUR J. DEITCHMAN, Chevy Chase,
Maryland, Special Advisor
ANTHONY J. DeMARIA, DeMaria ElectroOptics
Systems, Inc.
JOHN F. EGAN, Nashua, New Hampshire
RICHARD J. IVANETICH, Institute for
Defense Analyses
DAVID W. McCALL, Far Hills, New Jersey
ROBERT B. OAKLEY, National Defense
University
WILLIAM J. PHILLIPS, Northstar Associates,
Inc.
HERBERT RABIN, University of Maryland
JOSEPH B. REAGAN, Saratoga, California
HARRISON SHULL, Monterey, California
JAMES M. SINNETT, Boeing Company
KEITH A. SMITH, Vienna, Virginia
ROBERT C. SPINDEL, Applied Physics
Laboratory, University of Washington
DAVID L. STANFORD, Science Applications
International Corporation
H. GREGORY TORNATORE, Applied Physics
Laboratory, Johns Hopkins University
J. PACE VANDEVENDER, Sandia National
Laboratories
PAUL K. VAN RIPER, Williamsburg,
Virginia
VERENA S. VOMASTIC, Institute for Defense
Analyses
BRUCE WALD, Arlington Education
Consultants
MITZI WERTHEIM, Center for Naval
Analyses
Navy Liaison Representatives
RADM John W. Craine, Jr., USN, Office of
the Chief of Naval Operations, N81
RADM Richard A. Riddell, USN, Office of
the Chief of Naval Operations, N91 (through May 29, 1998)
RADM Paul G. Gaffney II, USN, Office of
the Chief of Naval Operations, N91 (as of May 29, 1998)
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Marine Corps Liaison Representative
LtGen John E. Rhodes, USMC, Commanding
General, Marine Corps Combat Development Command
Ronald D. Taylor, Director
Charles F. Draper, Program Officer
Susan G. Campbell, Administrative Assistant
Mary G. Gordon, Information Officer
Larissa M. Markarian, Senior Project Assistant (through October
16, 1998)
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Page vi
COMMISSION ON PHYSICAL SCIENCES, MATHEMATICS, AND
APPLICATIONS
PETER M. BANKS, ERIM International, Co-Chair
W. CARL LINEBERGER, University of Colorado, Co-Chair
WILLIAM BROWDER, Princeton University
LAWRENCE D. BROWN, University of Pennsylvania
MARSHALL H. COHEN, California Institute of Technology
RONALD G. DOUGLAS, Texas A&M University
JOHN E. ESTES, University of California at Santa Barbara
JERRY P. GOLLUB, Haverford College
MARTHA P. HAYNES, Cornell University
JOHN L. HENNESSY, Stanford University
CAROL M. JANTZEN, Westinghouse Savannah River Company
PAUL G. KAMINSKI, Technovation, Inc.
KENNETH H. KELLER, University of Minnesota
MARGARET G. KIVELSON, University of California at Los
Angeles
DANIEL KLEPPNER, Massachusetts Institute of Technology
JOHN R. KREICK, Sanders, a Lockheed Martin Company (retired)
MARSHA I. LESTER, University of Pennsylvania
M. ELISABETH PATE-CORNELL, Stanford University
NICHOLAS P. SAMIOS, Brookhaven National Laboratory
CHANG-LIN TIEN, University of California at Berkeley
NORMAN METZGER, Executive Director
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Page vii
Preface
As the Department of the Navy plans to meet the challenges of
the 21st century, it must take into account budget trends since the
end of the Cold War and the need for maintenance and modernization
of the fleet. To adjust, significant restructuring of both fleet
and shore activities has been undertaken and will continue.
However, such restructuring must be done without adversely
affecting the ability of naval forces to execute their missions. A
serious challenge to the Department of the Navy is how to
recapitalize and modernize for the future while maintaining fleet
readiness within projected budgets. Reducing the costs associated
with maintaining an extensive shore establishment has been viewed
by the Department of Defense and the Department of the Navy as one
means for achieving the necessary cost savings to finance the fleet
of the future.
Naval installations are major components of the shore
establishment and are complex enterprises. Some are comparable to
cities, with airports and harbors; others incorporate shipyards and
aviation depots. Most have family housing, hospitals, and child
care and commissary facilities. Typically, a base commander and his
or her staff are responsible for managing more than 100 different
activities and often must provide such support to numerous tenant
organizations. Unfortunately, these commanders are not provided the
tools needed for managing such complex enterprises, and today's
accounting, information management, and personnel and legal systems
are ill-suited to the challenge. By contrast, large enterprises in
the private sector rely on management techniques and business
practices that are based largely on advances in information
technology, systems and industrial engineering, operations
research, organizational design, accounting, production scheduling
and economics, management of human resources,
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Page viii
and environmental management. Use of these techniques has
dramatically reduced overall operating costs and enabled better use
of resources in major functions. Their application to shore
installation operations could provide the same benefit to the
Department of the Navy. With this in mind, the Navy has in fact
established the Smart Base project, a set of initiatives to apply
state-of-the-market, commercially available technology, policy
changes, and better business practices to shore installation
operations in an effort to increase efficiency. This initiative
along with others is providing a testbed for new ways of doing
business.
At the request of Admiral Jay L. Johnson, USN, Chief of Naval
Operations (CNO) (see Appendix A), the National Research Council
(NRC) conducted a study designed to assist the Department of the
Navy with its ongoing efforts to improve shore installation
operations, readiness, and management through the focused
application and integration of state-of-the-market technologies and
business methods (including outsourcing, privatization, and
partnerships with state and local governments), with a goal of
reduced cost of infrastructure. The Committee on Shore Installation
Readiness and Management, operating under the auspices of the NRC's
Naval Studies Board, was appointed to (1) identify business
practices (or enterprise processes) in addition to application of
technology for enhancing efficiency; (2) recommend how
implementation might be accomplished and evaluate efficiencies that
might be gained; and (3) provide estimates that project Navy-wide
savings that could result from further application. Against these
objectives, it also was requested that the committee examine the
Navy's Smart Base project.
In responding to the CNO's request, the committee focused its
considerations initially on U.S. Navy efforts to reduce shore
installation costs, exclusive of base realignment and closure
(BRAC). The committee's interpretation of the terms of reference
was that it should investigate what could be done to achieve
infrastructure savings outside of BRAC. The committee soon
realized, however, that reengineering naval installations could
bring only small savings and that the Navy and the Marine Corps
infrastructure in total should be examined fully if the Department
of the Navy's recapitalization goals are to be met. Furthermore, in
its efforts to provide implementable recommendations, the committee
identified and presents in the body of the report a number of
specific actions that it believes are best assigned to particular
individuals under the current Navy organization, e.g., the
Secretary of the Navy, the Chief of Naval Operations, the Chief
Information Officer, and such. In many cases, alternative
approaches might be possible, particularly under a different
organizational structure. The committee had no desire to comment on
how the Navy is organized. Given the existing organizational
structure, however, the committee felt compelled in many instances
to provide at least one method by which specific problems could be
solved and progress made in these complex areas.
The Executive Summary gives the report's major recommendations.
The body of the report presents and discusses additional, specific,
detailed recom-
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Page ix
mendations and actions regarding naval installations and also
key aspects of the multifaceted Navy infrastructure. In making its
recommendations, the committee was very conscious of the impact
that potential changes in the infrastructure might have on the
ability of the operating forces to carry out their missions. The
committee believes that making the infrastructure more efficient by
using good business practices, as opposed to the current approach
of arbitrarily reducing funding for the infrastructure, will in
fact enhance the support of the operating forces and improve the
capability of the infrastructure to respond to new and/or
additional requirements. This would include the requirement for
dealing with sudden emergencies that necessitate rapid response,
such as Desert Storm.
The committee first convened early in 1998 and met for
approximately 8 months. During that time, it held the following
meetings and visited the following bases:
• February 4–5, 1998, in Washington, D.C.
Organizational meeting. Navy briefings.
• March 4–5, 1998, in Washington, D.C. Navy
briefings. Managerial accounting and facility management in the
commercial sector.
• April 27–30, 1998, in San Diego, California. Site
visit to assess the regionalization efforts underway at Naval Base,
San Diego. Briefings on management and change.
• May 20–21, 1998, in Washington, D.C. Navy
briefings. Use of information technology in the U.S. Air Force.
• June 4, 1998, in Pascagoula, Mississippi. Subcommittee
site visit to Navy's Smart Base.
• June 10–11, 1998, in Washington, D.C. Navy
briefings. Briefings on management and change.
• June 24, 1998, in Portsmouth, New Hampshire. Subcommittee
site visit to Navy's Smart Industrial Base.
• July 1–2, 1998, in Washington, D.C.
• August 11–12, 1998, in Washington, D.C.
The resulting report represents the committee's consensus view
on the issues posed in the charge.
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Page xi
Acknowledgments
The Committee on Shore Installation Readiness and Management
extends its gratitude to the many individuals who provided valuable
information and support during the course of this study. Special
acknowledgment goes to Mr. David M. Wennergren, who assisted the
committee with countless briefings and information throughout the
early stages of this study.
The committee wishes to extend a special thanks to RADM Veronica
Z. Froman, USN, Commander, Naval Base, San Diego. Admiral Froman
and her staff were gracious in hosting the committee on its 4-day
site visit to learn more about regionalization efforts in the
Southwest Region. Likewise, the committee wishes to thank VADM
Henry C. Giffin, USN, Commander, Naval Surface Force, U.S. Atlantic
Fleet, and RADM R. Tim Zeimer, USN, Commander, Naval Base, Norfolk,
for visiting with the committee in Washington, D.C., to discuss
fleet readiness and regionalization efforts in the Hampton Roads
region.
The committee also wishes to thank CAPT Vernon T. Williams, USN,
Shipyard Commander, Portsmouth Naval Shipyard, and CDR Christy J.
Wheeler, USN, Commander, Naval Station, Pascagoula, for hosting
site visits by members of the committee to learn more about
initiatives surrounding the Navy's Smart Base project.
Finally, the committee wishes to thank the many men and women
throughout the Armed Services, as well as government, academic, and
industry leaders who provided the committee with insightful
discussions throughout the course of this study. Without their
combined efforts, the committee's report would not have been
possible.
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Page xiii
Acknowledgment of Reviewers
This report has been reviewed by individuals chosen for their
diverse perspectives and technical expertise, in accordance with
procedures approved by the National Research Council's (NRC's)
Report Review Committee. The purpose of this independent review is
to provide candid and critical comments that will assist the
authors and the NRC in making the published report as sound as
possible and to ensure that the report meets institutional
standards for objectivity, evidence, and responsiveness to the
study charge. The content of the review comments and the draft
manuscript remain confidential to protect the integrity of the
deliberative process. We wish to thank the following individuals
for their participation in the review of this report:
ADM Stanley R. Arthur, USN (retired), Lockheed Martin
Corporation,
MG Norman G. Delbridge, USA (retired), Springfield, Virginia,
Brian K. Dickson, PricewaterhouseCoopers LLP,
L. Paul Dube, Arlington, Virginia,
John R. Kreick, Sanders, a Lockheed Martin Company (retired),
Joe H. Mize, Oklahoma State University,
Richard L. Tucker, University of Texas, Austin, and
Anthony M. Valletta, SRA International, Inc.
Although the individuals listed above provided many constructive
comments and suggestions, responsibility for the final content of
this report rests solely with the authoring committee and the
NRC.
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Page xv
Contents
Executive Summary
1
1
Introduction
9
Background,
9
The Navy's Problem: Meeting Its
Recapitalization and Modernization Goal Through Infrastructure
Reductions,
11
Organization of This Report,
15
2
Selected Navy Initiatives
16
Regionalization,
16
Facilities Planning, Maintenance, and
Demolition,
27
Logistics,
34
Smart Base,
38
Information Technology for the 21st
Century and Smart Link,
42
Closing Comment,
47
3
A Strategy For Managing The Infrastructure
49
The Strategy,
49
Navy-wide Enablers,
52
Implementing the Strategy,
80
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4
The Need For Top Leadership To Drive Change Across The Entire Navy
System
82
The Compelling Case for Major Change
Across the Navy,
82
The Leader's Crucial Role in Changing
the Organization,
84
Appendixes
A
Admiral Johnson's Letter of Request
91
B
Analysis of Department of the Navy Funding Trends
92
C
Developing Output Measures
98
D
Key Guides to Successful Change
101
E
Committee Biographies
110
F
Meetings Agendas
117
G
Acronyms and Abbreviations
128
