Army Materiel Command (U.S.): Smooth Transition of Government Employees to CSC Creates a Precedent of Success in Government Outsourcing
The Client Army Materiel Command (US)
The Challenge When the US Army Materiel Command outsourced the modernization of its logistics systems to CSC, hundreds of federal employees working on these systems were also transferred to CSC. The challenge was to successfully integrate them into a new commercial culture that was alien to most of them.
The Solution To address the organizational and cultural challenges, CSC applied best practices, methodologies, and lessons learned from other complex and difficult transitions -- making the entire operation leaner and more efficient.
The Results Thanks to CSC's welcoming culture, generous package of salary and benefits, and the efforts made to keep the lines of communication open during the transition, the integration worked successfully despite the radical divergence of cultures involved. The close partnership between CSC and AMC has set a precedent seen by many as a model for future government-industry partnering.
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As a new century dawned, the U.S. Army was still using systems designed around 1970 to supply soldiers with everything from weapons to paper clips. The Army Materiel Command (AMC) determined that outsourcing logistics systems, including their modernization, would cost about $160 million less than keeping the work inside the organization.
CSC won the 10-year contract to move Army logistics to an ERP system. It was the first time a government agency had outsourced the entire modernization and operation of a major IT system, and the contract called for unprecedented cooperation with the contractor.
Another critical factor made this deal unusual: The government would be transferring not just services, but federal employees to CSC. The difficulties inherent in all transitions would be even more complex in this one, because of the radical divergence of cultures between government employment and commercial environments.
A commercial partner with a welcoming culture
In addition to working closely with the U.S. federal government since 1959, CSC has an unusually long and successful track record of integrating other companies' workforces into CSC's. The company's first acquisition was in 1964, and today more than half of CSC employees have joined the company through acquisitions or outsourcing engagements.
The Army's Logistics Modernization Program (LMP) called for transfer to CSC of the federal software writers and other technical staff at two Army sites – in Chambersburg, Pa., and in St. Louis, Mo. However, these employees could choose to decline the transfer, depriving LMP of knowledge and skills essential to its success. CSC worked to understand the employees' needs and designed a generous package of salary and benefits. Job offers were extended to all 207 in-scope employees; 205 accepted.
To help ensure that the 205 would continue to feel good about their decision, CSC undertook an intensive communications campaign that included one-on-one interviews, town hall meetings, newsletters, Web sites, broadcast e-mails, and a variety of print materials. These communications ensured that new employees had more than one resource for answering any question, and they helped CSC understand transferees' concerns.
Another important key to this transition's success was the Integrated Product Teams (IPTs) that are the basic functional units for all of LMP. IPTs consist of personnel from AMC, the LMP Program Director's Office and the CSC team, and they develop solutions based on true consensus. IPTs were the mechanism of transferring not only employees, but also workload, processes and government equipment.
Streamlined processes mean cost savings
LMP began delivering benefits to the client even before the modernized system was fully in place. For about what the Army used to spend just to operate its logistics systems, CSC operated and modernized them. This was possible because CSC streamlined operations, saving about $8 million during the first two years of performance. Those savings were largely attributable to standardization of processes, methodologies and tools and adherence to stringent performance standards, making operations leaner and more efficient.
With the U.S. government apparently moving toward outsourcing more and more of its traditional functions, LMP is seen by many as a model for future government outsourcing engagements. Close government-industry partnering seems likely to become the rule rather than the exception.
