Credit Cards, Computers Cut Red Tape

Hamre's goal as head of the Task Force on Defense Reform is to save money by replacing costly, cumbersome procedures with new age business practices.

"This is truly a world-class organization when it comes to military capabilities, but it is not a world-class organization when it comes to business activities," he said.

Cutting the fat to save the muscle is the objective, Hamre said. "Because dollars are tight and we need to maintain our modernization program, this is more than anything a warfighting initiative so we can preserve our warfighting capability."

Revamping DoD's business strategy is part of an overall initiative to streamline the business side of the department, just as the Quadrennial Defense Review did the military side, Hamre said at a Nov. 8 briefing. Reform efforts include restructuring DoD headquarters, eliminating excess infrastructure and opening more jobs to competition from private industry.

Feedback from the field alerted Hamre to service members' red tape frustrations and the need for change. A pilot told the defense leader he loved flying, but couldn't stand all the paperwork. A first sergeant said he doesn't mind working eight hours a day, but the extra four hours a day he spends filling out all the paperwork drives him crazy.

Hamre said he hopes the reforms will help service members by providing more user-friendly tools to do their jobs. Instead of being on paper, forms will be computer files so users can pull them up, fill them out and send them off electronically. Instead of having to go to several places to get basic office supplies, people will be able to order from their desks and have supplies delivered to their offices.

"This is now the norm in the private sector," Hamre said. "Why can't this be the norm for the Department of Defense? It ought to be."

Hamre said he aims to take the best practices from private industry and incorporate them in the Defense Department. He said he aims to use commercial credit cards instead of written contracts, do business via the Internet and set up paperless electronic supply systems.

The paperwork required to handle DoD's 11 million annual contracts was a clear target of the reform focus, Hamre said. A contract payment office in Columbus, Ohio, for example, handles about 370,000 contracts at any one time, he said. The facility has 15 miles of shelf space for contract files. It disburses about $43 million an hour.

"About 75 percent of all of these contracts are for less than $2,500. For $2,500, you can use a commercial credit card and go down and buy [an item] directly rather than writing a contract," he said.

Processing a contract costs between $100 and $150, Hamre noted. Using a credit card costs 25 to 50 cents. "Obviously, we're going to save a lot of money through this process. We think we can save up to $200 million a year when this is finally implemented." Plans call for a paper-free contracting system by January 2000.

DoD is also making a major commitment to doing its business -- everything from distributing regulation changes to ordering toilet paper and other supplies -- over the Internet, Hamre said. By January 1999, digital dogtags will be used to provide security and prevent system abuse.

The Internet allows DoD to do away with printing and distributing multiple copies of directives and regulations. The new philosophy is "print on demand," Hamre said. DoD will discontinue publishing instructions and directives as of July 1, 1998, and go to an Internet-based system, Hamre said.

"If you put it on the Internet, you only need to pull up the page you need," he said. "We will electronically notify people of a change in the regulation. Your rules and regulations are instantly available now, as opposed to having shelf space dedicated to dusty financial management regulations."

Supply items will soon be ordered through electronic catalogs available on the Internet. Right now, it's an elaborate process for the average motor pool to requisition items like humvee batteries, Hamre said. The process includes finding stock numbers, ordering from a supply center, which then orders from a contracted vendor. Delivery slips then have to be matched with invoices.

"It's a huge paper-based system," he said. "Our goal is to put a computer at the first sergeant's desk. When he needs new batteries, he scrolls up an electronic catalog, orders the batteries and pays for them with a credit card.

"This is the ultimate democratization of the acquisition process," Hamre said. "It's putting the tools in the hands of the soldiers, sailors, airmen and Marines that have to live with the system. We believe this is not only going to save money for the government, but it's going to make life a lot easier for our average troopers out there. ... We're going to give them user-friendly techniques."

Instead of stockpiling supplies in warehouses, DoD will use the modern approach of "just-in-time delivery" from vendors, Hamre said. This allows DoD to provide the most current technology and medicines available. Ninety percent of peacetime medical supplies are available directly from vendors, he said.

DoD is also extending the practice to food products and office and maintenance supplies through direct vendor contracts over the next two years. "Instead of a having a warehouse storing all those dried potato flakes, we will be getting food supplies directly from vendors on an as-needed basis," Hamre said.