Fleet support, or outsourcing, has its roots in the early 1990s. Before then, you could be employed by the world’s armed services as anything from a professional soldier to a dishwasher, engineer, electrician, accountant, designer, machinist or cook.
When the recession of the time gripped the world, governments and big business took the lead. Departments and services that employees had run for disparate and wide-ranging companies or government institutions like defence were closed or abolished across the board.
It was the age of core competencies, when you looked at what you were good at, concentrated as small a number of resources as feasible on it, and paid someone else to do the rest rather than maintain a huge, expensive workforce that did a little of everything.
The privatisation movement saw the aerospace industry in the US virtually dismantled, electrical and machine shops across bases closed, the money to run them given to private contractors who did the same job more efficiently and at times, cheaper.
For nations that run sovereign navies, it was no different, and nowadays the market for services that support a naval fleet are incredibly lucrative. From McDonalds winning the contract to provide fast food in US Naval bases to a request for the development of technologies that perform something called ‘small to large vessel at-sea transfer’, outsourcing is everywhere.
BLACKWATER’S BACKUP OPTION
There is a difference between fleet support and a Hollywood studio outsourcing the digital special effects on a movie. As reported on Naval Technology in August 2007 questions about who owns the material or data and who’s accountable for protecting it remain contentious. The World War II phrase ‘loose lips sink ships’ still very much applies in our security-heightened world.
But the private fleet support market continues to grow. Even Blackwater Inc, the infamous US ‘private army’ is getting in on the act. Under fire for their record in Iraq as private security personnel – including the killing of 17 Iraqi civilians by Blackwater personnel last year – the company is looking beyond Iraq. In September 2007 it acquired a 183ft ex-National Oceanic and Atmospheric Administration (NOAA) ship, the McArthur, a vessel crammed with facilities and described as having ‘multiple support vessel capabilities’.
The McArthur will offer the latest in navigation and communication systems as well as helicopter and hospital areas, and is Blackwater’s first foray into seagoing battle support.
But even though the business of defence itself is being outsourced to an unprecedented degree thanks to Blackwater and many companies like it, fleet support means a lot more than privately run communications and medical facilities.
IMPROVING LEVELS OF SERVICE AT FLEET SUPPORT
A British Company – Fleet Support Limited – offers engineering services for surface-going ships from design and construction throughout their periods of active service. Founded in Portsmouth in 1998, it’s worked extensively for the Royal Navy as well as the navies of Romania and Chile and several small commercial ferry operators.
Fleet Support Limited offers a huge array of services, from non-destructive testing of materials to test hull thickness to industrial painting facilities and everything in between. The company achieves its outcomes through ‘a sophisticated partnering arrangement with the Naval Base Commander whereby both parties gain operational and financial benefit from constantly improving the levels of service to the RN customer.’
If that sounds familiar, it’s because it’s business parlance for the sort of close relationship contract holders strive for with their clients or stakeholders. The word ‘partner’ refers to the goal of closely enmeshing two cultures that can be very different such as military and business environments. The aim is to make sure those involved can see eye to eye and stay focused on objectives that might seem disjointed, like spreading democracy versus improving the share price.
KAZ’S OPEN LINES OF COMMUNICATION
A company that seems to get it right is Sydney, Australia-based KAZ. A subsidiary of the Australian national telecommunications carrier (Telstra), KAZ and the Royal Australian Navy (RAN) speak each other’s language because many KAZ staff have naval backgrounds. For 15 years KAZ has provided the RAN with real-time information access, communications equipment and infrastructure for the 50-strong fleet.
KAZ cites the toughness of the system needed because of what it calls the ‘extreme business’ environment the RAN operates in, where information must be made available between units regardless of the location of ships or their individual operational environments.
Of course, navy personnel do more than fight. In June 2006, the US Navy sent out a request for information from the private sector on overhauling the military postal system, asking for ‘unique and innovative ideas or approaches that have been developed outside of the government’. The announcement was tacit admission that the private sector, used to cutting costs to maximising profit performance, knows how to do many things better than the bloated, Cold War-era systems of many government and military departments.
It’s not just that the private sector does it better, either. It’s the era of small government and armed forces are already stretched far and wide. The US, for instance, is involved in active combat in Iraq and Afghanistan and has been for longer than in any other conflict of the last century. If the situation in global hotspots like North Korea or Iran calls for a large western military presence, America simply won’t have any more soldiers or equipment to deploy.
In September 2007 the Pentagon announced the outsourcing of a new battle to stem the international drug trade it says is financing terrorism. It invited five contractors to bid for $15bn worth of contracts in areas such as anti-drug technologies and equipment, vehicles and aircraft, communications, security and personnel training, GPS systems and field support.
Bidding alongside names like Raytheon, Lockheed Martin and Northrop Grumman, contractor ARINC mentioned a wide range of services, from managing border police to building shooting ranges for training and deploying air-based drug detection systems.
And as the geopolitical security landscape gets ever-more complicated, the navies of the world, particularly the US and UK, are enjoying their share of private expertise, while the coffers of arms and support contractors continue to swell. The largest military contractor in Britain and the third largest worldwide, BAE systems exceeded £15bn in 2006. BAE represents the most lucrative aspect of fleet support, munitions.
On March 19, the company announced a contract with the US Navy to supply $13m to supply anti-mine weapons that can be launched from helicopter, ship or inflatable boat. If all proposed stages of the contract are adopted by the US Navy by 2010, the deal will be worth $60m to BAE Systems.
With the private sector fulfilling many of the traditional roles of military service, there’s not just the international security aspect to consider, but its value as an economic stimulant. John Arthur is the director for special operations at the Skinningrove operation of steelmaker Corus, which runs three plants in the UK. On 5 March he told the Evening Gazette website nebusiness.co.uk that; ‘the industry was making all the wrong headlines for site closures and decreased capacity.’
In a deal worth up to £65m, Corus has been contracted to supply 80,000t of steel to build two £3.8bn aircraft carriers for the Royal Navy, the HMS Queen Elizabeth and the HMS Prince of Wales, due to enter active service in 2014 and 2016.