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Walter Reed Disgrace Shows Outsourcing's Dark Side

The abysmal conditions at the Army's Walter Reed hospital reflect an appalling lack of respect for men and women who suffered grievous injuries fighting for this country. They also show what can happen when an outsourcing project goes awry.

In January of last year, the U.S. Army awarded a support contract to IAP Worldwide Services, a well connected contractor whose CEO, Al Neffgen, is a former executive at Halliburton subsidiary Kellogg Brown and Root. Under the $120 million deal, IAP is to provide administrative, managerial and operational support services at Walter Reed Army Medical Center in Washington, D.C., through 2011.

I have no reason to believe that IAP is not fully capable of providing the services specified, though the company reportedly had difficulty fulfilling an earlier contract to deliver ice to Hurricane Katrina victims. What is becoming apparent is that Army officials did not properly supervise Walter Reed's transition from a facility served by in-house workers to one that contracts out for basic services.

Last September, Walter Reed Garrison Commander Peter Garibaldi sent a revealing memo to Colonel Daryl Spencer, the Assistant Chief of Staff for Resource Management with the U.S. Army Medical Command. In that memo, Garibaldi complained that the outsourcing deal with IAP was causing an exodus "of highly skilled and experienced personnel" at Walter Reed.

It's a situation that would be familiar to any private sector CIO who has outsourced his company's technology operations. The period between the contract signing and the full takeover by the outsourcer is fraught with peril. Keeping key staff on board while colleagues are laid off is one of the biggest--just ask IT officials at Sprint Nextel.

There's an important distinction to be made here, however. Contrary to complaints by some Democrats, notably House Oversight Committee chairman Henry Waxman, outsourcing per se isn't why our servicemen and women are recuperating in rooms beset by black mold and mice. The Army's failure to properly manage the outsourcing initiative is what's to blame.

Outsourcing is a proven way of cutting costs and gaining efficiencies and access to new technologies for both the private and public sectors. You just have to get right, because the price of failure, especially in this case, is too high.

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