[Congressional Record Volume 142, Number 119 (Wednesday, September 4, 1996)]
[Senate]
[Pages S9851-S9852]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          INNOVATIVE BUSINESS PRACTICES AT NORFOLK NAVAL BASE

  Mr. NUNN. Mr. President, in an article entitled ``An Admiral Turns 
Big Guns on Waste at Norfolk, VA, Base'' last month, Wall Street 
Journal reporter John Fialka described some of the new business 
practices that the Navy is employing to improve the efficiency of its 
base operations. I will ask unanimous consent that this article be 
printed in the Record at the conclusion of my remarks for the benefit 
of my colleagues who may have missed it.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. NUNN. This article documents a number of innovative initiatives 
undertaken by the Navy at Norfolk Naval Base--energy audits; joint 
agreements with civilian port terminals to increase the Navy's railroad 
access and terminal capacity; and lease arrangements with private real 
estate developers to increase the quality and quantity of housing for 
Navy members and their families. Mr. President, this kind of aggressive 
and innovative approach to reducing infrastructure costs is essential 
if our military services are going to have the funds to invest in the 
new systems and equipment need to modernize our forces.
  According to the Wall Street Journal, the individual most responsible 
for these efforts at Norfolk Naval Base is Adm. William J. ``Bud'' 
Flanagan, the Commander of the Atlantic Fleet. Many of my colleagues 
remember Admiral Flanagan from his tour as head of the Navy's Office of 
Legislative Affairs in the late 1980's. Following that assignment, 
Admiral Flanagan commanded the Navy's Second Fleet before taking over 
as Commander of the Atlantic Fleet.
  Mr. President, I have known and worked with Admiral Flanagan for many 
years. He is an extremely capable naval officer, and I am not at all 
surprised to see that he is also an energetic and creative business 
manager who is bringing innovative practices to the Navy's base 
operations. I hope that he keeps up the good work, and that others 
throughout the military services follow his good example.

[[Page S9852]]

                               Exhibit 1

             [From the Wall Street Journal, Aug. 19, 1996]

        An Admiral Turns Big Guns on Waste at Norfolk, VA., Base


 Facing a Sea of Business Deals, Flanagan Charts a Course That Changes 
                               U.S. Navy

                          (By John J. Fialka)

       Norfolk, VA.--Not long ago, a private company wanted to 
     rent one of the Navy's sagging, ``temporary'' buildings here. 
     It offered $400,000 a year for a Cold War relic that was 
     sitting empty.
       ``We can't do that! Tear it down,'' ordered Adm. William J. 
     ``Bud'' Flanagan Jr., commander of the Atlantic Fleet and the 
     short, stocky czar of the sprawling Norfolk Naval Base.
       The admiral, who now oversees an $11 billion budget but 
     spent many of his 29 years in the Navy hunting for Soviet 
     submarines, had reason to torpedo the deal. He had hired an 
     outside research firm to analyze the base's $100 million 
     energy bill--a first--and found that heating and cooling the 
     70,000-square-foot, uninsulated structure would cost nearly 
     $1 million a year. So the rental would lose money. Now, the 
     building is the 84th the admiral has ordered destroyed, and 
     he has targeted 80 more.
       Not that Adm. Flanagan hates business deals. In fact, he 
     views this 55-square-mile naval base as awash in 
     entrepreneurial possibilities. He will welcome tourists to 
     what will be, in effect, a theme park with aircraft carriers. 
     He will let a neighboring cargo terminal store cocoa beans on 
     the base--if it helps load Navy ships. He will let developers 
     build fancy townhouses and offices on a slummy-looking 
     peninsula.
       For decades, the Navy played a cat and mouse with the 
     Soviet Union at sea, but on shore it operated much like its 
     old adversary. Nobody itemized costs. Electricity wasn't 
     metered. Submarine, aircraft and surface-ship commanders 
     built redundant fiefs and, Adm. Flanagan complains, ``didn't 
     talk to each other.'' As with many federal bureaucracies, 
     leftover funds reverted to the Treasury at year end; so they 
     were spent--on almost anything. ``The old tradition was if 
     the Navy can spend some money, it will,'' he recently noted 
     to a group of naval auditors.


                             changed rules

       Last year, however, the Navy changed the rules--after hard 
     lobbying by Adm. Flanagan. He did so partly because, as one 
     of a Cape Cod, Mass., policeman's eight children, he admired 
     his mother's gentle but firm grasp on the family budget. But 
     he also was strongly influenced by four mid-career months at 
     Harvard Business School, where he became acquainted with 
     marketing concepts. ``It opened up a whole new avenue of 
     thought,'' he recalls.
       Under the Navy's new rules, a commander who saves money or 
     generates outside income can use the funds to buy new ships, 
     planes or other equipment. Now Adm. Flanagan, perhaps with 
     more determination than most senior officers, is trying to 
     get his subordinates on board. His reasoning: The Navy's job 
     remains ``to fight and win.'' he says, but, in an era of 
     shrinking budgets, it can't win ``unless we learn to look 
     more like GE than USN.''
       When he found the Norfolk base renting several hundred vans 
     it didn't need and its overstaffed golf course losing vast 
     sums, he didn't ``shoot anybody'' but got the problems 
     corrected, he says. ``If you start assessing fear and 
     blame,'' he adds, waste simply goes ``underground.'' Instead, 
     he praises managers who improve matters.
       Meanwhile, the first new business was peering through the 
     front gate. Lured by hulking carriers moored at the docks, 
     some 350,000 visitors showed up at base entrances every year, 
     but most couldn't get past the guards. So in October, the 
     admiral removed the guards from the gates. ``It took some old 
     salts here some time to get used to it,'' recalls Norfolk's 
     mayor, Paul Fraim.
       Before long, tour buses will call at a new, privately owned 
     marina and restaurant, which will share any profits with the 
     base, and a ``Welcome Center'' complete with souvenir shops. 
     Naval Number-crunchers--more use to counting munitions--
     expect 500,000 tourists this year, causing one naval officer 
     to exult: ``When they each buy a baseball cap at $6 a pop, 
     we've just made $3 million!''
       Nearbly Norfolk International Terminals is also pleased. 
     Cramped for space, it finds itself inundated by two million 
     bags of cocoa beans after a market upheaval. For years, 
     Robert Bray, executive director of the Virginia Port 
     Authority, which runs it, had sought access to empty Navy 
     warehouses just across the fence but found ``the answer was 
     always no.''


                          Barter Deal Proposed

       Adm. Flanagan said yes. But he wants a billion-dollar 
     barter deal; if the terminal will load cargo onto Navy ships, 
     it can build storage facilities on unused naval property. 
     Under the projected agreement, the railroad serving the 
     terminal could use Navy land, allowing it to operate longer 
     freight trains. Both the terminal and the base would gain 
     cargo capacity.
       Another possible deal that interests Adm. Flanagan involves 
     Willoughby spit, a landfill area with 440 somewhat-shabby 
     Navy apartments--each needing $70,000 of renovation. Two 
     local developers see opportunity--prime waterfront land for a 
     hotel-office-marina complex and townhouses. Monica R. 
     Shephard, the Navy's negotiator, hopes to lease out the site 
     on a long-term basis and use the revenue to finance better 
     naval housing elsewhere. However, civilian tenants would 
     be warned they could be temporarily locked off the base in 
     a national emergency.
       In addition, many other tacky, prefab buildings are coming 
     down. Adm. Flanagan, who first came here as a freighter 
     crewman in 1964, remembers even then wondering why so many 
     ``temporaries'' were still around. As the landlord, he found 
     132 Navy tenants, some with no direct connection to his 
     base's mission, and told them to pay rent or ship out. ``The 
     goal is to make people aware that this stuff isn't free. . . 
     . We are in a limited-resources game,'' he explains.


                     repair facilities consolidated

       His staffers also have consolidated 13 electric-motor 
     repair facilities into one and have cut some 30 instrument-
     calibration shops to five. The savings so far: about $39 
     million. And Rear Adm. Art Clark, the Atlantic fleet's chief 
     maintenance officer, says he can cut more.
       Not all this pleases private repair yards. They invested 
     heavily in drydocks and piers when President Reagan wanted a 
     600-ship Navy, and now they fear that the Navy will do more 
     of its own work.
       J. Douglas Forrest, vice president of Collona's Shipyard 
     Inc., a family business operating here since 1875, grumbles 
     about naval officers going to ``90-to-120-day whiz-bang 
     programs at Harvard, so then they can deal in the financial 
     world.'' Nothing personal, he adds quickly. ``People like Bud 
     Flanagan broke the Red Navy. . . . They're great guys. . . . 
     But the Navy never prepared them for making all the decisions 
     that have been forced upon them by a government that is 
     downsizing.''
       Adm. Flanagan, too, sometimes longs for the days when ``win 
     the war'' was the Navy's bottom line: ``that was easy. You 
     just got up in the morning and followed the plan.''

                          ____________________