Many years ago the Israel Defense Forces believed it was the best at everything. It even ran its own coffee plant, managed by officers. After long and heavy pressure the armed forces agreed to shut the factory and to order its coffee from Elite. And thus was saved vast sums of money.
In the past few years, the IDF has continued on the outsourcing path - it recently submitted a plan to outsource catering entirely. "We believe that we are not the best in the food field. We have no comparative advantage over the civilian companies," said the head of the technology department Yaakov Nakash.
The IDF is also planning to privatize emergency stores, and even to transfer the unmanned aircraft division into civilian hands. The new slogan in the army is, "If it doesn't shoot - privatize it!" although apparently the old adage of "We know best" does come back and haunt.
One of the perks of the career army and security services, is the annual vacation fully paid by the defense establishment. In July 1998, the Defense Ministry published a tender for organizing these vacation services. The Shekem firm won the tender (worth some NIS 70 million a year) to run the service for the next five years, although the ministry decided to extend the contract until the end of June, that is in another four days.
Now it appears that Defense Ministry Director-General Amos Yaron is considering taking a step backward, to cancel Shekem's contract and those with other vacation services and to have the ministry do the job itself. In other words, to set up a new army unit whose staff will personally go out and sign contracts with 120 hotels across the country. Yaron believes that defense personnel can become experts in the field of tourism. They will follow prices, when they go up and when they are falling, what's the situation of each hotel, when it is stuck with empty rooms, when charter flights are operating and when their prices are rising, when charters have been canceled and their prices are falling, what's going on in global tourism, what's up with domestic tourism - and all of this requires information of each segment of the sector, competitive organization and long-term specialization.
So it is quite obvious that if the Defense Ministry sets up this unit to order the hotel rooms directly, then it will always end up paying more. It will never provide better service than the specialist private companies, not to mention the cost of the organization, which will only balloon forever upward, and then there's the matter of the "benefits" such as freebie weekend pre-booking sorties, to check out the facilities.
There are enough companies in the country that deal with holiday services. So Yaron should simply conduct a public tender, choose the best couple of firms and save the defense establishment tons of money, and also avoid getting stuck with problems it shouldn't have. Didn't the IDF ages ago stop making its own coffee for its soldiers?
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