Canada’s Combat Ship Procurement Process

On the same subject

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  September 18, 2020 | Information, Aerospace, Naval, Land, C4ISR, Security, Other Defence

  Defense industry worries Congress will punt budget deal into 2021

  Joe Gould WASHINGTON ― As Congress readies a stopgap spending measure this week, the defense industry is girding for a long-term funding patch that could delay both new procurement programs and needed fiscal certainty into next year. Democrats say they are considering whether to offer a continuing resolution that would stretch 2020 funding levels into next February or March, or whether to go along with a stopgap through mid December, as Senate Majority Leader Mitch McConnell, R-Ky., is seeking. Trade groups said this week that passing a CR by the Sept. 30 deadline is better than a government shutdown, but they warned that because CR's ban most new start programs, that will add more turbulence for firms already suffering from pandemic-related economic shocks. “As threats continue to multiply and the COVID-19 crisis continues, sustained and stable funding in national security takes on new meaning for the U.S. military and the defense industrial base that supports it,” Aerospace Industries Association President and CEO Eric Fanning, said in an email to Defense News. AIA represents roughly 340 manufacturers. “Relying on continuing resolutions, for any length of time, removes that stability, undermining the shared supply chain and endangering the solid progress made in readiness and modernization over the last several years.” Defense advocates say continuing resolutions of any length are inefficient for government and disruptive to the budget certainty that businesses need in order to make decisions, but the pandemic and sagging economy add new wrinkles. Smaller defense firms, many hit by cash flow problems related to the pandemic, were of particular concern to shipbuilder Huntington Ingalls Industries, which was among large firms that accelerated millions of dollars in payments to help small suppliers over recent months. “The effects of a long term continuing resolution can be harmful to the defense industrial base by delaying or prohibiting work,” HII spokesperson Beci Brenton said in an email. “Our greatest concern with a long term CR is the impact to our thousands of suppliers located in all 50 states who are already impacted by the COVID pandemic.” Despite a longstanding deal on the budget top lines, only the House has passed full-year appropriations bills, which means Congress will need more time to pass an FY21 appropriations package. Congress would likely need to draft a CR this week and pass it next week to avert a government shutdown. That's just what House Majority Leader Steny Hoyer, D-Md., told reporters this week that House leaders are planning. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi, D-Calif., say they have agreed to a “clean” CR, free of policy riders. It's not expected to include COVID relief funds, but further details have not been announced. Beyond timing, the defense industry is also watching which anomalies Congress includes to permit select new start programs. The White House sent Congress a list that included the Columbia-class submarine and new W93 submarine-launched nuclear warhead, as well as funds to ramp up the new Space Force ― along with select federal programs across multiple agencies. The National Defense Industrial Association's senior vice president, Wesley Hallman, said delaying new starts means delaying new revenue streams for companies and, for some, new hiring decisions. “How many new starts are planned for 1 October, I can't tell you, but if we go to March or February there are more new starts over that entire period,” Hallman said. “If it's bad in October, it's really bad if it's going into March.” Professional Services Council president and CEO David Berteau, whose group represents services contractors across government, said his member are worried about long delays for a budget deal. “Our members are always concerned because it slows down new contract awards, and it adds uncertainty to every program manager ― not only in the Defense Department, but across the federal government ― because they don't know how much money they're going to get or when they're going to get it,” Berteau said. The duration of the CR has special political dimensions this year. If the bill runs through December, President Donald Trump and a Republican-controlled Senate would negotiate over the final spending package. Depending on the outcome of the election, a CR that stretches into the next calendar year could be negotiated by a President Joe Biden or a Democratic-led Senate, which would give Democrats more leverage. Berteau was concerned that Biden, like Trump in 2017, would not enter office Jan. 20 ready to immediately hammer out a budget deal. It took until that April for Trump to sign a deal, and it took President Bill Clinton ― who entered office under similar circumstances in 1993 ― until that June. “If you don't get it now, history says you won't get it for six months,” said Berteau, “and that's debilitating for industry.” “Our members are always concerned because it slows down new contract awards, and it adds uncertainty to every program manager ― not only in the Defense Department, but across the federal government ― because they don't know how much money they're going to get or when they're going to get it,” Berteau said. The duration of the CR has special political dimensions this year. If the bill runs through December, President Donald Trump and a Republican-controlled Senate would negotiate over the final spending package. Depending on the outcome of the election, a CR that stretches into the next calendar year could be negotiated by a President Joe Biden or a Democratic-led Senate, which would give Democrats more leverage. Berteau was concerned that Biden, like Trump in 2017, would not enter office Jan. 20 ready to immediately hammer out a budget deal. It took until that April for Trump to sign a deal, and it took President Bill Clinton ― who entered office under similar circumstances in 1993 ― until that June. “If you don't get it now, history says you won't get it for six months,” said Berteau, “and that's debilitating for industry.” https://www.defensenews.com/congress/2020/09/16/defense-industry-worries-congress-will-punt-budget-deal-into-2021/

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  September 24, 2020 | Information,

  AIA’s Fanning: Civil aviation’s nosedive endangers Pentagon supplies

  Joe Gould WASHINGTON ― The Pentagon's shared supply chains with battered commercial aviation companies will suffer if Washington doesn't provide that sector with aid soon, the Aerospace Industries Association warned Wednesday. The trade group released its recovery plan for the broad aerospace and defense sector as Congress has begun a fierce Supreme Court replacement battle, shifting attention away from passing another stimulus package to defray the impact of the coronavirus pandemic. But AIA President and CEO Eric Fanning suggested some aviation companies have little time to wait. “If the commercial side doesn't get some relief, you are going to see companies in the supply chain go out of business, and that will impact the defense side,” Fanning said in a teleconference with reporters. “We're going to see bankruptcies, consolidation, closures in the supply chain, and she of them are single points of failure.” The defense subsector, declared essential at the pandemic's start, enjoys steady demand from the Pentagon, which has accelerated payments to prime contractors and directed stimulus funds toward its suppliers. However, sagging demand for commercial air travel will fuel a $100 billion revenue loss in the U.S. this year, Fanning said. AIA's analysis concluded another 220,0000 civil aviation jobs are at risk beyond 100,000 already lost. The study and its recommendations were prepared by Avascent, Boston Consulting Group, and McKinsey & Company, combined with input from AIA member companies. Beyond any federal aid, the civil aviation industry, the agency said, can highlight the steps it's taken to make air travel safer; increase communication between original equipment manufacturers, prime contractors, and suppliers, and support flexibility in the supply chain if private companies offer balance-sheet support and share inventory risk. The report called for stable Defense Department funding from Congress, but also said DoD can relieve stress on the industrial base by accelerating procurements of systems and services, with a focus on suppliers with notable commercial aerospace exposure. DoD can also keep making increased payments against ongoing contracts as they reach development and production milestones. AIA also continues to advocate for industry reimbursements for costs incurred during the COVID-19 pandemic, as authorized by Section 3610 of the CARES Act. Defense officials have said they need roughly $10 billion, and that without added funding from Congress, the Pentagon would have to dip into modernization and readiness funds. AIA's call comes a day after key House progressives, Reps. Marc Pocan and Barbara Lee, demanded an investigation and public hearings into the use of economic stimulus funding for defense contractors, calling it a “Pentagon misuse of COVID funds.” The Pentagon, which reported its intent to Congress in May, refuted that characterization. When asked, Fanning said it was important for the Pentagon to shore up previously identified supply chain weaknesses that the pandemic might exacerbate. “This money was put into contracts, so the war fighter is getting something for that,” Fanning said. “But I think the important thing is the critical nature of this industrial base, not just to the nation's economy, which is the health and safety of American's citizens writ large, but also to our nation's security.” A larger obstacle to winning further aid for the sector is that Congress has deadlocked over continued stimulus funding overall. AIA's report proposed that the government establish an investment fund that would send government-backed capital to civil aerospace suppliers; subsidize the airlines' major maintenance, repair, and overhaul visits, and continue to payroll assistance to support employees. Fanning told reporters that AIA found bipartisan backing for the idea of a payroll cost-share program, but there has been no legislative vehicle behind it. “The real problem is there's no bill,” Fanning said. “Congress hasn't been able to come together with the administration and itself to get a bill in place.” https://www.defensenews.com/congress/2020/09/23/aias-fanning-civil-aviations-nosedive-endangers-pentagon-supplies/

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  April 24, 2018 | Information, Aerospace, Naval, Land, C4ISR

  Bridging the ­Procurement Divide

  CHRIS MACLEAN © 2018 FrontLine Defence (Vol 15, No 2) A critically honest and engaged discussion about government and industry engagement, was held recently at the Telfer School of Management as part of the new Complex Project Leadership Programs. The program participants (mostly federal civil servants who are involved in procurement) interacted with executive-level industry leaders – Joe Armstrong, Vice President and General Manager at CAE; Jerry McLean, Vice President and Managing Director of Thales Canada; Iain Christie, Vice President of AIAC; and Kevin Ford, CEO of Calian – who shared their leadership insights, as well as what it is really like to do business in Canada. Through the highlighting of mutual pain points and frustrations, as well as identifying what is being done well and ways to move forward together, efficiently, each party gained insight and understanding that is sure to improve communication and future progress. It was evident that both sides wanted to learn from each other and pinpoint the principles that would help achieve mutual success; ultimately impacting the national economic footprint and saving taxpayer dollars. From the industry perspective, dependability equals direction. When a company can be assured that it has a fair opportunity to compete for a contract, it can set its sights on that goal and will make the necessary investments to ensure the best possible outcome. When government programs start and stop and change and restart, companies find it difficult to justify the extended costs because they lose their competitive edge and/or any ability to make a profit. Instability does not save the taxpayer, but it does have the potential to impact both quality of product and sustainability of the bidders (therefore employment numbers). Contracts equal sustainability and confirmation that the company direction is on track for success. Profit equals growth and further investment. Employment and supply chain purchases depend on a profit margin that allows growth. This “number one” business requirement conflicts with the government's prime directive is to ensure its bidders make a bare minimum of profit. When asked what they need from their government counterparts in order to create a better working relationship and foster a robust industry that can contribute to a strong GDP, the industry panelists identified two key elements. One was “more accuracy in the procurement process” and the other was “predictability”. Industry must be able to foresee where profits and sustainability could potentially come from. The time it takes to award large projects is also a limiting factor to success. It was noted that, since the beginning of time, a cornerstone of success for industry has always been ensuring the satisfaction of its client. It is believed that trust in the quality of the product and ease of customer service will lead to sustainability in the form of continued business. Not so with government contracts, which seem skewed to ensure previous successes gain no advantage, and must in some cases be hidden from decision-makers. Not taking into account a company's excellent past delivery performance, was said to contribute to industry's lack of incentive to perform to the best of its ability at all times. A company's ability to invest goes beyond individual contracts, which means the prospect of being evaluated for value can be a powerful incentive for going that extra mile – if exploited, not suppressed. Government employees were encouraged to exhibit courage in pursuing ways to truly streamline the procurement process, rather than repeatedly adding more and more layers of approvals and meetings. Industry leaders across the spectrum have commented on a palpable “lack of trust” on the part of government negotiators. Does this mistrust come from contract negotiators feeling the pursuit of profit is somehow un-Canadian? Or does it mean a company does not care enough about its customers? Neither assumption is accurate, and this may be one area where a culture change could make a world of difference. As one audience member exclaimed: “This was the best, most transparent conversation regarding the procurement process, I have ever heard.” While large-scale procurements will always be contentious due to the huge dollars and risk at stake, embracing the concept of open and unreserved dialogue, like what was experienced by this small group, has the potential to uncover procurement pitfalls and create a more progressive process. The Telfer School of Management's Complex Program Leadership programs focus on the hard and soft skills necessary to successfully deliver inherently complex programs and projects, while emphasizing strategic thinking, creative problem solving, stakeholder engagement, and leadership skills as key building blocks for this goal. http://defence.frontline.online/article/2018/2/9586-Bridging-the-vast-%C2%ADProcurement-Divide