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September 17, 2020 | Information, Other Defence

Coronavirus has kept us close to home. It’s a helpful lesson for strengthening national defense.

Justin P. Oberman

Despite being warned, with impressive precision, about the dangers of so-called black swan events, America tends to ignore or downplay them because they seem remote, or the perceived financial, societal and political costs are too great. In the aftermath of 9/11, of Hurricane Katrina and other major domestic tragedies, we too often learn that our relevant capabilities have atrophied.

Now, following perhaps the most devastating such event — the COVID-19 pandemic — the defense industrial base is actively seeking billions of dollars to prop it up without necessarily committing to making step-function leaps forward in a highly complex threat environment.

And while keeping the thousands of small companies that support the defense primes alive is important, the Pentagon — flush with cash and a mandate to act quickly to react to the pandemic — should use this opportunity to refine its technology acquisition approach, in part by doing more to engage nontraditional defense firms.

The reasons for bringing in new ideas for defense are clear. Just last week, the Department of Defense released its annual report to Congress on China, which states that “China has already achieved parity with — or even exceeded — the United States in several military modernization areas.”

Even more concerning, DoD analysts describe China's military-civil fusion development strategy as “a nationwide endeavor that seeks to ‘fuse' its economic and social development strategies with its security strategies to build an integrated national strategic system and capabilities in support of China's national rejuvenation goals.”

The United States doesn't need and shouldn't pursue a “fusion” strategy; rather, we need a better approach to strengthening the defense industrial base and engaging with innovators.

The United States is at risk of losing its ability to manufacture critical national security technology thanks to a combination of byzantine domestic procurement processes, offshoring and overseas competitors. To counter these and other negative trends, the DoD needs a sustainable, continuous innovation model.

In Silicon Valley, everyone from the biggest players to the youngest startups view working against or around slow, tired establishment organizations as almost a prerequisite to success (Uber vs. taxis, Tesla vs. legacy automakers, Amazon vs. everybody). Despite the Pentagon's attractive budget and important missions, many innovators are repelled by restrictive requirements, lengthy sales cycles, high costs of bidding and a deck often stacked in favor of large prime contractors.

The DoD must throw open its doors to innovators and free itself to make bets; if it does, it will get more world-class tools for its mission owners. The department should:

Make requirements less prescriptive, easier to understand and run two ways. Develop an outreach program for innovators that uses channels they're already occupying, in language they understand, with requirements that are compelling. Encourage two-way communication that surfaces non-obvious solutions to critical defense missions. At the Transportation Security Administration, we worked with an In-Q-Tel-backed company that was founded in Las Vegas to catch casino cheats; the Pentagon should look for similar outside-the-box opportunities.

Engage substantively with private sector innovation experts. The best investors and executives back successful entrepreneurs, mentor them as they refine their offerings and support world-changing scale. The DoD needs these skill sets and should set up (unpaid) innovation mentoring boards.

Insert flexibility into contracting and financing. To remove barriers to entry without sacrificing quality, the DoD should:

  • Create “off-campus” labs to mitigate procurement and security clearance delays.
  • Build on the work of Dr. Will Roper, the assistant secretary of the Air Force for acquisition, technology and logistics. to ensure innovators don't run out of funding.
  • In what would be a great advancement and threshold change, work with Congress to arrange for private sector investment in key technologies to bolster programs of record.

Lift government price and margin controls. Cost, often controlled through the anti-innovation technique of lowest-price, technically acceptable contracts, is not the key metric, particularly in emerging, dynamic technologies. What matters are outcomes and value. Restricting profit to a bureaucrat-calculated rate of 15 percent will drive innovative and nimble companies away from the DoD. Cost does not effectively incorporate other important metrics, including risk, prior investment and return on investment. Order quantities and frequency are also critical in determining reasonable costs, as these factors underpin business cases.

It's not a coincidence that the world's largest, most innovative economy belongs to the same country that has the world's largest, most lethal military and is the world's most attractive target for emerging threats.

The threat environment (intensified by the pandemic) makes clear that we need to change our approach; the state of our economy means that we need to start now.

https://www.defensenews.com/opinion/commentary/2020/09/16/coronavirus-has-kept-us-close-to-home-its-a-helpful-lesson-for-strengthening-national-defense/

On the same subject

  • Defense industry worries Congress will punt budget deal into 2021

    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/

  • Doing business with NATO

    February 9, 2018 | Information, Aerospace, Naval, Land, C4ISR, Security

    Doing business with NATO

    Canada has a new representative at the NATO Communications and Information Agency (NCIA / NCI Agency). Ms Joanna Glowacki started this fall and is ready to help Canadian companies connect with NATO ICT business opportunities. She can be reached at joanna.glowacki@ncia.nato.int or +32 (0)2 707.82.27 As you know, Canada has established a new Liaison Officer at the NATO Support and Procurement Agency (NSPA) in Capellen, Luxembourg. Lieutenant-Colonel Martin Bedard arrived in the summer and some of you have already been engaging with him. Martin's email address is calo@nspa.nato.int Canadian companies are encouraged to continue to track NATO business opportunities on the websites of the two NATO Acquisition Agencies – NCI Agency and NSPA. For companies tracking ICT business opportunities at NATO, it is recommended that you follow the NCI Agency Bulletin Board website https://www.ncia.nato.int/Industry/Pages/Home.aspx for the latest updates on current business opportunities. If you see an opportunity of interest, shown on the website as a Notice of Intent (NOI), notify the Canadian Delegation to be added to the bidders list. There is no cost to receive the bid package and no commitment to bid once on the bidders list, although for each and every opportunity you must notify Canada's Delegation to NATO at BNATO.industry@international.gc.ca to be added to the bidders list. For NATO business opportunities in the area of logistics and maintenance, the NATO Support and Procurement Agency (NSPA) website is: http://www.nspa.nato.int/en/index.htm. You should also register your company as a supplier of NSPA – there is no cost and no commitment to register your company – so you start to receive notices of NSPA business opportunities in your domain. You can register at the following link: http://www.nspa.nato.int/en/organization/procurement/supplier.htm. You can also view “Future Business Opportunities” on the NSPA database: http://www.nspa.nato.int/en/organization/procurement/fbo.htm. Right click on an item of interest for more detail. Check out as well the “Request for Proposal” opportunities at the same site – right side of page. You can also look at the following webpages for general information: Guide to navigating NATO procurement: http://www.forces.gc.ca/en/business-connecting-foreign-markets/nato-faqs-guide-procurement.page Answers to Frequently Asked Questions about NATO business opportunities: http://www.forces.gc.ca/en/business-connecting-foreign-markets/canadian-industry-doing-business-nato-faqs.page Guide pour la navigation- Acquisitions au sein de l'OTAN: http://www.forces.gc.ca/fr/faire-affaires-acceder-marches-etrangers/otan-faqs-guide-acquisition.page Réponses aux questions fréquemment posées sur les opportunités d'affaires de l'OTAN: http://www.forces.gc.ca/fr/faire-affaires-acceder-marches-etrangers/industrie-canadienne-faqs-otan.page

  • Bridging the ­Procurement Divide

    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

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