NATO space enterprise must throttle up — or risk falling short

On the same subject

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  October 2, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

  Facing industry pressure, Pentagon backs off contract payment changes

  By: Aaron Mehta and Joe Gould WASHINGTON – Following a wave of criticism from the defense industry and members of Congress, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts. In a statement released at the unusual time of 7:19 PM, Deputy Secretary of Defense Patrick Shanahan said the decision to withdraw the proposed acquisition changes stemmed from a lack of “coordination” inside the department. “Recently, proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) were prematurely released, absent full coordination,” Shanahan's statement read. “As a result, the Department will rescind the proposed amendments. In coordination with industry, the Department will create a revised rule to implement section 831 of the FY2017 NDAA.” "The department will continue to partner closely with Congress and industry to examine all reform opportunities, ensuring we provide the best value to taxpayers and critical capabilities to military personnel who defend this great Nation,” Shanahan said. Unsaid in the statement: that since word of the proposed changes got out, the defense industry has been loud and unanimous in its opposition, and has enlisted its supporters on the Hill to help fight against the plan, put forth by Undersecretary of Defense for Acquisition and Sustainment Ellen Lord. As part of a broader set of changes to the acquisition rules, Lord hoped to change how companies receive their cash flow based on performance measurements, to act as an incentive for good behavior. In a Sept. 5 interview with Defense News, she laid out the rationale, saying “I believe the lifeblood of most industry is cash flow, so what we will do is regulate the percentage of payments or the amount of profit that can be achieved through what type of performance they demonstrate by the numbers.” However, three major trade groups — The National Defense Industrial Association, Professional Services Council and the Aerospace Industries Association — objected to the proposal, which would slash the payments on work to be performed from 80 percent to 50 percent, with incremental increases for maintaining quality or on-time delivery — and decreases for companies that have committed fraud. Rep. Mac Thornberry, R-Texas, and Sen. Jim Inhofe, R-Okla., the chairs of the House and Senate Armed Services Committees, sent a Sept. 21 letter to Shanahan calling the proposal “fundamentally flawed" and asking that it be rescinded and revisited. “We should not make it harder to do business with the Department of Defense than it is to do business with other parts of government — and that's exactly what this regulation does,” Thornberry told reporters last Tuesday. “We try to streamline acquisition, we try to make it easier to do business with these small companies; and then something like this comes out.” The Pentagon had hoped to implement the rule changes by the end of the year and had planned to hold a public meeting on Oct. 10, before the public comment period ended on Oct. 23. Whether that event will still happen is unclear. https://www.defensenews.com/pentagon/2018/10/02/facing-industry-pressure-pentagon-backs-off-contract-payment-changes

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  April 23, 2018 | International, Naval

  Are you a small business? The Navy wants to work with you

  By: Daniel Cebul WASHINGTON — To reach its acquisition goals, the Navy wants to make it easier to partner with small businesses. Speaking from the Sea-Air-Space Exposition to a Facebook Live audience, Assistant Secretary of the Navy for Research, Development and Acquisition James Geurts outlined his views on the important role small businesses play in Navy acquisition programs. “Small business is an incredible source for innovation, for adaptability, for agility, and resilience,” Geurts said. “My main goal [is to figure out], how do we leverage small business for things they are really good at?” Geurts emphasized the importance of small business in achieving U.S. security goals. Looking at the National Defense Strategy for guidance, Geurtz summarized the document to be one focused on how the United States will continue to compete and win as a nation. “Winning teams figure out how to use all the players available, use them for what their strengths are, continue to grow them, and expand,” he said. “Small business is a big piece of that equation for us.” One way small businesses can get connected to the right program is by clearly communicating their technological capabilities and ability to execute awarded contracts. “If you're a small business you've got to let us know what your capabilities are,” Geurts said. By clearly communicating capability, businesses “make it easy for [the Navy] to know what capabilities you have so we can be fully informed in putting a program together,” he added. https://www.defensenews.com/digital-show-dailies/navy-league/2018/04/12/are-you-a-small-business-the-navy-wants-to-work-with-you/

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  April 14, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

  The coronavirus threatens NATO. Let’s move to protect the alliance.

  By: Sophia Becker , Christian Mölling , and Torben Schütz The global fight against COVID-19 has devastating economic consequences which might soon be felt in the defense sector. First estimates by OECD and national institutions conclude that the initial economic impact of the measures to fight the virus will by far exceed that of the 2008 financial crisis. The severe socio-economic consequences may tempt European governments to prioritize immediate economic relief over long-term strategic security and defense considerations. The good news is: there is no automatism – it remains fundamentally a political decision. If European governments do decide to slash defense spending as a result of the current crisis, it would be the second major hit within a decade. Defense budgets have only just begun to recover towards pre-2008 crisis levels, though capabilities have not. Nationally, as well as on an EU and NATO level, significant gaps still exist. European armies have lost roughly one-third of their capabilities over the last two decades. At the same time, the threat environment has intensified with an openly hostile Russia and a rising China. With European defense budgets under pressure, the United States might see any effort to balance burden-sharing among allies fall apart. A militarily weak Europe would be no help against competitors either. The US should work with allies now to maintain NATO's capabilities. Improve coordination to avoid past mistakes Europe's cardinal mistake from the last crisis was uncoordinated national defense cuts instead of harmonized European decisions. In light of the looming budget crisis, governments could be tempted to react the same way. This would be the second round of cuts within a decade, leaving not many capabilities to pool within NATO. If domestic priorities trump considerations about procurement of equipment for the maintenance and generation of military capabilities the system-wide repercussions would be severe. NATO defense, as well as the tightly knit industrial network in Europe, will suffer. Capabilities that can only be generated or sustained multinationally – like effective air defense, strategic air transport or naval strike groups - could become even more fragile; some critical ones may even disappear. If Europeans cut back on capabilities like anti-submarine warfare, armored vehicles of all sorts and mine-warfare equipment again, they could endanger the military capacity of nearly all allies. Ten years ago, such capabilities for large-scale and conventional warfare seemed rather superfluous, but today NATO needs them more than ever. This outcome should be avoided at all costs, because rebuilding those critical forces would be a considerable resource investment and could take years. Europe would become an even less effective military actor and partner to the US, resulting in more discord about burden-sharing. Uncoordinated cuts would also affect the defense industry, as development and procurement programs would be delayed or cancelled altogether – hitting both European and American companies. Moreover, their ability to increase efficiency through transnational mergers and acquisitions and economies of scale is limited due to continued national sentiments in Europe. Companies might decide to either aggressively internationalize, including massive increase of defense exports, or leave the market as national armed forces as otherwise reliable clients drop out. Technological innovation would suffer from a shrinking defense industrial ecosystem and duplicated national research and development efforts, risking the foundation of security for the next generation of defense solutions. To safeguard NATO's strategic autonomy, lean on lead nations In order to prevent the loss of critical capabilities and infrastructure within NATO, the US should immediately start working with its European partners to preemptively plan for increasingly tight budgets. NATO should take stock of existing capabilities and offer alternatives for consolidation. Based on a coordinated effort to redefine NATO's level of ambition and priorities, it should offer plans for maintaining the military capacity to act while retiring unnecessary and outdated resources. Such a coordinated effort should include close cooperation with the European Union. Building on the NATO Framework Nations Concept, the United States should work with a network of larger member states, better equipped to weather the economic shock of the current crisis, to act as lead nations. These countries could safeguard critical defense capabilities and provide a foundation of essential forces, enabling smaller partners to attach their specialized capabilities. Such an arrangement allows for a comparatively good balance of financial strain and retention of military capacity. Additionally, NATO should look beyond the conventional military domain and build on lessons learned from hybrid warfare and foreign influence operations against Europe. The way ahead is clear: As ambitions for European strategic autonomy become wishful thinking in light of the current crisis, allies should focus on retaining NATO's strategic autonomy as a whole. For the foreseeable future, both sides of the Atlantic have to live by one motto: NATO first! The authors are analysts at the Berlin-based German Council on Foreign Relations (DGAP). https://www.defensenews.com/opinion/commentary/2020/04/09/the-coronavirus-threatens-nato-lets-move-to-protect-the-alliance/