Startups Poised To Break into Defense Market

By Sandra I. Erwin
A small number of large firms currently garner the preponderance of Pentagon and NASA procurement dollars. Their dominance seems immutable.

Or maybe not.

A confluence of economic and technological factors is creating conditions for startups to break into the government’s old-boy network of aerospace and defense suppliers, some experts contend.

The current environment is reminiscent of the shakeup witnessed in the information-technology industry of the late 80s and early 90s, said Chris C. Kemp, chief information officer at NASA Ames Research Center in Silicon Valley. The implosion of long-established IT firms that could not survive the onslaught of the Internet offers an eerie parallel to what is happening today in aerospace, Kemp said in a presentation at the National Press Club. Does anyone even remember Wang Laboratories, or Data General?

“Small businesses are more agile. They can take advantage of targets of opportunity as they present themselves,” said Ed Celiano, general manager of Applied Communications and Information Networking, a consortium of 65 small contractors in Camden, N.J.

The disappointing performance of several U.S. military space projects prompted a group of former Pentagon and Lockheed Martin officials to start a private venture to provide satellite communications services. U.S. Space LLC would offer a fee-for-service basis for less than what it costs the government to lease commercial satellites currently. This is one example of how industry startups are stepping in to fill known needs in the government, said David Fitzpatrick, an aerospace industry analyst at AlixPartners.

Topics: Defense Department, DOD Budget

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