Pentagon Officials Pledge Better Communication With Industry
Communication broke down over the past decade when the defense budget grew by double-digit percentages annually, and there was no real incentive for contractors and Pentagon buyers to talk, said Brett Lambert, deputy assistant secretary of defense for manufacturing and industrial-base policy.
While the money was flowing and business was good, the Pentagon dealt with troubled programs by throwing more money at them, he said. When the spigot went dry, a cash-strapped Defense Department and a cash-dependent defense industrial base found each other speaking different languages.
“I came [into office] in 2009 with clear guidance … to figure out why there was this perception that there was a lack of communication with industry,” Lambert said Feb. 20 at a forum on government-industry relations hosted by the Atlantic Council, a Washington, D.C.-based think tank.
“A lot of people thought that that was political, but it became obvious to me very quickly that it had nothing to do with politics or parties," he said. “There was no need to talk to each other. ... Everyone was happy. When we had a program that was bleeding, we cauterized the wound with money, because we had it. … The interaction between industry and the department, frankly, broke down.”
A study of four previous downturns, most notably those after World War II and the Cold War, showed that the Pentagon missed the mark on every occasion in how it engaged its suppliers in preparation for austerity, Lambert said.
“We got it wrong in every case … for a variety of reasons,” he said. “What ultimately came out of that effort is that we need to engage industry up front. … Ours is the only business in the world where the closer you get to awarding a contract, the less you talk to the person you’re going to award it to. Nobody would build a house like that, but we build defense systems like that.”
Lambert, urged on by his boss, Undersecretary of Defense for Acquisition Frank Kendall, has established several new policies to spur dialogue between government and industry. They include education of Pentagon officials on how industry works and communicating the private sector’s concerns and suggestions.
Industry input and considerations will also be a top priority when Pentagon officials are making decision regarding programs, he said.
Lambert has authorized a study of the “breadth and depth of the our industrial base, in some cases down to the tenth tier, to look at key points of vulnerability.” The study is focused on indentifying “niche providers,” or sole-suppliers of critical products and material.
“In those cases we will intervene … to stabilize production runs,” Lambert said. There is $30 million available for “very targeted investments to keep those companies alive, to invest in them for next-generation technologies and to hopefully bring down the overall cost of systems. We have to stop solving million-dollar problems with billion-dollar solutions.”
Future defense budgets will likely reflect an increased reliance on fast-track procurement efforts such as the Army’s Rapid Equipping Force and Network Integration Evaluation programs. Similar endeavors, which suspend labyrinthine acquisition regulations to fulfill combat troops’ urgent needs, have resulted in the mine resistant ambush protected vehicle and to some extent unmanned aerial vehicles.
“The success of rapid equipping efforts really drives home the need for acquisition reform,” said William Greenwalt, vice president of acquisition policy for the Aerospace Industries Association. He held Lambert’s position from 2006 to 2009. Rapid acquisitions are possible by the “authority Congress has given the [Defense] Department to essentially wave all the rules to do rapid acquisition. We have that authority, we have other transaction authority, which, by the way, brought us UAVs 20 years ago.”
Positive reviews of programs such as the Army's REF has Pentagon officials asking why the infamously slow, uncertain traditional acquisition system exists, Greenwalt said. While no plans are in the works to do away with the old system, Lambert said the consensus has been that rapid equipping programs will be continued and likely expanded.
“As we draw down, do we do away with those practices and go back to our old milestones, 18-month, 24-month cycles?” Lambert asked. “A decision has been made to … continue to run pilot programs. Actually to continue not just to keep them at the levels they are but perhaps increase them in these times of decreasing budget to focus on real, near-term needs.”
The programs are designed to help small and medium-sized business break into the world of government contracting while avoiding what Lambert called the “summit of uncertainty” — a riff off the research and development idiom “valley of uncertainty” that often separates prototypes from production.
In the cliff scenario, an entrepreneur has” a great idea and you know the [Defense Department] needs it, but there’s no way to get it in the hands of the Department,” Lambert said.
After hiring consultants and retired military personnel to establish contacts inside the Pentagon; working with a prime contractor that takes a cut of its profit; and becoming a full fledged government contractor in their own right, the company reaches the edge of a cliff.
“Now you’re at the summit and you fall off the cliff and you’ve spent three years of your life not innovating, but just simply trying to become a client to the customer,” Lambert said. “And now you’re a government contractor with all of that baggage that added absolutely zero value to the department at the end of the day. The challenge is how do we get that innovation directly into the hands of the war fighter.”
Greenwalt was upbeat about the prospects of industry policy in times of budget cuts. If the Pentagon can inspire science, engineering and technological efforts to tackle “grand challenges,” both the private public sectors of defense can pull through, he said. “The budget downturn offers opportunities … to change the way you do business,” he said. “It offers opportunities for innovation to rise up.”
Photo Credit: Defense Dept.
Topics: Business Trends, Doing Business with the Government, Procurement, Acquisition Reform