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Technical Data Rights

In reference to your editorial, “DoD Clashes With Suppliers Over Data Rights,” (Jan. 2014), in most cases the data rights/IP issue is focused upon commercial off-the-shelf, or COTS, items. In the product support of these COTS items is where things can get ugly regarding field service technician manuals, the tasks to be performed for a reparable part, embedded software changes/upgrades and much more.

I have pondered developing a solution for this issue. In my commercial and defense work, I have often had to contend with this area of conflict between end-user/non-manufacturing providers and the originial equipment manufacturers and distributors.

Why not create a financial instrument —traded within a special financial exchange — that would monetize the IP not only for contractors, but also for Defense Department IP? The financial instrument would be constructed as a right to employ the IP, which could include multiple tranches of use, such as one for parts manufacturing or another for algorithms. The value of the IP would be based upon the net reset value of the IP. For instance, IP that would be employed to support the line maintenance of 300 aircraft currently fielded, with an expected remaining life of 20 years would have a greater price than that for the same aircraft that had only 10 years remaining.

What is interesting is that the Defense Department could turn the tables on contractors by having the contractors “pay their fair share” for work done by such groups as the Defense Advanced Research Projects Agency through the exchange.

This financial exchange would be created with a special status by Congress in order to control exports and other issues.

The Defense Department currently has an estimated weapon system inventory worth $1.5 trillion. An estimated 20 percent of it entails products with manufacturer-owned IP, and IP constitutes an estimated 10 percent of the value of those products. Product support annual expenditures average about 7 percent, or $21 billion a year for COTS items. IP could be monetized, through the exchanges, over a 10-year period. Thus if the non-manufacturer acquires the right to the IP, they would have to build a business case in which they could still generate a profit, if they incurred the additional cost of acquiring the rights to the IP.

Selling the rights of Defense Department IP could be a source of income for the Materiel Life Cycle Commands. Imagine the monetary value of IP that the government has given to contractors that was never employed in a fielded weapon system. We are talking billions of dollars. Some of that could be recovered via this IP financial exchange that would be available for commercial organizations.

In a fully functioning financial exchange, $5 billion to $10 billion of IP rights could be exchanged each year. Market forces would drive a solution that is a win for the government and for contractors.

Ron Giuntini
Giuntini & Co.

No Shortage of Defense Engineers

Concerning “Defense Executives: Shortage of Engineers Is Not a Myth” (National Defense Blog Nov. 27, 2013), the key point mentioned in your article is that “U.S. defense executives are pushing back on suggestions that a shortage of science, math and engineering graduates is a fake crisis.”

The article says a deficit of STEM skilled workers has been the “conventional wisdom in Washington for years, but a crop of studies in recent months has poured cold water on the notion, embraced by defense industry, that a dearth of engineering talent poses a threat to U.S. industrial competitiveness and national security.”

I have watched many of the best and brightest leave science and engineering in almost every year of all of the past 30 years of my career, for lack of career opportunities. I can remember in 1990 when an MIT B.S.-University of Chicago PhD left research engineering for a sales job, and said to me, “the shortage of engineers and scientists in the U.S. is a myth perpetuated by vice presidents of large technology companies.”

As a senior scientist/engineer today, I sometimes help my company fill positions by reviewing resumes. I see hundreds of applications. Many of the applicants have PhD’s and/or decades of experience. The above recent experience and many like it is not consistent with a shortage.

Pushing science and engineering on young people today might possibly be of value to them and our society in the next five years, but the prevailing wisdom of our society is that it will create yet another generation of disappointment with STEM as a career.

The continuing “fib” that we need more scientists and engineers has created a now-engrained backlash against science and technology. It’s not just the scientists and engineers, it’s their extended families and communities that see their straight-A students fail in life. And if we import engineers from other countries, a U.S. student would ask, “why bother with STEM when the United States will just import low-cost STEM labor?” I heard such sentiments recently in Northern California.

In my opinion, it’s not a shortage of engineers and scientists that’s the problem, but instead a failure to properly utilize the ones we have by those same American business leaders you quote. I founded several technology companies, including one in Silicon Valley, and never had a problem finding talented help in any aspect of STEM.

Richard Brooks Holmes
Kihei, HI

The inefficiency and misuse of technical talent I have seen firsthand as an engineer in the defense industry has reminded me of the 1990s, when having defense work on your resume was usually a killer for a job interview in commercial industry.

STEM workers today have to think about their career technical growth and future marketability in a variety of industries, which large defense firms generally don’t provide. I have noticed the assumption that “engineers can do anything, so let’s put them on everything,” including writing nontechnical boilerplate documents that would be done much more efficiently by technical administrators.

Since STEM graduates have choices to make, the defense industry would do well to tailor jobs that really require their skills and give them forward visibility into attractive careers. This is very different from the prevailing mentality of “filling a slot” and would require adjustments that might be unfamiliar to this industry and its cost-focused government customer. At my level, I’m not expecting any changes soon.

Ron Purcell,
RelQual Associates

Topics: Business Trends, Doing Business with the Government, Defense Department, Research and Development

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