Budget preview hits Defense contractors on weapons and management
January 31, 2012 by cs
Defense budget cuts previewed Thursday, Jan. 26, 2011 would affect contractors in two ways: in the coming alterations to major weapons systems and the intensified search for greater efficiencies in Pentagon management.
Defense Secretary Leon Panetta planned to retire aging C5A and C130 transport aircraft while preserving adequate airlift capability. He would trim six tactical air squadrons from the current lineup of 60, and the Navy would retire seven older cruisers and two amphibious ships early. He would delay the next generation of ballistic missile submarines by two years, and he would “make adjustments” to the long-controversial Joint Strike Fighter aircraft, “slowing procurement to complete more testing and to develop changes before we buy in great quantities,” he said.
Programs left largely intact, he said, would be the Navy’s carrier air wings, the next generation of bombers and the aerial refueling tanker.
In a move likely to have the most direct effect on the acquisition community, Panetta said he would look to save $60 billion over five years by “improving business practices across the department.” That would include “more aggressive and competitive contacting practices and reductions in contract services.”
Further savings might be found, according to a Pentagon fact sheet, in better use of information technology, better use of business and enterprise systems, streamlined staff, limitations on official travel, improved inventory management and deferral of some military construction.
Asked whether such efforts in the past have proved fruitful, Panetta said his predecessor, Robert Gates, “had made some progress with regard to going after duplication, overhead and waste, and tightening up on systems. This is a very big bureaucracy,” Panetta said.
He emphasized that a key element of the guidance released earlier this month is “protecting key investments to retain a decisive technological edge,” which includes scientific programs in such areas as cyberwarfare, unmanned aircraft and homeland missiles. That means “maintaining the vitality of a healthy industrial base,” he added, “and avoiding imposing unacceptable risks on our critical suppliers.”
None of the actions comes as a surprise, said Stan Soloway, president and chief executive officer of the Professional Services Council, a contractors trade group. “They’ve long been signaling a need to drive more efficiency into the system, and you can only take so much out of each area,” he said. “The force structure reductions are going to happen, but it will take a while to achieve savings.”
He said people may look more carefully at the proposed new round of BRAC cuts. “We know it requires an up-front investment and takes several years to realize the savings, so it’s not impactful in the near term,” he said.
Marion C. Blakey, president and CEO of Aerospace Industries Association, asked how the Defense cuts will affect national security. “These cuts will have real consequences on our military and industrial base,” Blakey said.
– by Charles S. Clark – cclark@govexec.com – January 26, 2012 – http://www.govexec.com/story_page.cfm?articleid=49871&dcn=e_gvet
Defense technology to grow despite Pentagon budget cuts
January 17, 2012 by cs
As the Defense Department slashes its budget by at least $487 billion in 10 years, technology investment is one of the few areas that will continue to grow, according to a new military strategy that President Obama and Pentagon officials released Thursday.
The increased spending will focus on cyberspace, intelligence systems, space and science research, according to the review.
President Obama told a Pentagon press briefing that Defense has to develop “smart, strategic priorities.” Specifically, he called for enhanced intelligence, surveillance and reconnaissance systems.
In his written introduction to the review, Obama said the new strategy will “ensure that our military is agile, flexible and ready for the full range of contingencies.” He added this includes investments to ensure that the United States can prevail in all domains of military operations, including cyberspace.
Defense Secretary Leon Panetta said broad cuts in the new Defense budget, due for release in late January, do not apply to investments in technology, including unmanned systems, space capabilities and “particularly cyberspace capabilities.”
Defense budgeted $3.2 billion for cybersecurity in 2012. The Pentagon, Panetta said, must continue to invest “in new capabilities to maintain a decisive edge.”
He declined to provide specific funding figures for any military programs, deferring that action until release of the 2013 Defense budget. But, Panetta said, the strategy will drive the structure of the budget.
Deputy Secretary of Defense Ashton B. Carter said the new strategy envisions budget increases in “all aspects of cyber,” along with science and technology research. Defense cannot abandon that research, Carter said, as it would be akin to “eating our seed corn.”
Highlighting the importance of networks and space systems in the future, the strategy document said: “Modern armed forces cannot conduct high-temp, effective operations without reliable information and communication networks and assured access to cyberspace and space. Today space systems and their supporting infrastructure face a range of threats that may degrade, disrupt or destroy assets. Accordingly, DoD will continue to work with domestic and international allies and partners and invest in advanced capabilities to defend its networks, operational capability and resiliency in cyberspace and space.”
Trey Hodgkins, vice president of national security and procurement policy at TechAmerica, an industry trade group, said the new military strategy reflects an increasing awareness within Defense that technology, including information technology, sits at the core of multiple missions, and the Pentagon has to continue to beef up investments in this area.
Obama pointed out that the new military strategy shifts the Pentagon focus from Europe and the Mideast to the Asia-Pacifc region, including a beefed-up U.S. force presence in Australia that he announced in November 2011.
“As we end today’s wars, we will focus on a broader range of challenges and opportunities, including the security and prosperity of the Asia-Pacific [region],” Obama wrote in his introduction to the review. This shift includes dealing with the growth of the military power of China, which should be balanced by greater U.S. military presence in the region, the document said.
Hodgkins said this increased focus on the Asia-Pacific region will boost the importance of the U.S. Pacific Command headquartered in Honolulu and will require greater Defense network capacity in the region.
– by Bob Brewin – NextGov – 01/05/12 at http://www.nextgov.com/nextgov/ng_20120105_8406.php?oref=rss?zone=NGtoday
DOD tries to calm industry fears
January 16, 2012 by cs
Government contractors shouldn’t fear the looming defense budget cuts, the private sector still has a critical role to play, said the leader of the military’s acquisition arm on Jan. 6.
Frank Kendall, undersecretary of defense for acquisition, technology and logistics, said in a conference call that the department convened a joint DOD-private sector task force to determine the potential effects on industry of impending budget cuts and the military drawdown in Southwest Asia.
The task force has helped guide some of DOD’s strategy outlined Jan. 5 by President Barack Obama and Defense Secretary Leon Panetta, Kendall said. He was optimistic despite a new report from the task force that revealed worries over the projected spending decreases.
“The industrial base was considered throughout the review as part of total force structure,” Kendall said. “The department is dependent on the industrial base as a partner in the defense enterprise. But less is less…you cannot expect the market to continue to grow as it has in the past.”
But despite his optimism, defense industry executives are worried about the cuts. Their concerns were outlined in a report dated Nov. 11, 2011, but released Jan. 6.he
“This report paints an alarming picture for the future of the aerospace and defense industry,” Marion Blakey, president of the Aerospace Industries Association, said in a release. “Yesterday Secretary Panetta outlined very severe reductions in the defense budget. Any further cuts will cripple crucial industrial base capabilities in the national security sector.”
AIA was part of the Defense Industrial Base Task Force; other groups included the Professional Services Council and the National Defense Industrial Association.
Kendall said technology remains one area that likely will still see investment and the private sector’s partnership would remain critical to military operations.
“Our continued dominance will rely on technological superiority,” he said. “While we will be taking budget cuts, there will be high priority areas of investment,” including cyber, intelligence, surveillance, reconnaissance and space.
The task force’s report assessed the effects of two scenarios: the $480 billion defense spending reduction over 10 years that Obama and Panetta outlined Jan. 5, and the $1 trillion across-the-board cuts that could result from sequestration triggered by the congressional supercommittee’s failure to agree on federal budget cuts.
“Cuts beyond $480 billion…would render major segments of the defense industry unable to produce critical products and components, leaving wide gaps in the domestic capacity needed to sustain an acceptable margin of military superiority in the future,” the report stated.
According to Kendall, he and Deputy Defense Secretary Ashton Carter have met with the task force, and Panetta is slated to meet with members in two weeks.
Kendall stressed that he believes the cuts and strategy implementation are doable, and that industry has a seat at the table as DOD’s leadership determines strategy.
“I believe we can execute the strategy within the context of budget constraints and still preserve military and industrial base,” he said.
About the Author: Amber Corrin is a staff writer covering defense and national security for Federal Computer Week. This article appeared Jan. 6, 2012 at http://washingtontechnology.com/articles/2012/01/06/kendall-defense-industry-task-force-report.aspx?s=wtdaily_090112.
Contractors brace for coming defense cuts
January 13, 2012 by cs
As the Pentagon readies a fiscal 2013 budget expected to map out $487 billion in cuts over the next 10 years, many contractors already are bracing for a new climate of austerity, but they are heartened by the Obama administration’s pledge to preserve America’s industrial base.
At the Pentagon on Thursday (January 5, 2012) with President Obama, Defense Secretary Leon Panetta and Deputy Secretary Ashton B. Carter stressed the need for innovation and scientific progress. Both touched on the importance of innovation, maintaining the industrial base, and fostering science and technology.
“As we reduce the overall defense budget, we will protect our investments in special operations forces, new technologies like [intelligence, surveillance and reconnaissance] and unmanned systems, space and cyberspace capabilities, and our capacity to quickly mobilize,” Panetta said.
Carter said, “this guidance tells us to preserve investment, and even in some cases to increase our capabilities in key areas that are clearly important to the future — special forces in counterterrorism, countering weapons of mass destruction, building partner capacity, cyber, and aspects of our science and technology investments — making sure that we don’t simply revert to yesterday’s pre-9/11 force structure under the pressure of budget cuts.”
He offered assurance that the Defense Department does not “eat the seed corn” by making cuts that are irreversible. “As we make program changes, we want to make sure that 10 years, 15 years from now, we still have an industrial base that supports our key weapon systems even if we’re not able to buy in those areas at the rates or in the volume that we had planned before we were handed this $487 billion cut.”
The Professional Services Council, a contractors trade group, issued a statement applauding the administration for recognizing that a “strong, flexible and resilient industrial base is integral to ensuring future readiness and mission success.” But the council warned against “arbitrary cuts” to contracts, programs and personnel.
“Clearly, the planned reductions will have an impact on both the military and the industry. Those impacts could be exacerbated if the department does not pay close attention to how it can best capitalize on the capabilities of the private sector,” said PSC President and Chief Executive Officer Stan Soloway. “It is therefore more important than ever that the department buy smart and ensure it genuinely incentivizes and rewards performance and innovation rather than simply buying at the lowest price.”
The Aerospace Industries Association also was encouraged by the Pentagon’s approach, saying in a statement that officials “recognized the importance of a strong industrial base” and for planning reductions based on “a new national defense strategy … rather than simply lower numbers across-the-board.”
Richard Rector, a partner with DLA Piper who runs the law firm’s contracting practice, told Government Executive he expects “contractors’ work and the legal work to track the decline in spending, and that companies will be less willing to accept a loss on a key programs as the pie shrinks and there are fewer large programs.”
During the previous defense spending downturn, in the mid-1990s, the number of bid protests went down commensurately, he said, but companies today are apt to be “less sanguine about accepting a loss when profitability and margins are thin, and more likely to fight over things that at other times they would let slide.” That might mean more bid protests and more claims against agency contract officers for changing the scope of contract work, he added.
The American Federation of Government Employees urged the Pentagon “to take a balanced approach to spending reductions that subjects private contractors to the same cost-cutting scrutiny that has already been placed upon the civilian workforce,” AFGE President John Gage said in a statement.
“Tens of thousands of civilian jobs are slated for elimination, despite strong evidence that having civilians perform these jobs is the most cost-effective strategy,” he said. “Meanwhile, the department continues to increase spending on contractors, even though they are more costly and less accountable.”
The nonprofit Project on Government Oversight criticized both Defense officials and an advance story about the Pentagon review in The New York Times for failing to address possible savings through decreased reliance on contractors. “Beyond the secretary’s failure to provide specifics on how he’s going to achieve his budget savings, it was what he didn’t say that left us flabbergasted,” POGO Executive Director Danielle Brian said in a statement. “Not once did he mention the need to take a serious look at the more than $200 billion the Pentagon spends each year on outside service contractors.”
Brian said her group’s research shows the Pentagon spends more on service contractors than on its uniformed military and civilian employees combined, and that contractors, on average, bill the government “nearly twice as much as it would have cost federal employees to do the same jobs.”
Defense budget analysts Barry Watts and Todd Harrison of the Center for Strategic and Budgetary Assessments wrote a December 2011 op-ed in Politico underlining the importance of contractors in maintaining the industrial base and the need for a long-term Pentagon strategy that sets priorities for critical capabilities.
“For-profit companies, defense firms cannot afford to maintain a broad range of weapon design and production capabilities if there is no funding,” they warned. “In 1997, for example, the British navy wanted to develop a new class of nuclear attack submarine, only to find that the British defense industrial base no longer had the necessary design or production skills. Fortunately, the Royal Navy could turn to a U.S. firm for the lost expertise. But if the Pentagon finds itself in a similar situation, to whom would it turn?”
– by Charles S. Clark - Government Executive – January 6, 2012 at http://www.govexec.com/story_page.cfm?articleid=49718&oref=todaysnews
Supply chain innovations conference scheduled for Feb. 22-23 in Savannah
January 7, 2012 by cs
The Center for Advance Logistics Management is pleased to host a two-day conference on Supply Chain Innovations on Feb. 22 and 23, 2012 in Savannah, GA. The conference is an outgrowth of on-going research and education efforts by Albany State University, partnered with Albany Technical College.
The conference will be held at the Marriott Savannah Riverfront. The conference theme is “Leveraging technology for security, resilience and optimization in Defense supply chains.”
Information technology is being leveraged to provide enormous competitive advantage in globally connected supply chains. Technology is a source of innovation and competitive advantage, but it also makes supply chains vulnerable to cyber threats.
Advanced supply chains recognize and manage risk, and build security and resilience while they optimize performance.
IT underpins all of the elements of supply chain management. Sharing of information across processes in the supply chain affect everything from materials extraction and sourcing through manufacturing, transportation, distribution, finance, payments, security and customer relations.
The Department of Defense relies heavily on private-sector infrastructure for its supply chains.
While supply chains move materials through normal distribution channels (air, sea and land-based shipping), supply chain information travels on the Internet. Today we know that security and resiliency in information and communications infrastructures is insufficient, resulting in serious vulnerabilities for supply chains.
The risks and vulnerabilities in an improperly managed supply chain, from counterfeit equipment to malware to other avenues of attack, are real and growing. The Defense Department, through efforts such as the Trusted Foundry program and use of standards like Common Criteria (ISO/IEC 15408) is working to reduce its supply chain vulnerability footprint. This is not a small problem. Some have recommended government measures that mandate significant consequences for having inadequate cyber protections and requirements for reporting breaches and penetrations.
DoD programs that are mission critical or essential to national security or national defense have stepped up the requirements for compliance with DoD directives and Public Law requiring trusted components in the most important defense systems.
Agencies and departments are developing policies to keep a more watchful eye on vendors, partners, and others in their cyber supply chains and adopt best practices for mitigating risks across their systems and processes to protect your system against backdoor access or other deliberate mischief.
Complete confeence information, including registration details, may be found at http://www.afei.org/events/2A08/Pages/default.aspx.
Contractors get insourcing warning under defense bill
January 4, 2012 by cs
As Defense Department officials consider insourcing work, Congress wants them to notify contractors of their decision to bring the work inhouse.
The fiscal 2012 National Defense Authorization Act includes a provision requiring DOD to notify companies before insourcing particular jobs. Congress wants officials to give contractors a “timely notification” of their decision.
One expert said the timely notification is a step forward in informing companies that they are losing their contracts. But the provision’s usefulness
depends on DOD’s interpretation of the provision.
“How ‘timely’ is defined determines whether this is of any value or not,” said Robert Burton, former deputy OFPP administrator and now partner at the
Venable law firm.
Having worked with small contracting companies that lose their business because of insourcing, a timely notification may be a six-month heads-up. Still
he said the small businesses often struggle to stay afloat after a decision to insource work.
For the best option, Burton said government officials should talk with companies about the effect of insourcing on their future. Officials should then
consider it as a factor in their decision.
Also in the bill, the provision would add slightly to the blurry term of “critical function.”
A critical function is a duty “necessary to maintain sufficient government expertise and technical capabilities” and “entails operational risk associated
with contractor performance.”
The Office of Federal Procurement Policy this year defined a critical function as work that’s “necessary to the agency being able to effectively
perform and maintain control of its mission and operations.”
Congress also is telling defense officials to give special consideration in taking back these critical functions, as well as acquisition workforce functions
and even work that DOD employees have done at some point during the past decade.
Officials would need to test whether to insource certain functions based on guidance in a memo on comparing the estimated costs of civilian, military and
contractor support. Officials would also have to decide if insourcing a function would be either 10 percent lower or $10 million less expensive than the
contractor’s cost. The choice would not apply to inherently governmental functions, which should only be done by federal employees.
The authorization bill cleared Congress Dec. 15, and now awaits President Barack Obama’s signature or his veto.
About the Author: Matthew Weigelt is a senior writer covering acquisition and procurement for Federal Computer Week. This article appeared Dec.
22, 2011 at http://washingtontechnology.com/articles/2011/12/22/ndaa-timely-notification-insourcing.aspx.
Lucrative VA projects get 2012 funding OK
December 28, 2011 by cs
The fiscal 2012 omnibus budget bill passed Dec. 17 includes more than $100 million more in IT funding for Veteran Affairs than the agency received in 2011.
A big winner was a joint Defense Department-VA effort for a digital medical record system, which received $73 million for development costs. In May 2011, the secretaries of the VA and DOD signed an agreement to deploy an Integrated Electronic Health Record rather than separately modernize their respective digital medical record systems.
In total, Congress approved $580 million for the VA’s IT development projects, including the medical record project.
Other VA projects funded in fiscal 2012 include $107 million for the Veterans Benefits Management System; $70 million for Veterans Relationship Management; $50 million for the Virtual Lifetime Electronic Record; and $48 million for health care access programs, such as telehealth, surgical quality and workflow management; and emergency department and systems.
About the Author: Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week. This article appeared Dec. 21, 2011 at http://washingtontechnology.com/articles/2011/12/21/va-budget-approval.aspx?s=wtdaily_221211.
SBIR solicitations open until Jan. 11
December 20, 2011 by cs
The Department of Defense’s 2012 SBIR solicitation is now open and accepting proposals until January 11, 2012..
Small Business Innovation Research (SBIR) is a government program, coordinated by the Small Business Administration, in which 2.5 percent of the total extramural research budgets of all federal agencies with extramural research budgets in excess of $100 million are reserved for contracts or grants to small businesses. Annually, the SBIR budget represents more than $1 billion in research funds. Over half the awards are to firms with fewer than 25 people and a third to firms of fewer than 10. A fifth are minority or women-owned businesses. Historically, a quarter of the companies are first-time winners.
In addition, Congress established the Small Business Technology Transfer (STTR) Program in 1992. It is similar in structure to SBIR and funds cooperative research and development projects with small businesses in partnership with not-for profit research institutions (such as universities) to move research to the marketplace.
The SBIR/STTR Programs are structured in three phases. Phase I (project feasibility) determines the scientific, technical and commercial merit and feasibility of the ideas submitted. Phase II (project development to prototype) is the major research and development effort, funding the prototyping and demonstration of the most promising Phase I projects. Phase III (commercialization) is the ultimate goal of each SBIR/STTR effort and statute requires that Phase III work be funded by sources outside the SBIR/STTR Program.
During the solicitation period, communication between small businesses and topic authors is highly encouraged. For reasons of competitive fairness, direct communication between proposers and topic authors is not allowed during the Open period when DoD is accepting proposals for each solicitation. However, proposers may still submit written questions about solicitation topics through the SBIR/STTR Interactive Topic Information System (SITIS). In SITIS the questioner and respondent are anonymous and all questions and answers are posted electronically for general viewing until the solicitation closes. All proposers are advised to monitor SITIS during the Open solicitation period for questions and answers and other significant information relevant to their SBIR/STTR topics of interest.
Topics Search Engine: Visit the DoD Topic Search Tool to quickly and easily find topics by keyword across all DoD components participating in this solicitation.
IMPORTANT DATES:
- December 12, 2011 – Solicitation opens and DoD begins accepting proposals
- January 4, 2012 – SITIS closes to new questions
- January 11, 2012 – Solicitation closes to receipt of proposals at 6:00 AM EST
Complete details on DoD’s 2012 SBIR solicitation may be found at: http://www.acq.osd.mil/osbp/sbir/solicitations/sbir20121/index.shtml.
To be added to the DoD SBIR List serv: sbirlist@listserv.dodsbir.net.
Understanding the human dimension of federal contracting
November 23, 2011 by cs
Earlier this month, I was sitting on a stage with several government technology leaders, when one of them said something that cut through the usual noise.
“If you don’t do right by the people involved, the whole thing will fall on its face.”
The speaker was David Wennergren, the assistant deputy chief management officer for the Department of Defense. His point is relevant to all of us, both in government and industry.
It’s easy for us to focus on the numbers and the technologies. We wring our hands about where the money will come from to finish out the quarter, how to navigate budget cutbacks and still grow our businesses, and how to get a foot in the door with an agency. In the process, we can neglect the human dimension of the complementary challenges the government faces.
The buyer on the other side of the table, after all, is in a difficult place too. For government acquisition professionals, it’s not terribly difficult to make mistakes. They can accidentally spend in advance of appropriations, task the contractor to perform unauthorized work, inject bias into a source selection decision – the list is as long as your arm. Then there’s the additional stress of working within a risk-averse, rule-bound culture that limits options on a daily basis.
The acquisition workforce faces a tougher job today just a few years ago. With the chronic delays in congressional appropriations, these federal employees are now finding themselves halfway through the fiscal year and still uncertain about what funding they might receive and whether there will be any strings attached. As a program manager in the commercial world, you’d be frustrated.
There’s an old saying: “If you don’t have time to do it right, when will you have time to do it over again?”
An over-extended government acquisition workforce, short on qualified professionals, doesn’t always have time for either.
The best business leaders in our industry understand this. They work to help keep government acquisition professionals from getting in a bind. They know that if their government customer makes a mistake, it falls partially on the contractors’ shoulders.
Keep quiet when you know about a tactic that customers could use to solve their problems and you deny the taxpayer an efficient solution, limit the agency’s resources, and — consequently — limit your own opportunity to grow.
That’s why, increasingly, I think the key to success in our industry will be the people skills necessary to have a constructive conversation with an acquisition professional. It’s not an easy thing to do, and it requires a particular skill set. At the heart of it is an intimate knowledge of the world she works in. So study the Federal Acquisition Regulation and the financing rules. Attend events where people like Wennergren explain their challenges. Sit down with the customer and offer a new approach to s a program. Few contractors do these things.
But those who do find a receptive audience. During my time as a federal procurement official, I saw contracting officers with 15 years or more of experience approach me with a solution to a problem that they wanted to explore, courtesy of a contractor. Risk-averse culture or not, their minds could be expanded.
The lesson here is simple. When you see a way forward, pick up the phone. Coach them, guide them honestly and objectively. “Do right by the people involved.” Together you’ll find the solution.
– by Ray Bjorklund, Chief Knowledge Officer, Deltek – published by the Washington Business Journal – November 22, 2011 at http://www.bizjournals.com/washington/blog/fedbiz_daily/2011/11/the-human-dimesion-to-federal.html.