Industry analyzing DoD reforms, looking for “entry point”

The pile of initiatives that Defense Secretary Robert Gates has assigned to Undersecretary Ashton Carter is creating a lot of buzz in the defense industry. And the changes are so drastic that it’s taking companies a while to interpret them, and find out how the changes will affect business.

“Industry is still trying to evaluate each of those [23 initiatives] to determine our entry point,” ARINC’s Vice President of Contracts and Procurement, Glenn Baer, told me on Industry Chatter today. “Sixty per cent of our business is government business, and yet that yields forty per cent of our company’s revenue. It’s a marketplace that if you’re in it, you’re not going to be having large profit margins. So every time you see these initiatives come out, the short answer tends to bubble up.”

Overall, though, Glenn gives the DoD initiatives a “thumbs up. Industry across the board sees some great opportunities in improving the process; obviously the government’s behavior drives industry’s costs,” Glenn said. “As I can continue to see improvement within the Federal acquisition process, in the rules and regulations, that [improvement] drives my behavior. [One of] Dr. Carter’s [list of 23 initiatives] is to remove obstacles to competition, and one of the big [ways] is to allow reasonable time to bid, to attract people to the marketplace. I had a requirement just this week that came out on Sunday morning, due Wednesday night. It was probably funded with year-end money; that’s why the cycle was so short. But in that kind of time frame – a four-day cycle – you limit the number of companies that actually want to spend their limited and precious bid-and-proposal money to go against requirements like that.”

Glenn and I also discussed how his company can deliver better value to the Pentagon. His top choice for doing that is “better management definition. Ten or twelve years ago, the government would give you 23 pages of specifications along with your contract that you had to perform, under these specifications processes. That drove cost issues that were not necessary, and [drove] some wasteful spending. Over the last ten years they have put in place performance-based contracting. My number one issue would be training the force in order to write the requirements more [along the lines of] what I need, and less how to get there. What we’re seeing as we continue to go through the balance between performance-based and non-performance-based are these requirements that ask industry, ‘you propose performance-based back to me.’ The ‘what’ for ARINC might be different than the ‘what’ for somebody else. That forces the source selection authority to potentially evaluate disparate responses, and try to make sense out of what would be best-in-class responses. For me, that’s an important activity that has to happen within the Federal government – to train their workforce.”


We also talked about improving collaboration with agencies before proposals are sent (“it’s only good”); and shortening the actual execution time of defense projects (“Jack Gansler [said] when he was AT&L that DoD acquisition cycle time from concept to development time is three years, and on the commercial side it’s three months. In order to capture emerging technology, they need to improve that process rather dramatically”).

You can hear the entire conversation with Glenn Baer by clicking on the audio link.