Category Archives: Business

Congress Seeks Pentagon Watchdog Probe of Aircraft Parts Supplier

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“THE PROJECT ON GOVERNMENT OVERSIGHT”

“This week, a House member called on the Department of Defense Inspector General (DoD IG) to investigate an aircraft parts supplier suspected of gouging the Pentagon for many years.

TransDigm, through the dozens of US and European aircraft part manufacturers it has bought up over the years, provides parts used on nearly every commercial and military aircraft in service today.

Representative Ro Khanna (D-CA), a member of the House Armed Services Committee, sent a letter to Acting DoD IG Glenn Fine requesting a probe into “potential waste, fraud, and abuse” by TransDigm Group, a Cleveland, Ohio-based conglomerate with a massive footprint in the aviation industry.

Most of those parts are proprietary products for which TransDigm owns the design or is the sole supplier.

Khanna is concerned that TransDigm is using its market dominance to take advantage of its customers, including DoD. Recent stories in the financial press have highlighted the company’s tendency to dramatically raise the price of parts after acquiring the manufacturer. For example, Business Insider reported that TransDigm raised the price of Harco Laboratories’ cable assembly 352 percent (from $1,737 to $7,864) after it bought the company in 2011, and two years later raised the price of Aerosonic Corporation’s vibration panel 300 percent after acquiring the company. Khanna’s letter contains other examples of similar post-acquisition price hikes.

TransDigm’s pricing practices have a direct impact on taxpayers. DoD, which accounts for roughly 30 percent of TransDigm’s sales, once paid about $5.3 million more than the fair and reasonable price for some of the company’s parts, according to a 2006 DoDIG audit.

In addition, Khanna asked the IG to look into whether TransDigm “has been operating as a hidden monopolist” by using various methods to conceal from DoD contracting officers that it is a sole-source supplier. For example, TransDigm will sometimes falsely create the appearance of a competitive bid by selling parts through other companies, known as exclusive distributors. The DoD has long known about the perils of buying parts through exclusive distributors. A 2008 IG audit advised the government to avoid this type of purchasing arrangement, warning that it “adds a duplicate layer of administration and shipments to the traditional procurement process” and prevents the government from being able to negotiate fair prices and obtain best value.

Khanna also noted that 12 TransDigm subsidiaries failed to disclose the identity of their corporate parent in the System for Award Management (SAM) contractor registration database. He reminded the IG that posting misleading or inaccurate information in SAM carries serious criminal, civil, and administrative penalties. He further noted that following publication of the inaccurate disclosure, the company amended the SAM data.

Khanna’s letter should resonate with a new president who is not shy about expressing his displeasure with wasteful defense spending. In December, then President-elect Trump took to Twitter to blast the spiraling costs of Boeing’s 747 Air Force One upgrade and Lockheed Martin’s F-35 stealth fighter, both of which use TransDigm parts.

We hope the letter puts pressure on DoD to probe TransDigm’s practices and spurs DoD and Congress to make reforms to the acquisition system. Over the years, the Project On Government Oversight (POGO) has repeatedly documented the problems in that system, which mainly boil down to rules and practices that hamstring the government’s ability to negotiate fair and reasonable prices and get the best deals for taxpayers.

POGO received the following comment from TransDigm:

TransDigm has been and remains committed to conducting business within the framework of the applicable laws and regulations across all areas and geographies in which we operate and we strongly disagree with recent allegations to the contrary. We remain steadfast in our commitment to supplying products that support the critical functions of our armed forces as well as commercial airplanes in use around the world.”

http://www.pogo.org/blog/2017/03/congress-seeks-pentagon-watchdog-probe-aircraft-parts-supplier-transdigm.html

Federal Contractors Seek Edge in Specialized Services

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Competive Edge Virtual Elves dot com

Image: “Virtualelves.com”

“NATIONAL DEFENSE MAGAZINE”
“In the cutthroat world of government services contracting, the lowest bid generally wins the project.
That trend has driven a cadre of technically specialized firms to reposition themselves in the market so they can compete less on price and more on the value of particular skills and knowledge. 
 
This shift is especially apparent in sectors like defense, space and intelligence that depend on contractors for highly complex missions. Companies that have the technical expertise are carving out niches where they can dominate and be less vulnerable to price wars. 
 
Lynn Dugle, CEO of government services contractor Engility Inc., said the company has been moving in that direction for the past couple of years, and the plan going forward is to focus more acutely on projects that are awarded based on “best value.”
 
“We are positioning our defense business to be more like our space and intelligence businesses, where we can differentiate the work we do in higher end services and engineering,” Dugle told National Defense. 
 
Dugle is finishing up her first year as CEO of $2.1 billion Engility. The company was spun off nearly five years ago from top defense contractor L-3. In 2015 it acquired the services contractor TASC and doubled its size.
 
Engility initially sought to compete in broader categories of federal support services that are awarded to the lowest bidder in so called “lowest price technically acceptable” contracting. Over the past eight months, only 5 percent of Engility’s bids have been for LPTA contracts, Dugle said. Now almost all the company’s proposals are “best value.”
 
LPTA is widely despised by companies in the defense industry and viewed as a race to the bottom. There is now a growing consensus that LPTA contracting works for nontechnical services like maintaining government facilities or staffing mess halls. Dugle has seen the Defense Department walk back from LPTA for engineering support and other “mission support.” Defense agencies frequently found that companies selected based on LPTA were technically unqualified.
 
“The market has shifted,” Dugle said. “Customers got burned on those higher end contracts with LPTA. Competitors bid really low and then they couldn’t staff the jobs.”
 
Engility is moving to hire specialized talent to shore up its defense expertise. “We are close to naming a senior VP for defense,” she said. “We need a certain percentage of our leadership to have operated and been successful at pursuing big programs, and at best value proposal writing. That’s a different skill than competing on price for smaller projects.”
 
The shift to higher end services appears to paying off. Engility reported an $11 million loss in 2016, but that was an improvement over $235 million of red ink in 2015. The numbers are “encouraging,” said Dugle. “Four contracts we won were over $200 million. That requires getting the right people with the right experience.” Engility has submitted at least 10 bids worth over $100 million that are still in source selection.
 
“We want to be primes in large jobs,” said Dugle. The company’s government work today is 40 percent defense. Dugle predicts that share will increase. “The market itself in DoD continues to get more attractive,” she said. 
 
Like other industry executives, Dugle is bullish but cautious about the anticipated spending boost to defense and veterans programs projected by the Trump administration. Even if the increase materializes, every agency in the federal government including the Defense Department will be squeezed. A new Trump executive order requires agencies to conduct a “thorough examination” of its operations and to recommend “where money can be saved and services improved,” White House Press Secretary Sean Spicer told reporters. That could result in layoffs of government workers but also in cutbacks in the use of contractors.
 
The message for contractors is that “we have to be prepared to respond,” said Dugle. “We do a lot of thinking about scenarios and how we can be prepared. Services is always a challenging business. It’s not a technology play, it’s a people business.”
 
Dugle is especially optimistic about the possible privatization of parts of the Federal Aviation Administration. “We just won the largest contract with the FAA, the largest we’ve ever won, to help them modernize their systems.”
 
Trump’s budget has been widely rejected on Capitol Hill and many specifics remain unknown so Engility, like other defense firms, has been conservative in its future earnings and sales guidance to Wall Street. “It’s premature until we know the program details of the FY18 budget,” she said. “We believe we are more advantaged than disadvantaged in a Trump administration but we did not want to put that in a plan.”
 
The industry also will be watching congressional action led by House Armed Services Committee Chairman Rep. Mac Thornberry, R-Texas. The committee is drafting a procurement reform bill to accompany the 2018 national defense authorization act. On the list of Thornberry’s targets are services contracts. 
 
The 2017 NDAA sets limits to the use of LPTA in defense procurements. Thornberry has pushed Pentagon officials over the years to more precisely articulate the military’s needs for contracted services and how services vendors are selected.
“One of the big challenges is the definition of requirements,” Dugle said. That is partly the reason DoD has had to re-evaluate its use of LPTA contracts, she noted. “If you just write a requirement that you need five people with 10 years of experience with a particular degree, that is when people default to price.” Conversely, the government could make the requirement to accomplish a desired mission, and leave it up to the bidders to decide how to staff the job. “If you are relying on systems engineering, you have to write good requirements.” 

Make GWACS and IDIQ Contracts Part of Your Government Contracting Strategy

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“WASHINGTON TECHNOLOGY”  By Mark Amtower

“Government Wide Acquisition and Indefinite Delivery, Indefinite Quantity Contracts (GWACs and IDIQs)  will continue to grow, with or without you.

If you don’t have a prime spot, look for a partner company that does.

As new programs and projects will be on hold for the foreseeable future, agencies will be turning to contracts that are in place. As has been noted by Bloomberg Government and my research, GWACs and other IDIQs like OASIS have experienced significant growth over the past few years.

SEWP, the NITAAC contracts (CIO-SP3, CIO-SP3 SB, CIO-CS) and Alliant and Alliant SB each had banner years in in fisal 2016, and reports from each contract shop indicate that thus far this year there is continued growth for each vehicle. OASIS is experiencing similar growth.

The apparent downside to this is if you don’t own a prime spot on one of these contracts, you may be out of luck. While those with prime positions certainly have the edge, any company offering products or services that fall within the scope of these contracts has the opportunity to partner with a prime to gain access to these contracts.

The program managers for Alliant, SEWP and NITAAC have all stated publicly that this is a viable option, indeed, an encouraged option, for those not on one of the GWACs or other IDIQs.

There is a big upside for the small contractors already on these contracts. Partnering with other companies allows them to bid on more RFQs that come though the GWAC, thereby reaching a broader audience.

We know that the large contractors have gone after smaller contracts and task orders in recent years and this trend will continue.

To counteract this, small contractors, especially those with prime spots on the GWACs, need to aggressively seek partner companies to go after more of the task orders coming through the GWACs. When smaller contractors are successful in responding to RFQs that go through the small business side of these contracts, the more likely it is that more RFQs will follow. When fewer responses occur, the small business task order pipeline dries up.

To fully leverage GWACs and other easy-to-access (from the government buyer point of view) contracts, you need to create your own advantage, not wait for someone to level the playing field.

We know the proactive outreach on the part of the contract program managers helps grow these contracts. Joanne Woytek of SEWP makes a habit of meeting with all of her contractors. I know Bridget Gauer and her staff at NITAAC and Casey Kelley of the Alliant contract pursue a similar approach.

There are also several things contractors should be doing, including:

  • Proactive contractors on each contract have learned how to leverage these contracts. This includes knowing which agencies prefer which contracts and focusing efforts on growing that business.
  • Contractors that do their homework and develop a deeper understanding of and relationships with targeted agencies win more business from those agencies.
  • Contractors that know when to bring senior executives and other experts to certain meetings will win more business.
  • Contractors that communicate with and leverage the relationship with the GWAC/IDIQ program office always do better than those that don’t develop that relationship.
  • Contractors that develop deeper relationships with OEMs and focus on particular technologies tend to do much better than those who will sell anything to anyone.
  • Contractors partnering with carefully selected companies to respond to RFQs will likely have a higher win rate.”

About the Author

Mark Amtower

Mark Amtower advises government contractors on all facets of business-to-government (B2G) marketing and leveraging LinkedIn. Find Mark on LinkedIn at http://www.linkedin.com/in/markamtower.

 

 

 

 

 

 

 

NATO Agency Seeking Bids for IT Modernization Program

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“NATIONAL DEFENSE MAGAZINE”

“The program will span at least four contracts and be worth up to $537 million, and is expected to be completed by mid-2018.

NATO’s communication and information technology arm is seeking industry partnerships as it takes on a multi-year modernization effort for its information-technology systems, according to the organization’s acquisition director.

The NATO Communications and Information Agency — which runs the information technology, communications and command and control for the multinational organization — has opportunities for defense and IT companies in various stages of the modernization program, Peter Scaruppe told National Defense in February.

“The IT modernization program is a very important one because it basically replaces all of the IT in all the NATO locations, and for all the NATO forces,” he said.

The program entails: streamlining NATO’s IT service offerings to increase efficiency and effectiveness; using a customer-funded delivery system to increase the flexibility and scalability of IT services; delivering services from a centralized set of locations; and implementing increased cyber security measures, according to the agency.

Next on the priorities list is introducing a cloud-based services enterprise design by this summer, which Scaruppe called a major part of the modernization program.

“Storage is an important issue for all current and future IT programs, because with big data and the availability of big data, it is increasingly important,” he said. “We are anxious to see what companies will provide.”

NCIA Agency also plans to develop new data centers in Mons, Belgium, and Lago Patria, Italy, by early 2018, Scaruppe said. A third site has not yet been publicly revealed, but is being considered as an option “if and when we need it,” he said.

“This is for the IT support and operational support for NATO locations and operations,” he said.

NCI Agency has made concerted efforts in recent years to work more closely with industry to beef up its cyber defense capabilities. The agency contracts out about 80 percent of its work to the defense and security industries of NATO’s 28 current member-nations, Scaruppe said.

This year, the agency will host its annual industry conference in North America for the first time since it kicked off six years ago, rather than in a European country, “to note the transatlantic alliance,” he said.

The theme of the NCIA Agency Industry Conference and AFCEA TechNet International — which will be held in late April in Ottawa, Canada — is “Sharpening NATO’s Technological Edge: Adaptive Partnerships and the Innovative Power of Alliance Industry.” The conference builds upon last year’s theme of why innovation is important to NATO’s technological needs, Scaruppe said.

“Especially in the IT and cyber world, we know that there are a lot of innovators out there … not exactly keen on working with an 800-pound gorilla like NATO,” he said. “Some are not familiar with the process, [so] we need to catch the right innovators.”

One major part of the conference is dedicated to innovation challenges where agency officials and industry will discuss pre-determined areas of study, he said. “We did this last year, very successfully, and we got lots of proposals, many more than we thought we would get.”

Conference attendees will learn of upcoming business opportunities with an overall budget of about $3.2 billion over the next two to three years, Scaruppe said.

Businesses also have the change to speak with agency experts ahead of potentially bidding on a project.

“We do this every year, but we’re dedicating a lot more time to this part than usual [this year],” he said, adding that the agency hopes to attract more U.S. and Canadian industry members as a result.

Attendance rates at previous conferences have been about 70 percent European-based, Scaruppe said.

The agency is also looking to attract more cyber experts through the conference by running a next-generation skills exercise and innovators program, he said.

“We have a lot more work than we have staff for — and the same is true with the private companies — [and] we want to find innovative ways of how to attract these people, how to retain these people and also keep us current in the cyber exercise.”

http://www.nationaldefensemagazine.org/blog/Lists/Posts/Post.aspx?ID=2448

 

 

 

Government Shutdown? Stakes for the Military and What Contractors Need to Plan

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“MILITARY TIMES”

“Congress could cause a partial government shutdown next month, with proposed defense spending at the center of a looming feud between Capitol Hill and the White House.

Currently, the Defense Department and most other federal programs are running off a continuing budget resolution that expires at the end of April.

The White House plan includes a $25 billion boost in base defense spending for the final five months of the current fiscal year, and at least $18 billion in cuts to non-defense programs over the same period.

The extra money is for “urgent warfighting readiness needs,” President Trump said in an accompanying letter to Congress. It’s also necessary, he says, to begin a “sustained effort to rebuild the U.S. armed forces,” and to address shortfalls in everything from personnel and training to equipment maintenance and munitions.

Standing in the way is a new agreement from congressional Democrats to lift the defense spending caps known as sequestration — without corresponding spending increases for non-military programs. Party leaders have refused to do that for the last six years.

To overcome Senate procedural rules, Republicans would need at least eight senators from outside their party to approve any spending plan.

Earlier this week, Senate Minority Leader Chuck Schumer, D-N.Y., indicated that any “poison pill riders such as defunding Planned Parenthood, building a border wall, or starting a deportation force” will force Democrats to oppose Republican budget plans, even if that means a partial government shutdown.

The White House’s fiscal 2017 proposal does include $1.4 billion for the first phases of building a wall along the Mexican border.

What does this mean for the Pentagon, and rank-and-file military personnel and their families? Earlier this month, House lawmakers voted 371-48 in favor of a $578 billion spending bill to keep the military operating through September, roughly matching the White House’s request but allotting the funding differently — and excluding proposed cuts to non-defense programs.

That measure is currently stalled in the Senate.

The last extended government shutdown occurred in October 2013, resulting in unpaid furloughs for civilian workers employed by the departments of Defense and Veterans Affairs. That disrupted some basic services on military bases and installations, and delayed implementation of some military pay and benefits.

The White House spending plan for the remainder of 2017 also includes $5 billion in new funding for overseas contingency operations, including $1.4 billion for the mission in Iraq and Syria, and $1.1 billion for ongoing operations in Afghanistan. Another $2 billion for be set aside for a “flexible fund” for the war against Islamic State militants, to “maximize the impact of U.S. counter-terrorism activities and operations.”

A partial shutdown this year would not affect VA operations, since its full 2017 budget was approved by Congress last fall.

The administration’s fiscal 2018 budget plan also includes a stark divide between defense and non-defense spending, with a $52 billion boost for the military and $64 billion in proposed cuts to the State Department, Environmental Protection Agency, Department of Health and Human Services, and other federal programs.

But lawmakers must resolve spending plans for the current fiscal year before fully engaging in that debate. ”

http://www.militarytimes.com/articles/trump-fiscal-2017-budget-plan-government-shutdown

WHAT IS A GOVERNMENT CONTRACT STOP WORK ORDER?

Image: Eybeam.org

“SMALLTOFEDS”

“During the Federal Government Shutdown of 2013 many enterprises received stop work orders on contracts.

Stop work orders are serious matters and require special handling to comply with government direction and to manage risk.

The below article specifies the purpose of a stop work order, actions that must be taken upon receipt of the order and the relationship of the order to resumption of effort, funding constraints, contract terminations and associated business risk.  It also discusses the principal options and equitable adjustment terms and conditions available to you if you undergo a stop work on a government contract.

Continuing effort on a contract after receipt of a stop work order is high risk.”

https://rosecoveredglasses.wordpress.com/2015/09/30/what-is-a-government-contract-stop-work-order-2/

 

 

 

 

Astutely managing your options is a far better approach.

 

Is Small Beautiful For The Army’s Next Generation Combat Vehicle?

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“BREAKING DEFENSE”

“There’s serious lesson here which the Army’s Next Generation Combat Vehicle effort is taking to heart.

Automation, by replacing bulky humans with compact electronics, can make for smaller combat vehicles that are not only cheaper and more fuel-efficient, but harder to hit.

The robotic war machines of the future are strangely cute. Here at the Association of the US Army winter conference, BAE Systems is showing off a 12-ton robot mini-tank that looks like a baby M1 Abrams.

Video “BAE Systems”

“The key to survival on the battlefield is not being seen,” said David Johnson, a leading scholar and former top advisor to the Chief of Army Staff. “If you saw the BAE autonomous tank… it is radically smaller than anything we have now, and smaller for a vehicle on the battlefield is a good thing.”

You don’t have to replace the entire crew to benefit, either. The Russians have long been obsessed with smaller tanks, to the point of having height limits for tank crewmen, and starting with their T-64 in the 1960s, they replaced the main gun’s human loader with a mechanical one, allowing for a smaller turret. (The M1’s designers didn’t do this because Cold War autoloaders were not only unreliable but slower than a well-trained human). Today, Russia’s new T-14 Armata tank has a completely automated turret, with the entire three-man crew in the heavily armored hull. The US Army tried a similar configuration with its cancelled Future Combat Systems, a program to build much lighter armored vehicles. BAE’s Armed Robotic Combat Vehicle mini-tank was also originally built for FCS.

Smaller vehicles have advantages for mobility as well as for survivability: They’re easier to transport to the battlefield by ship, plane, or rail, and they’re easier to keep supplied. That’s in stark contrast to the M1 Abrams, which for all its virtues gets three gallons to the mile. During the seizure of Baghdad in 2003, some M1s had to shut down their engines until a fuel convoy could push through, taking casualties on the way. The Army’s concepts for future Multi-Domain Battle envision widely dispersed units, constantly on the move to evade detection and destruction, and able to live off infrequent resupply — something that would be difficult for current heavy forces.

The Next Generation Combat Vehicle, set to enter service by 2035, would be designed to carry out those concepts, said Col. William Nuckols, director of mounted (i.e. vehicle) requirements at Fort Benning’s Maneuver Center. “This is not just about a vehicle, this is about a concept and a formation,” he said at AUSA, “the formation that we need to be able to fight the way that’s prescribed in the Army Functional Concept for Movement and Maneuver.”

“Many of the things in the Movement and Maneuver concept do a great job of making the case for new-start combat platforms that make different trade-offs,” said Maj. Gen. David Bassett, Program Executive Officer for Ground Combat Systems. For instance, the Army has upgraded the M1 and M2 engines, he told me at the conference, and there’s more promising tech in the works — but the engine compartments on those vehicles will stay the same size they were when designed in the 1970s, putting a strict physical limit on what upgrades are possible. If you want to dramatically change fuel consumption, speed, firepower, or any other performance characteristic, you need to design a new vehicle.

So how do you build a vehicle to burn less fuel? “Fuel consumption is driven in no small way by overall vehicle weight,” Bassett said. Weight, in turn, is mainly driven by armor. Since no one’s about to develop any new magical armor material that lets us get the same protection for less weight, if you want to reduce weight, you have two choices: accept less protection — fine with unmanned vehicles, not so with humans at risk — or shrink the “volume under armor” you have to protect. Shrinking volume also makes the vehicle a smaller target.

“We are certainly keeping our aperture wide open” about what size and shape the NGCV could be, Nuckols said. In fact, he said, “we’re not certain” if NGCV will replace the M1 Abrams tank, the M2 Bradley Infantry Fighting vehicle, “or potentially both. It could be a family of vehicles.”

For a potential Bradley replacement, Nuckols said, the Army is studying both reducing the crew and reducing the number of infantry passengers. The Bradley today has a three-man crew: a driver in the hull, a commander and a gunner in the turret (its 25 mm ammunition is small enough it doesn’t need a dedicated loader). The commander’s role is to keep a 360 lookout for threats, targets, and terrain so he can direct the gunner and driver, who focus more narrowly on a given target or path. With enough assistance from sensors and artificial intelligence, however — for example, Nuckols said, “automated target acquisition” to serve as a virtual gunner — you could get down to two crew. You could also put both of them in the hull, which would allow for a smaller, cheaper turret that’s harder to hit and, if it is hit, the likely ammunition explosion doesn’t kill anyone.

To really reduce the size of the hull, however, you need to make peace with carrying fewer infantrymen. That’s painful because the raison d’être of an Infantry Fighting Vehicle is to carry infantry. The Bradley nominally carries seven, but that was with the smaller equipment loads — and smaller soldiers — of the 1980s, and even then one man had to cram into the charmingly named “hell hole.” In practice, Bradleys today manage from four to six depending on the mission.

The Army’s standard infantry squad, however, is nine men, a number the service’s analysts and tacticians swear by. The eight-wheel-drive Stryker can carry a full squad, but it’s both large and lightly armored. The cancelled Ground Combat Vehicle would also have carried nine, but putting heavy armor around that many men — plus a manned turret — pushed the vehicle’s weight north of 60 tons. So, while the Army won’t give up the nine-man squad, it’s considering splitting that squad between two (or even three) smaller vehicles.

However big they are, the manned Next Gen Combat Vehicles could well operate with completely robotic “wingmen” similar to BAE’s mini-tank, which is designed to keep up with full-sized armored vehicles. The autonomy software would have to improve. Currently, the BAE Armed Robotic Combat Vehicle can navigate from waypoint to waypoint, using its LIDAR sensors and object recognition to avoid hitting obstacles and running people over, BAE’s Jim Miller told me. For precise driving, like bringing it into the AUSA exhibit space, however, a human takes over by remote control. A human also has to remote-control the gun — no Terminators here. In fact, the ARCV’s robot brain currently doesn’t have the capacity to realize it’s under attack.

Given rapid advances in automation, however, those should be solvable problems. The Army is very interested in autonomous vehicles that could scout ahead of the manned machines or provide supporting fire alongside them. Ideally, these machines wouldn’t require one human remote operator per unmanned vehicle, but would be smart enough that a single human could supervise a whole pack of robots.

The question of control is critical. “One of the problems we have with robotics right now, Sydney, is the fact that we can’t have assured control,” Nuckols said. “Until we have that assured control… we’re going to be hesitant to replace any of our current formation capabilities with a robotic platform.”

If that’s solved, however, it opens up some radical possibilities. “There’s no guarantee that the Abrams will be replaced by a future tank,” Nuckols said. “It could conceptually be replaced by an autonomous vehicle with the lethality of an Abrams.” Equally lethal, but probably smaller — and perhaps cuter.”

http://breakingdefense.com/2017/03/is-small-beautiful-for-the-armys-next-generation-combat-vehicle/

 

 

Innovating Federal Contracting: Be Careful What You Wish For

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“FEDERAL TIMES” By Michael P. Fischetti

“We’re all aware of — and perhaps have participated in — the criticism of today’s model of contracting with the federal government.

However, when  change is forthcoming, criticism and second-guessing is swift in response and often before the results of such innovation are yet known.

Recent examples include lowest price technically acceptable selection strategies, transactional data reporting or other transaction authority. All of these initiatives have resulted in constituencies warning, criticizing or outright objecting to their use for numerous reasons. The mantra “damned if you do; damned if you don’t” comes to mind.

So what’s the contracting officer or program manager to do? Everyone wants innovation in acquisition, but not really? Take risks, but make sure everything works out well? Leadership has your back, as long as [insert favorite oversight authority or trade association here] is supportive. Buy more commercial, but make sure [insert favorite administration, agency, industry priority, or compliance and socioeconomic statutory and regulatory requirements here] is adhered to and included.

Under a new administration, there is a sense of unpredictability. Everything is on the table across multiple government policy areas — acquisition included. Thus, along with optimism that true “reform” could actually occur, there is conversely fear as well that, yes, true “reform” might actually occur! Perhaps the many subsets of today’s government contracting community should be cautious and prudent in criticism of today’s acquisition system, and thus be careful of what they ask for. One is reminded of the line from Charles Dickens’ “A Tale of Two Cities”:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness … [I]t was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”

The credibility of today’s professional pundits and promoters of acquisition change is under threat. What if change really occurs? What if the innovation we all say we want actually happens? While there will always be individual winners and losers in such a scenario, one winner might be empowering those innovative acquisition professionals in government and industry interested in program results; those invested in improving what is acquired versus how it’s acquired. Another winner might be the American taxpayer.

Time will tell. Hang on to your seats and let’s see what happens. ”

NCMA ED

Michael P. Fischetti is the Executive Director of the National Contract Management Association.

 

 

 

 

 

 

 

 

U.S. Xpress Offers Truck Driver Apprenticeship Program for Vets

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U.S. XPress Apprenticeship Program

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“U.S. Xpress launched its Military Recruitment Initiative back in July 2016 as part of the company’s commitment to providing veterans with an opportunity to start a new career in the growing logistics industry.

Don Davis and his wife, Rebekah nearly doubled their combined income when the two military veterans became commercial truck drivers and started making long-haul trips between Chicago and the East Coast for the Chattanooga-based U.S. Xpress Enterprises.

“We’re used to being away from home in the military,” said Dan Davis, a 33-year-old veteran of the Army and Navy who twice served in Iraq. “Truck driving is definitely a great career if you don’t mind spending time by yourself, which a lot of us did in the military.”

Davis used his GI bill to get his commercial drivers license through a truck driving school and continues to receive GI benefits to supplement his income through a veterans apprenticeship program that U.S. Xpress joined last month.

As part of the Post 9/11 GI Bill Apprenticeship Program, veterans may receive tax-free educational benefits while training with U.S. Xpress to become truck drivers or diesel technicians. Participants can receive up to $25,700 from the Veterans Administration over a two-year period, depending on their years of military service, on top of their salary from U.S. Xpress.

Professional truck drivers can usually expect to earn between $50,000 and $70,000 based upon which driving opportunity the veteran qualifies for at U.S. Xpress. Combined with the GI Bill benefits, military veterans in the apprenticeship program can earn up to $82,000 in their first year with the company.

If a veteran chooses to enter the program as a diesel technician, they can expect to earn between $35,000 and $50,000 depending upon experience and performance.

The GI bill benefits, which typically take 90 days or so to process, are granted tax-free to the recipients.

Wayne Roy, a 31-year-old Marine who served from 2004 to 2008 as a motor mechanic in the military, joined U.S. Xpress last August after going through truck driving school and is able to supplement his drivers’ pay with what is left on his GI Bill.

“I love to travel, and this helps me make this transition into what I hope to make my career,” Roy said.

U.S. Xpress hopes more veterans use their GI Bill benefits to go into truck driving. According to the American Trucking Association, the industry needs at least 25,000 more truck drivers, and the shortage of drivers is likely to increase as qualified drivers age and retire and the demand for truck shipments increases along with the economy.

“We value the strong work ethic and leadership experience veterans can bring to our company,” said Eric Fuller, chief operating officer for U.S. Xpress. “Beyond that, veterans have a sense of productivity, accountability and a ‘can-do’ attitude that will serve them well in trucking, which is why we look to hire veterans in every aspect of our company.”

U.S. Xpress launched its Military Recruitment Initiative back in July 2016 as part of the company’s commitment to providing veterans with an opportunity to start a new career in the growing logistics industry.

“Our veterans have always played an essential role in keeping our country strong, and now, we want veterans to put their skills to work as a U.S. Xpress truck driver and serve our country in a new way — one that will help keep the transportation industry moving forward and our economy strong,” said Fuller.

“I truly believe our new apprenticeship program will help make this possible by giving veterans added financial stability as they transition out of the military and into a new career.”

https://www.stripes.com/news/veterans/u-s-xpress-offers-apprenticeship-program-for-vets-to-fill-truck-driver-jobs-1.457208#.WL296W_yvcs

 

Defense Acquisition Requires Simplicity, Collaboration

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Image: “Media.licd.com”

“NATIONAL DEFENSE MAGAZINE’

“The organization and function of the Defense Department is so antiquated that it may well prove unable to deliver the changes that the nation needs.

So, even as it focuses on potentially existential threats to the nation, somebody must address the conversion of the “horse and buggy,” which is the present-day Pentagon, to make it perform like a modern turbocharged vehicle.

The challenges are many, but if there is focus on simplicity the department could be improved while dramatically reducing the problems faced by small contractors. The payoff for even modest improvement could be felt most by the smaller contractors, as they are most at risk under the current system. The focus should be to enlarge and modernize commercial interaction done by the department to make it less adversarial, more collaborative, transparent, accountable and sensitive to business cash flow needs.

There is a remarkable asymmetry between the government and industry with respect to fundamental contractual and administrative execution.

The first problem is one of predictable communication and consistent government performance. As an example, when processing a government contract for a simple procurement action inexplicably takes nine months versus the three months promised, the impact at the company level is complex and potentially devastating. This problem is exacerbated when the contracting entity does not provide any communication regarding revised performance timelines. Delays such as these put small businesses in a no-win position. Many businesses live in a world without adequate cash flow and little to no backlog. So, in this situation, waiting until contract award means that long-long lead production items from the manufacturing base will not be on hand when work should start. Production lines that go dormant do not come back to life easily or quickly. Workers trained and available today can’t be stored on dry ice for the six month delay; they are either laid off or employed elsewhere.

So, for many small firms in this situation, there is no choice but to take risk and begin committing precious resources on an un-awarded contract. This in turn intensifies the dependency of the small contractor on the government who now truly controls their fate.

The government must establish and live with reasonable performance standards and timelines. When it fails to do so, it should pay compensation promptly, just as the contractor is now required to pay “consideration” when he/she fails to meet government performance standards.

When both sides have leverage on the other it will drive improved communication and partnership. Presently the burden is entirely one-sided and gives the department unfair power.

In the current calculus people don’t count — either inside or outside of government. The Defense Department should institute modern relationship metrics to measure how individual teams align to their respective missions.

Major consulting firms with international portfolios such as Gallup and Korn-Ferry assist Fortune 500 firms in executing individual employee surveys measuring internal engagement, leadership and performance annually. The first year results of such a survey done on the department’s corporate structure — to distinguish it from the operational force — would probably stun its leaders. They would be given the opportunity to confront the reality that organizational alignment, leadership, teamwork, sharing and collaboration are all capable of major improvement when compared with global norms for like-sized entities. Gathering these results on an annual basis will afford defense leaders the opportunity to evaluate leadership development programs, workforce business processes, software and a host of other factors directly relevant to improving performance. Probably as important as anything, leaders who cannot accept candid feedback on issues will be forced to confront the reality that they must either embrace the input or leave.

In a parallel initiative, there needs to be lateral entry from business to government service at the mid-tier levels. This would bring an infusion of additional talent to a limited entry profession and augment the experience and knowledge base in the bureaucracy.

In addition to internal feedback, there must be measurement of relationships with contractors. The contracting process has to be made more collaborative and timely. A lot can be learned by comparing the business experience of two recent contracting processes. One was a standard government request for proposals to make a $80,000 piece of utility equipment for delivery over a 10-year period. The other was a commercial RFP for a similarly priced comparable item for multiple-year performance. Both were competitive contract awards with multiple competitors. The differences between the two processes could not have been more obvious. The defense-related RFP was 70 pages; the commercial RFP was 27 pages. The commercial RFP was readable and straightforward; the other was complex and contained endless references to additional government standards. The commercial RFP encouraged innovation by outlining desired characteristics and inviting new approaches, the other set specific standards for performance.

The commercial process encouraged continuous dialogue and explanation of performance priorities while the DoD process was terse and regulated by legalistic formality. The dialogue with the commercial partner enabled the prospective partner to educate its customer on new and evolving technology and materials. The government’s enforced silence did nothing to generate shared understanding. But most importantly, the commercial process timeline from initiating contracting action through prototype production was 10 months whereas the government’s was two years.

In a world where collaboration and speed are essential to success, the antiquated government process is increasingly costly and inefficient.

The process of transforming major enterprises and complex relationships requires courage and persistence. The difficulty of implementing change in an organization as large as the Defense Department should not be the argument for failing to start. It is already one or two decades behind leading-edge commercial businesses and is falling further behind.

Nothing recommended above is new, revolutionary or suspect — it’s just good practice.”

http://www.nationaldefensemagazine.org/archive/2017/March/Pages/DefenseAcquisitionRequiresSimplicityCollaboration.aspx

Managing Risk in Small Business Federal Government Contracting

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Image:  Govconadvisors.com

The challenges and difficulties for the small business in government contracting are not so much in the areas of barriers as  they are in lack of knowledge (which I concede is a form of barrier but one that can be dealt with)

Large business and government agencies take advantage of the small enterprise lack of knowledge or make poor assumptions regarding what a small business knows about the Federal Acquisition Regulation (FAR) and associated Cost Accounting Standards (CAS). This leads directly to abusive practices.

A prime example of an abusive practice is large corporations signing  teaming agreements during proposal efforts and then not awarding  subcontracts to the small enterprise as agreed, keeping the majority of work for themselves.

Agencies take forever these days to put in place actual prime contracts after source selections and award to a small business. They do not realize that a small enterprise does not have deep pockets and must have cash flow to sustain a new program with new employees.

Funding levels on IDIQ and Omnibus programs are insufficiently committed and the small enterprise is not adequately informed about limitation of funds and  funding exposure.

http://www.smalltofeds.com/2007/09/limitatoin-of-funds-and-funding.html

I have seen enough small  businesses succeed in the government contracting field that I am  convinced that the government needs more active roles in education of  the small enterprise and more trained contacting officers that understand the limitations of a small business.

The most common traumatic situation I encounter is with newly  established businesses who have won their first government contract and  have no CAS compliant job cost accounting system in place to bill it  out. The government has assumed that capability will materialize and  when it does not they audit the bills, find no backup and shut down the  cash flow until the system is fixed. At that point the business can fail. The company should have been educated much earlier in the process about these requirements.

http://www.smalltofeds.com/2012/09/what-small-business-should-know-about.html

The number of poorly performing SETA contractors in roles not suited  to them in contract administration support is increasing in federal  agencies. These firms need to be vetted and better managed for the  omissions and commissions they contribute to the above.

http://www.smalltofeds.com/2012/07/is-small-business-federal-government.html

Not every small enterprise can get  into a class on government contracting at George Washington University,  The Defense Acquisition University or send their personnel to lengthy  and costly seminars conducted by organizations like the National Contract  Management Association. These are  great education sources but do not  come close to filling the complete requirement and they cost time and money.

The contracting officer and his staff as well as larger enterprises need to be upgraded in the skills necessary to guide – not abuse – the small business in federal government contracting.