Ashton Carter, Undersecretary for Defense for Acquisition, Technology, and Logistics, addressed the Orlando Small Business Defense Procurement Summit with an anecdote about his rather long title.
?My kids say it?s too long, and nobody has ever heard of it.?
Carter will likely be trading his title for a shorter, more renowned one:? Deputy Secretary of Defense.? Before he does, Carter would spend the day in Orlando meeting with small businesses in defense contracting.
The economic climate is grave, and those representing small businesses were feeling considerable anxiety.? It is telling that Senator Bill Nelson, who opened the summit with remarks of his own, highlighted the achievements of once-upon-a-time small firms such as Lockheed Martin and Harris.? Successes, yes; small businesses, no.? Senator Nelson also pointed out the not-quite-dead-yet space program?s ongoing contributions to the development of vaccines for salmonella and MERSA.
Carter highlighted the efforts at being ?smarter? about defense spending.
?We have stopped doing things that either were not performing well or whose time had passed or we had enough of them,? he said.? ?We?ve done a lot of that over the last two years, and now we?re getting to the point where the things we have left are things we do want and do need, and we need to get them for the amount of money the country has to provide and for that we need something the economists call ?productivity growth.??
He continued, ?You go to Best Buy, you buy a new computer, and it?s a better computer than last year and it costs less.? Then, here I am coming up to Senator Nelson and his colleagues on the Hill with the same airplane, same ship, and same vehicle as last year and asking for more and they?re not very happy with the situation?and they shouldn?t be.?
Has Defense cut programs that need to be cut?? The case remains open on that.? Moreover, there is something that gets lost in this ?productivity growth? conversation:? capabilities creep.? Frankly, defense acquisitions personnel have long griped about ever-burgeoning price tags for high-tech weapons systems (longer than those two years Carter mentions), but those same acquisitions folks have had a tendency to demand ever-increasing features to defeat enemies real and imagined.? This gets lost in the narrative of big, bad defense contractors.? America must not only be smarter about buying but also in assessing the capabilities it needs.
Also lost in this conversation is the hemorrhaging of classified and/or confidential data from defense contractors that is pushing up prices not only in terms of reducing the cost of developing competing weapon systems but also enabling potential adversaries to produce better countermeasures to American weapons systems.? America must also be better about protecting its secrets.? Contractors deserve a fair share of the blame in this regard.
For all the talk of austerity, DoD is still spending quite a bit in Florida?$12 billion according to Carter. Florida is the fifth largest in terms of contracts spent among the states; $3.3 billion of those contracts are awarded to small businesses.
Carter also pointed to three key contributions of small businesses:? innovation, competition, and services provided at great value.? The two of these that warrant some expansion are ?innovation? and ?competition.?
?First, small businesses are a constant source of renewal and innovation for the defense industry,? Carter spoke. ?We need to make ourselves attractive to young people, to new blood, to new ideas, if we?re going to continue to have the defense industry of the future that is as strong and as vibrant as it is today.? Small business is one of the ways that we get those new faces and new ideas.? In fact, it is the principal way.? Sometimes, those companies get bought up by our larger defense companies and that?s a good thing.? It?s a conveyor belt of new ideas and new faces in defense.?
?Second, small businesses add another source of competition, and competition is one of the principal ways we deliver value to the taxpayer and the warfighter,? he said.
Does it benefit the small contractor to team up or sell out to big firms?? Surely.? Do these monolithic firms purchasing smaller firms guarantee innovation and competition?? Absolutely not.? In this context, it is worth revisiting Senator Nelson?s remark I mentioned earlier.
Carter went on to explain that DoD was making efforts to make project managers more aware of small businesses? capabilities as well as reduce barriers of entry for small business.? That all sounds good, certainly.
However, I remain skeptical having written about DoD?s risk aversion (as with the USMC?s IAR) and its tendency to reinvent the wheel when it comes to small firm?s contributions (as with MagPul?s PMAG).? In both cases, smaller firms were ignored in favor of larger ones.? (In the case of the USMC?s IAR, the Pentagon ignored multiple weapon systems designed and manufactured in America in favor of foreign companies.)
I asked Secretary Carter about the PEO?s ?improved magazine? program.
?You mentioned that the Pentagon does not ?make things,? but PEO Soldier has recently developed an improved magazine for the M16/M4 system when a small business developed such a system in 2006 with the cooperation of the DoD, is in the supply chain, and has been combat-tested.? What message does this send to small businesses??
Carter replied, ?I am not familiar with this individual program, but it is certainly not playing to our strengths.? I don?t want to make a habit of it, because small business does it better.?
Is it too much to expect the soon-to-be Deputy Secretary of Defense to know about this one program in the million-dollar as opposed to billion-dollar range?? Perhaps.? Is the ?Improved Magazine? representative given the more than $3 billion investment in Florida small businesses?? That remains to be seen, but the big firm focus for the small business summit does concern me.
What the PEO program and Carter?s unawareness of it does tell me is that the Pentagon is not examining its small business practices closely enough.
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