Industrial Base | The Contracting Education Academy

October 8, 2018 By cs

Facing industry pressure, Pentagon backs off contract payment changes

Following a wave of criticism from the defense industry and members of Congress, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts.

In a statement released at the unusual time of 7:19 PM, Deputy Secretary of Defense Patrick Shanahan said the decision to withdraw the proposed acquisition changes stemmed from a lack of “coordination” inside the department.

“Recently, proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) were prematurely released, absent full coordination,” Shanahan’s statement read. “As a result, the Department will rescind the proposed amendments. In coordination with industry, the Department will create a revised rule to implement section 831 of the FY2017 NDAA.”

“The department will continue to partner closely with Congress and industry to examine all reform opportunities, ensuring we provide the best value to taxpayers and critical capabilities to military personnel who defend this great Nation,” Shanahan said.

Keep reading this article at: https://www.defensenews.com/pentagon/2018/10/02/facing-industry-pressure-pentagon-backs-off-contract-payment-changes/

October 4, 2017 By cs

Industrial base war-gaming: Pentagon wants companies to find supply-chain weaknesses

The Pentagon is hoping industry will volunteer information on weak spots in their industrial supply chains, as part of a broader review and war-gaming effort to discover potential failure points for America’s defense industrial base.

John McGinn, acting deputy assistant secretary of defense for defense, manufacturing and industrial base policy, laid out Wednesday how his team is hoping to prepare the department for an industrial base crisis in a time of conflict.

McGinn compared the new effort to the scenario planning that goes on throughout the Pentagon on a regular basis. But where that planning may focus on options for North Korea or a Russian invasion, this one will look at how various scenarios would impact the Pentagon’s ability to arm itself.

“We’re looking for industrial base risks, and those risks include foreign dependency, sole source, single source, fragile suppliers, suppliers that may not be looking to stay in the market,” McGinn said. He added that there are specific concerns about mining companies that DoD fails to “move the needle on” but which are vital to maintaining a technological edge.

Keep reading this article at: https://www.defensenews.com/smr/equipping-the-warfighter/2017/09/28/industrial-base-wargaming-pentagon-wants-companies-to-find-supply-chain-weaknesses/

October 3, 2017 By cs

For U.S. defense contractors, North Korean hostilities are good for business

North Korea is making the world uneasy with its missile launches. It’s also driving business for defense contractors.

Take, for example, US defense giant Northrop Grumman’s planned $7.8 billion purchase of Orbital ATK, a smaller contractor focused on aerospace and missiles. As part of the deal—announced Monday (Sept. 18) and subject to regulatory approval—Northrop said it will pay $134.50 for each Orbital share, a 22% premium on Friday’s closing price, and assume $1.4 billion in net debt.

What makes Orbital so attractive? The tensions surrounding North Korea certainly don’t hurt.

In a call with analysts, Northrop CEO Wes Bush made an obvious reference to North Korea: “Clearly, as we watch what’s happening around our globe, the rather rapid advance of some of our potential adversaries is quite concerning.”

Keep reading this article at: http://www.govexec.com/contracting/2017/09/us-defense-contractors-north-korean-hostilities-are-good-business/141146/

August 25, 2017 By cs

Six takeaways from EO on assessing manufacturing and Defense industrial base

On July 21, 2017 – and during “Made in America Week” – President Trump issued Executive Order 13806 on “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States” (the “Manufacturing EO”). The Manufacturing EO sets forth a policy stressing the importance of having a “healthy” domestic “manufacturing and defense industrial base and resilient supply chains” to meet “national security” needs.

This policy comes on the heels of President Trump’s April 2017 “Buy American and Hire American” Executive Order (the “Buy American EO”), which announced a policy and action plan to increase U.S. manufacturing capabilities by “maximiz[ing]” the Federal Government’s procurement of “goods, products, and materials produced in the United States.”

The Manufacturing EO calls for a sweeping review and assessment of the strengths and weaknesses of the defense industrial base (“DIB”) and supply chains, and cites the need for the United States “to surge in response to an emergency.” This review stems from the Administration’s stated conclusion that the “manufacturing capacity and defense industrial base of the United States have been weakened by the loss of factories and manufacturing jobs.” Although a report on this review is not due until April 2018, the Manufacturing EO’s underlying policies and reporting requirements offer contractors an important glimpse into the Trump Administration “America First” vision and potential impacts on federal procurement.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/08/six-takeaways-president-trumps-executive-order-assessing-manufacturing-defense-industrial-base/

August 21, 2017 By cs

Trump’s failure to staff Pentagon is slowing the defense industry

U.S. President Donald Trump’s failure to fill dozens of senior-level positions at the Pentagon is making it difficult for defense contractors to forecast business.

Defense company officials, speaking on conference calls after their just-reported quarterly earnings, did not blame Trump directly, but said the lack of appointments to key positions at the Pentagon had slowed contract awards and created uncertainty.

“The still-high number of unfilled leadership appointments and the approaching government physical year-end continue to serve as headwinds,” said Roger Krone, chief executive of Leidos Holdings, on an Aug. 3 call with analysts.

Krone, whose company is one of the largest providers of services to U.S. armed forces, said those open posts have slowed the awarding of government contracts.

The Department of Defense said it has 42 unfilled top-level posts that require Senate confirmation, including general counsel, inspector general and other important roles like secretary of the Army and undersecretary of the Navy.

The Pentagon referred a request for comment on its unfilled posts to the White House. A White House official said: “Democrat obstruction has played a key role in jamming up the president’s agenda.”

Of the 42 open positions that require Senate confirmation, 29 have no nominee identified, while 13 have nominees awaiting confirmation.

Keep reading this article at: http://fortune.com/2017/08/11/trumps-appointments-pentagon-is-slowing-the-defense-industry/

Following a wave of criticism from the defense industry and members of Congress, the Pentagon on Monday backed off proposed changes to how companies receive cash flow on their contracts.

The Pentagon is hoping industry will volunteer information on weak spots in their industrial supply chains, as part of a broader review and war-gaming effort to discover potential failure points for America’s defense industrial base.

North Korea is making the world uneasy with its missile launches. It’s also driving business for defense contractors.

U.S. President Donald Trump’s failure to fill dozens of senior-level positions at the Pentagon is making it difficult for defense contractors to forecast business.

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