Industrial Base | The Contracting Education Academy

April 19, 2019 By AMK

Senate Armed Services Subcommittee on Cybersecurity holds hearing to discuss responsibilities of the industrial base

On March 26, 2019, the Senate Armed Services’ Subcommittee on Cybersecurity held a hearing to receive testimony assessing how the Department of Defense’s (DoD) cybersecurity policies and regulations have affected the Defense Industrial Base (DIB).

To gain a better understanding of the DIB’s cybersecurity concerns, the Subcommittee invited William LaPlante, Senior Vice President and General Manager of MITRE’s National Security Sector; John Luddy, Vice President For National Security Policy at the Aerospace Industries Association; Christopher Peters, Chief Executive Officer of the Lucrum Group; and Michael MacKay, the Chief Technology Officer of Progeny Systems Corporation.

In their opening remarks, the Chairman of the Subcommittee, Senator Mike Rounds (R-SD), and Ranking Member, Senator Joe Manchin (D-WV), acknowledged industry concerns about the DoD’s lack of clarity and disparate implementation of cybersecurity regulations, such as guidance relating to DFARS 252.204-7012 (DFARS Cyber Rule or Rule) and National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171.

Senator Rounds stated that he “expects [DoD] to come up with measured policies to make improvements in [cybersecurity]” and he “hope[s] DoD takes seriously the concerns of the DIB.” He further noted that DoD “cannot simply apply increasingly stringent cybersecurity requirements on its contractors” and that “doing so without subsidy or assistance is unlikely to particularly improve cybersecurity [for] the DIB” and would likely drive the most innovative small businesses out of the supply chain. Senator Rounds called for putting a program in place to ensure the best possible protections for contractors regardless of size and referred to the “Achilles heel” of this issue as the desire to use a large number of small contractors while still needing to protect sensitive government information. Later in the hearing, Senator Manchin expressed great concern over the cyber incidents experienced by DoD contractors and urged the witnesses to “tell [the Subcommittee] what you need . . . [the Subcommittee] is here to fix it and you’re here to tell us what’s broken.”

Keep reading this article at: https://www.insidegovernmentcontracts.com/2019/03/senate-armed-services-subcommittee-on-cybersecurity-holds-hearing-to-discuss-the-responsibilities-of-the-defense-industrial-base/

April 12, 2019 By AMK

The National Defense Strategy: A compelling call for defense innovation

The National Defense Strategy tells the U.S. military – the Department of Defense – what kind of adversaries they should plan to face and how they should plan to use the armed forces.

The National Defense Strategy is the military’s “here’s what we’re going to do” to implement the executive branch’s National Security Strategy. The full version of the National Defense Strategy is classified; but the 10-page unclassified summary of this strategic guidance document for the U.S. Defense Department is worth a read.

Since 9/11 the U.S. military has focused on defeating non-nation states (ISIL, al-Qaeda, et al.) The new National Defense Strategy states that America needs to prepare for competition between major powers, calling out China and Russia explicitly as adversaries, (with China appearing to be the first.) Mattis said, “Our competitive advantage has eroded in every domain of warfare.”

While the National Defense Strategy recognizes the importance of new technologies, e.g. autonomous systems and artificial intelligence, the search is no longer for the holy grail of a technology offset strategy. Instead the focus is on global and rapid maneuver capabilities of smaller, dispersed units to “increase agility, speed, and resiliency … and deployment … in order to stand ready to fight and win the next conflict.” The goal is to make the military more “lethal, agile, and resilient.”

The man with a lot of fingerprints on this document is Deputy Secretary of Defense Patrick Shanahan. Shanahan came from Boeing, and his views on innovation make interesting reading.

People in government rarely make the case for taking more risk. Yet Shanahan said after the strategy was released, “Innovation is messy.” He added, “we’re going to have to get comfortable with people making mistakes.”

Keep reading this article at: https://warontherocks.com/2018/02/national-defense-strategy-compelling-call-defense-innovation/

December 27, 2018 By AMK

Three competing options for acquiring innovation

The DoD’s technological edge is eroding.

Since 2015, the department has pursued a strategy to regain the lead. During the Obama administration, it was called the Third Offset. The Trump administration has abandoned that nomenclature, but it is pursuing the same objective.

The DoD seeks dominance in robotics, artificial intelligence, autonomous systems, and three-dimensional printing, among other fields. It recognizes, however, that such innovation will not come from the usual sources — government labs or the defense industrial base.

Nondefense firms have a decisive lead: The center of gravity in cutting edge, military applicable research is shifting abruptly away from the defense establishment to relatively new commercial firms. The DoD must engage with these nondefense firms to build the next generation of weapon systems. But how should it do so?

Two decades ago, defense economists David Parker and Keith Hartley, mapped the options for procurement along a continuum. On the far left, managerial diktat determines sourcing, and prices have little role in the process. On the far right is a fully competitive market, where the “relationship between buyer and supplier is transitory, non-committal beyond the current purchase, and arm’s length”; between these extremes are, from left to right, subsidiary purchases, joint ventures, partnerships, networks, preferred suppliers, and adversarial competition.

Keiran Walsh, Yale professor of economics, distilled these options down to three:

[T]here are three basic ways of getting people to do what one wants done. One can force them to
behave as one wishes them to. One can give them a set of incentives that aligns their interests with
one’s own. Finally, one can try to shape the values that they hold so that they will naturally want to
do what you wish them to do.

Walsh’s three alternatives, Parker and Hartley explain, correspond to coercion, competition, and long-term partnering. Of course, the same option needn’t be chosen for every procurement, and perhaps different alternatives may work better in some cases than in others. But the DoD must choose from these options as it determines how to buy innovation from nondefense commercial suppliers and perhaps should identify a default that works best in most cases.

Keep reading this paper at: https://www.airuniversity.af.edu/Portals/10/ASPJ/journals/Volume-32_Issue-4/V-Schoeni.pdf

December 21, 2018 By AMK

Hard-nosed Pentagon negotiator removed from job

Trump administration officials are removing the Pentagon’s top weapon buying negotiator, who racked up hundreds of thousands of dollars in travel costs and pushed a controversial plan to slow payments to defense contractors, Defense One has learned.

**Shay D. Assad, Director, DoD’s Defense Pricing and Contracting Initiatives**

Shay Assad, a senior Defense Department bureaucrat, is being reassigned to a post in Massachusetts, one unconnected to the contract negotiating team he has led for seven years, according to current and former defense officials familiar with the decision.

In the coming weeks, Assad will be moved from his position as director of defense pricing and contracting initiatives to a lateral position within the Defense Contract Management Agency in the Boston area, current and former officials said.

Keep reading this article at: https://www.defenseone.com/politics/2018/12/shay-assad/153591

October 8, 2018 By AMK

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/

On March 26, 2019, the Senate Armed Services’ Subcommittee on Cybersecurity held a hearing to receive testimony assessing how the Department of Defense’s (DoD) cybersecurity policies and regulations have affected the Defense Industrial Base (DIB).

The National Defense Strategy tells the U.S. military – the Department of Defense – what kind of adversaries they should plan to face and how they should plan to use the armed forces.

The DoD’s technological edge is eroding.

Trump administration officials are removing the Pentagon’s top weapon buying negotiator, who racked up hundreds of thousands of dollars in travel costs and pushed a controversial plan to slow payments to defense contractors, Defense One has learned.

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.

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