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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/

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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/

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Panel urges acquisition system reform

The 2016 National Defense Authorization Act (NDAA) established the Section 809 Panel to address fundamental problems with how the Defense Department acquires goods and services to support its warfighters.
Starting in 2008, whenever new legislation or regulation debuted that affected government contracting, it was written on a band-aid and stuck to a golf ball.  It’s 10 times bigger now.

It recently released an interim report and supplement advocating in broad strokes for a host of improvements to the acquisition system to better streamline the process and increase industry offerings to the government.

In meeting with over 200 government and industry representatives, the interim report found that the acquisition system creates obstacles that make it unattractive for small and large businesses alike to offer their goods and services to the government. It explained that “the United States’ ability to maintain technological, military and economic superiority is being challenged,” as our adversaries are recognizing vulnerabilities in our forces and the ability to respond through modernization.

Thus, the Pentagon’s acquisition procedures must be improved to achieve “a degree of agility that DoD is not currently able to deliver,” it said.

To achieve this agility, the interim report recommended several improvements.

Keep reading this article at: http://www.nationaldefensemagazine.org/articles/2017/7/25/panel-urges-acquisition-system-reform

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Major defense contractors on panel that will direct billion-dollar defense decisions

A new advisory panel has been tasked with streamlining the Department of Defense’s procurement process.

Sitting on the powerful panel: several current or former employees of major military contractors including Boeing, Lockheed Martin, and General Electric. Those corporations every year do billions of dollars of business with the Department of Defense — and have given more than $2.2 million in campaign contributions to members of the House Armed Services Committee, which is responsible for approving changes to DoD funding.

The panel’s creation, mandated by Section 809 of 2016’s National Defense Authorization Act (NDAA), has received little media attention compared to other provisions in the NDAA. But the panel will be responsible for recommending policy that affects how approximately $115 billion of taxpayer money is spent annually.

Keep reading this article at: http://www.ibtimes.com/political-capital/major-defense-contractors-panel-will-direct-billion-dollar-defense-decisions

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Category management basics: How to attract top-quality suppliers and ensure they deliver

Nurturing the relationship with suppliers is a critical component of the category management procurement model.

Supplier relationship management, or SRM, reshapes every step of the traditional acquisition lifecycle to increase the likelihood that agencies will contract with the most suitable suppliers and enable those companies to deliver on expectations.

SRM goes well beyond the requirements of traditional Federal Acquisition Regulation contract management: It requires extensive knowledge and analysis of markets and suppliers to improve sourcing. It results in more precise contracts that better match commercial practices. And it creates an environment that supports improved supplier performance and more effective measurement of that performance by the government.

As a result, capable, high-quality suppliers are more likely to bid on government work and to deliver it exceptionally. SRM also helps streamline government buying and drives down total costs over the term of the contract.

Consequently, the government becomes a more attractive customer and gets more value for its contract spending, while suppliers are incentivized to provide better quality goods and services. This helps build the pool of well qualified suppliers for future work.

Keep reading this article at: http://www.govexec.com/excellence/promising-practices/2017/03/category-management-basics-how-attract-top-quality-suppliers-and-ensure-they-deliver/135887/

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