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PUBLISHER'S NOTEBOOK

Clock Ticks toward Sequestration’s Next Bite

PETE YEATMAN, PUBLISHER

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It appears that everyone has now been reassured that the sky will not fall because of sequestration. This deep sigh of relief and relaxed attitude we’re taking should be reconsidered, if only from the standpoint that sequestration takes another bite every year. Congress continues to play chicken with itself and the administration. The administration just points the finger and says, “it’s not us, it’s Congress.”

I’m going to steal a line from Marine Corps Commandant Gen. James Amos, when he stated that the government’s procurement process is “constipated.” It’s not just procurement. But that is the area where our readers are most interested and concerned. Congress, the administration, the DoD and the services are all “constipated,” not only with procurement but with how they should operate and manage. What each of these groups—let me call them the Gang of Four—need is a good management consultant firm to come in and get rid of the obstructive individuals and processes. Then they need to streamline operations and empower results-oriented individuals. Of this Gang of Four, only the services have a chance of coming close to making a change. That’s because they are the military with a command structure that can dictate change.

No matter what both sides will say publically, for the last decade or two the environment between the defense industry and DoD has become adversarial and one of distrust. Large corporations with their emphasis primarily on the military market usually have difficulty shifting gears and focusing on the commercial market. Many of these corporations are now just attempting to wait things out. They’ve made adjustments in staffing and other cost savings. Their big problem is whether they can hold out longer than the Gang of Four; many won’t be able to.

Decades ago the Packard Commission noted that program management had shifted from management to reporting and selling the merits of their program. If anything, today it’s even worse. Every program is burdened with endless reviews and administrative procedures making program managers’ duties even more focused on reporting and selling. The results are products that come in over or under their requirements, interminably delayed and with cost overruns in multiples of the original concept.

For anyone to say that sequestration may be just what we needed is probably not politically correct. But sequestration may be the only way the Gang of Four will ever do what has to be done. We need to get back to where the top brass determines exactly what is needed—not desired or politically correct—and works with one or two contractors on a program. They need to just get it done like the F-117, MRAP and GPS, and get it into the hands of ground troops. We need to rebuild trust between industry and the military and develop a “will do” atmosphere, or China will overwhelm us with advanced technology military equipment.

Closer to home, what can we do in our industry? Ever since the introduction of commercially available product technology for the military, COTS suppliers have developed a range of base products and offered them with the understanding that they would be modified to meet specific requirements. This marketing technique enabled suppliers to have products they could introduce to multiple programs for different services. As time passed some suppliers developed product ranges that were more specific to one service than the others. Sequestration is pushing suppliers to even tighter focus on their products market. We’re entering a cycle where rather than developing a base product and modifying it, suppliers are now developing a product, at their cost, specifically and uniquely for a particular program.

To succeed in this new cycle of providing electronics to the military, you need to do exactly what the Gang of Four needs to do: work closely with the military in an atmosphere of mutual trust. In some cases our people will work directly with the military, or more likely in partnership with a prime. For many smaller electronics suppliers, the risk is still too great to work like this. Most if not all the development costs are born by the supplier. And what makes this technique work is unbelievably quick development and production of a quality product that performs as envisioned.

Funds are becoming tighter and tighter every year. And the military can only reduce headcount by so many. That all means that future budget reductions can only come from overhead and procurement. Having the ability to succeed in the new cycle of procurement will determine many of our current electronics suppliers’ business longevity. The clock has started to tick…

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