A fter years of struggling to be heard by the government officials c ritical to buying decisions, the collective voices of companies selling commercial-off-the-shelf products are finally getting an audience — and just in time. Under the pressure of budget cuts and development problems, U.S. Air Force Secretary Mike Wynne recently announced that: Undersecretary of the U.S. Air Force Ron Sega “has taken us to a back-to-basics program to get our programs back on budget and schedule.”
Commercial companies will be instrumental in ensuring aerospace can acquire superior technologies that are available now. The newly founded Defense Commercial Vendors Coalition will provide a channel through which companies can speak with a singular, clear voice, and conversely, where government managers and lawmakers can seek information on commercial technologies.
Twelve years ago the landmark Perry Memo was written into law. William Perry, then Secretary of Defense, had penned the memo in June 1994 during his first week in office and acquisition reform became a top priority for his three-year tenure. The Perry Memo stated that the Department of Defense would employ commercially available products whenever feasible. To facilitate this, the Department of Defense would no longer use military specifications, or milspecs, but would use performance requirements, allowing the program manager more latitude in purchasing.
Now, 12 years later, the Department of Defense is still struggling with the implementation of Perry’s mandate to purchase high-tech commercial-off-the-shelf (COTS) products. Nowhere is this more true than in aerospace, where it is difficult to perceive that anything commercially available could possibly surpass the cutting edge technologies that the military has traditionally designed and built.
Satellite imagery off-the-shelf? Private sector integrated circuits? Commercial satellite software? At one time these were inconceivable developments. Now, these products all exist and are available for commercial purchase with no new development costs and recurring fees far less than those associated with government developed systems.
Where the COTS philosophy and acquisition procedures have been embraced, the Department of Defense has been wildly successful. Satellite ground control stations have been built from commercial components. Central processing unit boards and workstations are also available off-the-shelf and are widely used. Solar panels have leveraged technology from the commercial market. The Department of Defense uses commercial communication satellites 85 percent of the time for its theatre operations. Without these commercial products the war-fighters would be at distinct disadvantage.
Though over these 12 years some progress has been made, the government acquisition system only sporadically takes advantage of available technology. Several factors have led program managers to continue to design-and-build when they have an option to buy off-the-shelf: incurring redevelopment costs over and over, and not leveraging the best of the commercial market as Perry had envisioned.
Witness the many blunders that have been made in recent years. For instance, the government procured a custom designed software package for $113 million when a superior COTS product was available and bid for $1 million . Five years later, the $113 million product was ultimately a failure, and the original COTS bidder was recalled. The program was up and running in six months for the original $1 million bid. Similarly, the military has designed and built software that will be ready in five years for $8 million when an identical system is currently available off-the-shelf for $2 million . There are countless cases where the government has wittingly spent orders of magnitude more than was necessary.
Some commercial companies have watched in frustration as the government fumbled with inferior technologies, while others have avoided doing business with the government altogether because of the restrictions, bureaucratic entanglement and laws that make it difficult to compete. Other companies have had financial difficulties, and yet others, even those with superb products, have gone under. With limited success in the United States, commercial companies with superior technologies have sought international opportunities. Superior products are going overseas — something to consider.
Why is this happening? There is much speculation, and academic and corporate research. Papers have been written about cultural changes, faulty reward systems and antiquated laws that stifle progress. Some have said that procurement officers, both military and civilian, are not familiar enough with the commercial market. The more cynical cite malfeasance.
According to behavioral pundits, people are inherently reluctant to change. New technologies are often perceived as disruptive to the status quo and not in the best economic interests of the parties who have fostered and have flourished in the design-and-build system. Some view new and available products as risky, yet many case studies have proven that this is not typically the case. How could a functioning commercial product with a known cost be risky? Perceptions are hard to change.
To be sure, COTS products are not available for every military application. Of course, neither an aircraft carrier nor a stealth fighter is available off-the-shelf. In fact such specialized items rarely even have components and subsystems that are commercially available. This is where the design and build system of acquisition is appropriate. It was initially developed for these types of projects when the aerospace business was in its infancy. Then fledgling companies could not afford to absorb all the risk of unknown technologies, so this was an avenue by which the government could mitigate their risk for these unproven technologies
At the time, it worked well, and it still works well for projects that are government unique. But unless carefully monitored, it is a system that encourages increasing costs and tests integrity.
Meanwhile, commercial vendors with common frustrations have banned together. The Defense Commercial Vendors Coalition is a not-for-profit organization that provides a channel through which common issues can be consolidated, distilled and brought to lawmakers and procurement officials. Their desire is to create a strong and singular voice in order to effect change. The Coalition was founded earlier this year by a contingent of commercial companies interested in getting their products to the fore.
Complex issues such as intellectual property, technology ownership and long-term availability are being addressed. Other sticky issues such as revisiting contracting laws that disadvantage superior commercial technology are being reviewed. Companies that have found solutions to common difficulties are able to share them at this forum. The Coalition hopes to adjust government acquisition to a system that levels the playing field and fosters efficiency for all defense providers. In the spirit of this, the Coalition welcomes thoughtful input and new members.
In order for the United States to maintain its global edge, the Department of Defense needs to embrace technologies from the vast commercial market. The ultimate goal is clear: to put superior technologies in the hands of the war fighters. But in order to accomplish this, the massive acquisition bureaucracy needs to flex a bit and learn to glean ideas from innovators in the United States’ remarkable industrial base.
Sally Baron, Ph.D., is an independent consultant with 15 years government experience, and many of her clients are COTS companies. In addition, Baron serves as a special advisor to the Defense Commercial Vendors Coalition. She worked with
William Perry while at Stanford.
