CONSTRAINTS AND CONTROLS
The key to doing so, Kendall said, “is to balance very carefully between what you’re asking for, what’s actually achievable, and what’s in the range of something industry can do, if they’re motivated, to give you a better product.” With a fixed-price pro- duction contract, he noted, “industry has all the incentive in the world, because the more they reduce the cost … the more profit they’ll make. It’s a very straightfor- ward equation. So there isn’t much point, in that kind of situation, providing an incentive beyond what’s already there.”
The overarching question, Kendall said, is,
“What does the government care about? What does the government want? And if this is something the government wants, how do we put something in the contract that will get industry to be more moti- vated to give it to us? … That requires judgment; it requires a careful thought process to go through, and not just apply a school solution to every contract.”
INDUSTRY OUTLOOK With the economy on everyone’s mind and the high value placed on competition to get the best deal for the government, the future of the defense industry was a prominent topic at the PEO/SYSCOM conference.
Kendall expects the industrial base to
“remain healthy through the drawdown,” albeit without the growth seen over the past 10 years. “It is a different environment; it’s a different environment for us, too,” he said. “It’s going to be a stressful time for industry. Industry will react, and we need to be aware of that. We also need to protect our industrial base. We rely on a competi- tive industrial base as much as possible.”
Competition “is not just driving the price down. It also drives innovation,” Shyu said. Because small businesses often can be more agile and innovative than large companies, “one of the things we’re
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thinking about is [using] more small busi- nesses as prime,” Shyu said. The ASAALT is also looking at the real value added of layers of subcontractors, she said. “We’re trying to bring some agility.”
Kendall said it’s unlikely there will be much more consolidation at the top ech- elons of the defense industry. The federal government “is not going to support that, because we’ve seen about as much of that as we think makes sense in order for us to maintain competition at that level.”
At the lower tiers, however, “there proba- bly will be some movement,” Kendall said.
“People will move around strategically, trying to position themselves for future business, and we’ll have to look at that on a case-by-case basis. We do want to protect competition there. We also want to protect some niche capabilities that may go away if we’re not careful. … We will intervene, but it will be rare for us to intervene.”
Michael T. Strianese, Chairman and CEO of L-3 Communications, said the near future may bring changes to business struc- tures, such as spinoffs and divestitures.
“Back in the ’90s, it was all about con- solidation,” Strianese said in the industry keynote address. “What you’re seeing now is not about consolidation. It’s about frag- mentation; it’s about portfolio shaping; it’s about restructurings. I can promise you, from our side, we will never excuse ourselves from the mission because it’s too difficult. We will be changed by these eco- nomic realities … but the commitment to your mission will not be compromised,” he said.
PROFESSIONALISM IN AL&T Throughout his keynote address, Kendall placed a heavy emphasis on the profes- sionalism of the acquisition, logistics, and technology (AL&T) Workforce, which
Army AL&T Magazine
CONTRACTOR CAPABILITY
Kendall lauded the contingency contracting capability established over 10 years of conflict in Iraq and Afghanistan and said that DoD needs to “institutionalize that capability” in anticipa- tion of using it again in operations that will rely heavily on contractors. Here, MSG Joe Man- cias, 36th Infantry Division Garrison Command Noncommissioned Officer in Charge, directs Iraqi contractors at Contingency Operating Base Basra, Iraq, June 29, 2011. The contrac- tors cleared debris left over from the move of Army and Air Force Exchange Service facilities. (Photo by PV2 Andrew Slovensky.)
he said is key to achieving better buying power in all of its many aspects.
“We have an incredible workforce, but I believe we can have a much more capable workforce than we do. Our task is enor- mous, and it requires real professionals to do it well. I’m going to be focused a lot on that over the next year.”
The need for well-trained, well-educated, experienced, and dedicated AL&T pro- fessionals is widely underappreciated, Kendall said. “They have a strong sense of integrity; they bring that to the job that they’re doing. And it is not something you get instantaneously.” Whereas indus- try can rely on buying the talent it needs,
“In the government, we have to grow our talent all through their careers, with few exceptions,” Kendall said.
DAU provides great training, Kendall said, but even Level III certification is
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