Partnerships With Industry Can Exclude Small Businesses
Smaller companies complain of a closed culture.
By Diego Laje for SIGNAL Magazine
Good business professionals turn a rolodex into profits. Standing between buyer and supplier could be good for profits, but can add inefficiencies for smaller defense suppliers.
While the defense business has special considerations, as there are life-or-death consequences if all parties do not share full information, often only very large corporations enjoy the advantage of access.
While the defense business has special considerations, as there are life-or-death consequences if all parties do not share full information, often only very large corporations enjoy the advantage of access.
“For me it’s transparency, it’s partnership, we use that ‘partnership’ word a number of times if we are recognizing that we are both on the same team,” said Kevin Mickey, sector vice president and general manager Apex, Northrop Grumman Aeronautics Systems.
Mickey spoke on the panel “A View from Industry” at the WEST 2023 conference in San Diego on Wednesday.
As the group of large business managers, most of whom have with former flag officer status, discussed the ups and downs of being a prime defense supplier, small businesses saw a disconnect.
“‘Partnership’ works well at the flag level, but it does not trickle down to all the other levels, who are the implementers,” said Chris Ciufo, chief technology officer and chief commercial officer at General Micro Systems (GMS).
Ciufo’s company manufactures computer systems, servers and switches that go into defense and aerospace systems. Large well-known defense contractors integrate the company's products as part of greater systems that warfighters, or end users, will employ.
GMS is one of many intermediate goods and services companies that will in turn see their outputs integrated into larger systems. SIGNAL Magazine spoke with several who complained about limited access to end users, including program executive offices (PEOs) and purchasing managers (PMs), complicating the process from design to delivery. Most asked to remain anonymous for fear their businesses would suffer if quoted.
“When we're dealing with a prime … they are protecting their business because their customer is the Navy, the Army, the Air Force, the Marine Corps; they don't want us talking directly with their customer because they're protecting their relationship and their business—and I understand why they're doing that,” Ciufo told SIGNAL Magazine in an interview.
At the other end of the chain, the military also complains about communication.
“We get that very often, how difficult it is to break inside the government,” said Vice Adm. William Galinis, USN, commander Naval Sea Systems Command.
He explained that on occasion his team reaches out to final suppliers when purchasing major systems from top-of-the-line suppliers, but it is not the norm in the procurement process.
“It's something that we've looked at and reflected on within [Naval Sea Systems Command]. We're probably not the most user-friendly organization around, I'll be honest,” Adm. Galinis admitted.
For direct business between the Navy and small and medium enterprises, Adm. Galinis was equally critical of his organization.
“Our warfare centers are already incredibly ugly for small businesses to get their ideas into the system,” he said. The centers are located around the country and still offer a gateway, despite difficulties, Adm. Galinis said during the WEST panel “Are the Requirements Processes and Acquisition Forces Nimble Enough to Meet the Challenges Ahead?
Challenges in the procurement process are not new or isolated. An ironic comment was shared during the industry panel: “You can go into the library in the Pentagon someplace, there's probably a bookshelf that's got all of the studies that have been done for the last 40 to 50 years about how to reform or change the defense acquisition system in all its aspects,” said Vice Adm. James Zortman (Ret.), former commander, Naval Air Forces, U.S. Pacific Fleet, U.S. Navy, who moderated the industry panel.
The Coast Guard has launched Project Minerva, a command-and-control initiative to increase awareness and upgrade technology.
Rear Adm. Chad Jacoby, director of acquisition programs of the U.S. Coast Guard, offered an example of how his force will integrate smaller businesses into Minerva’s development: “For many smaller sensors, plug into a network of vendors to integrate our data, so I can tell there is an acknowledgement and a focus on bringing in smaller companies.”
The Coast Guard project could be an opportunity for some businesses to supply in an efficient and timely manner, speaking directly to end users. Still, according to GMS’ Ciufo, these initiatives are far from normal.
“When we can get that actual partnership through, communication works well; the rest of the time I hear what they're saying, I know that's what they'd like to do—just doesn't translate well in the real world,” Ciufo said.
The reality for Ciufo and others consulted is that access is nearly impossible and communication incomplete.
Communication, at least for now, remains indirect and stilted, with major contractors managing what smaller suppliers will hear. “They flow it down to us, so I cannot go to the end user or the requirements setter, so they can know who I am and say, ‘Gee, we need you to do this.’ It's a rare relationship we get when we can actually talk to the PEO, or the PM face-to-face and they tell us, ‘This is what I want’,” Ciufo added.
