[iwar] [fc:Navy.Leader.Says.Contractors.Must.Change.Their.Ways]

From: Fred Cohen (fc@all.net)
Date: 2002-08-19 06:24:54


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Date: Mon, 19 Aug 2002 06:24:54 -0700 (PDT)
Subject: [iwar] [fc:Navy.Leader.Says.Contractors.Must.Change.Their.Ways]
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Navy News &amp; Undersea Technology
August 19, 2002
Navy Leader Says Contractors Must Change Their Ways 
By Dave Ahearn 
Defense contractors are irritating one of their best customers, the United
States Navy, and that must change, now. 
Defense contractors are driving for maximum profits by producing unique
systems that don't work well with systems produced by their competitors, and
that's causing major problems for a U.S. Navy bent on creating a
network-centric warfighting capability, a senior Navy leader told
contractors last week. That means a new paradigm must emerge, in which
defense contractors work more cooperatively with the Navy, and each other. 
The gently worded rebuke came from Paul Schneider, principal deputy
assistant secretary of the Navy for research, development and acquisition,
as he addressed an amphitheater filled with hundreds of representatives of
pre-eminent American defense contractors. They were attending the Office of
Naval Research naval-industry research and development partnership
conference in Washington, and Schneider was the lead speaker at the two-day
symposium. 
Schneider said he understands that corporations exist to make profits, and
those who lead and work in those firms must keep that in mind. "The industry
that you represent holds you responsible and accountable for profit and
loss," Schneider said. "You have to provide return to shareholders," and
it's true that corporations exist in a world where "some of the competition
is absolutely cutthroat." All well and good. 
Profits And Problems 
But "sometimes that competitiveness, frankly, ends up causing us some
difficulties in how we" attempt to integrate systems to form a seamless
network-centric capability. And that's why "we're going to have to figure
out how to do business a little differently," Schneider said. "What we want
to do is take advantage of all the great technology advances in sensors, in
weapons," and other areas, "but to do it in a manner that when we get it"
from contractors, "it really is, almost, plug and play, and fully
interoperable" with other systems made by other contractors. 
In a full and frank expression of his views, Schneider warned the defense
industry that the good old days and familiar ways are over. Companies are
going to have to change, if they wish to continue selling products to one of
the biggest-spending customers in the world, the Navy. 
Schneider noted that historically, when the Navy ordered a weapon or
platform or system, a contractor might design it whichever way the
contractor chose, and it would be interoperable at best with other defense
wares the contractor produced. That, of course, would be a great proprietary
plus for the contractor, and an incentive for the Navy to order more items
from that company. And the Navy itself was part of the problem. "You have
all these different constituencies" in the defense procurement arena, he
said. "That means all of you" contractors, and "that means all of us [in the
Pentagon] that play in this business." 
Whereas in the past, each Pentagon program manager ordered a custom item,
Schneider again told the crowd of contractor personnel "we can't do business
like that any more. That's just not going to work." 
Today, the Navy must have all of its systems working together, and to work
jointly with systems of other services. Electronic systems must interface
smoothly. "I want the networks and the protocols basically off the table" as
a problem issue, "so we can get competition that really matters, which is
the sensors, the weapons," he said. 
In other words, the Navy should buy whichever weapon or sensor works best,
and not make an acquisition based on what sensor or weapon will work with
some other system already on ships or in aircraft. 
A Balkanized collection of completely different, and differing, weapons and
sensors and systems that can't work together just won't cut it in the
current world, he said. That uncommunicative collection of products won't
square with Schneider's vision of fully linked battle space forces. The Navy
must be able to "take imagery from [a source identifying a target], download
it to a carrier, uplink it to an F-18" strike fighter plane, and have it
"drop the precision-guided munitions," all without a glitch or a hitch. 
"And so what you have to do is figure out how to make all of this stuff come
together," he said. This involves technical issues of the architecture of
electronic systems, and whether they have the same file format and
programming protocols and rules on how to exchange information, he said. "It
sounds simple," but it's "very, very hard," he said. "This is very complex,
and it has significant business considerations." 
Change, Or Else 
But, ever so gently, Schneider told the contractors that if they wish to
continue selling goods to the Department of Defense, they must change their
ways. "We want the competition, and the innovation, and the
technology-investments that industry makes-to be beneficial," and lead to
profits for corporate stockholders. "We don't want you to invest your
dollars on things that, frankly, we want to take off the table" because they
can't work with other systems. 
"We want a greater return on your investment for you, and a greater return
on your investment for us," in the form of network-centric capabilities, he
said. The Navy is seeking to determine, as it orders new weapons and
platforms and systems, "how do we incorporate these new technologies,
regardless of source? ... How do we integrate these networks and sensors and
weapons?" To underscore that this isn't just some routine series of
comments, but rather something that contractors must take seriously,
Schneider said: "This is a big deal. It's going to take a lot of smart minds
to figure out how to merge different architectures." 
Expressing frustration at what the Navy has bought and the defense industry
has supplied, he said that the Navy currently is "stuck with a lot of legacy
systems," and it's tough to integrate them with each other, or to buy new
systems that integrate smoothly with the old. "Any time you want to
incorporate a new capability, it's almost cost-prohibitive," Schneider said,
adding again: "We can't do business like that in the future." 
Intellectual Property 
Another thorny problem lies in the issue of intellectual property, such as
patent rights and the right to exclusive sales of products to the private
market that employ technology developed for the Navy and other services,
Schneider said. 
This can be such a major thorn in the side that it can, and has, blocked the
Navy from hiring corporations to produce weapons or other systems, he said. 
"I personally, over the past two years, have had some tough situations where
we were unable to, unfortunately, figure a way to work [out] business
management with a couple of companies," he said. Officers of those firms
thought that terms of agreements proposed by the Navy would have harmed the
companies. Those corporate officers thought the Navy wording "would have
been a failed protection of some creative technology that they had, that had
great commercial potential. That's unfortunate. And yet I fully understand
and appreciate the positions that they had." 
This kind of deal-breaking dispute can't be allowed to become common,
Schneider said. "We're going to have to work through this, because it's kind
of key to how we do business in the future," if more defense contracts are
to get signed. 
The Department of Defense and the defense industry must come to terms, and
"figure a way to work [out] ... a business arrangement," he said. 
Where there is "innovation with great commercial potential that we can use
in military applications, we ought to be able to figure out the business
relationship and the protection of rights that makes sense, and that's
fair," he told the contractors. "And we ought to get the right folks" from
both the Pentagon and defense corporations "working on that." 
Tough Times 
After the tough-love speech, Schneider said he sympathizes with the defense
industry. "I think the business environment that we're all operating in is
severe," he said. For example, he said as he flew in to attend the air show
at Farnborough, England, last month, it covered just about two-thirds the
space that it had two yeas ago, and the displays in exhibit halls shrank
that much or more. 
That's a reflection of the business environment, "and a lot of
consolidation" in the defense industry, he said. "It really is a severe
business environment."

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