MILITARY’S IT PROCUREMENT MODELS CAN AND MUST EVOLVE

Jay Jesse President, CEOIntelligent Software Solutions

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SUMMARY

There are two major models by which government procures defense solutions from its universe of contractors and vendors. Each model has serious deficiencies that drive up costs while slowing down the pace at which tools and weapons are needed on a rapidly evolving battlefield. Let’s take a look at both models at a high level, along with a few of their most serious shortcomings.

• Government buying technology as a commodity• Heavy Customization• An Evolved Procurement Model

THREE TOPIC AREAS

GOVERNMENT BUYING TECHNOLOGY AS A COMMODITYThese purchases can be for quasi-commercial purposes that involve off-the-shelf capability, incurring costs for licenses and turnkey systems for solutions that are already built.

Such systems can cost tens or hundreds of millions for a government agency to procure depending on the deployment footprint; they’re very expensive to acquire and scale — and very proprietary.

GOVERNMENT BUYING TECHNOLOGY AS A COMMODITYFor example, if the Coast Guard were to acquire a commercial enterprise database management solution after having let a few parts of the fleet try it out, they have the expensive burden of proliferating licenses across the rest of the fleet, plus recurring maintenance.

The upside? They can be quickly bought and deployed as most of the investment is already made and nothing had to be built from scratch.

On the flip side, the government is unable to collaborate with the makers to improve the functionality for their mission or theaters of operation. Legally, government can’t invest in products they’re buying commercially.

GOVERNMENT BUYING TECHNOLOGY AS A COMMODITY

HEAVY CUSTOMIZATION

You can’t buy a space and missile defense system or software for extremely specific wargame modeling off the shelf, so the “heavily customized” option is provided. The price tag can run into the billions for systems like these.

HEAVY CUSTOMIZATION

This model is equally polarizing since such systems are weighed down from a time perspective.

Defining requirements and putting out RFPs can take 2-3 years. Add another two years for bidding and award. Then factor in an additional 3-5 years to actually build and deploy the solution.

In today’s world – think about how much theaters of operation, strategic priorities and the technology itself can shift during that multi-year period.

HEAVY CUSTOMIZATION

And consider this: if the large military branch is buying a system, they’re paying for it solo from a line item in their budget and will be responsible for up to 10x the cost when you factor in the “development tail.”

Cost overruns and inevitable schedule slippage will also drive up the final price tag.

HEAVY CUSTOMIZATION

To be fair, there is an upside with this model: theoretically, you pick requirements and build a system to do exactly what you need it to do.

If you have to switch vendors and move the project, you can, but even then these projects face very high failure ratios.

HEAVY CUSTOMIZATION

Hundreds of billions of dollars have flowed through these models in the past few decades. And as problematic as they are, they’re what we have.

Choosing one of these paths — with all their attendant baggage — means that lots of smaller military groups, ISR (intelligence, surveillance and reconnaissance), warfighting and special ops actors get left behind by the procurement system.

HEAVY CUSTOMIZATION

They buy commodities that don’t do what they want and can’t keep up with what next year’s threats may demand. Or they invest heavily in purpose built tools that take years to see the light of day.

The opportunity to be cost-effective, while maintaining the agility to get the tools you need when situations require, slips away.

AN EVOLVED PROCUREMENT MODEL

Technology and the realities of 21st Century theaters of operation will eventually force evolution in these models, where $1B systems built from scratch are good for the current war, but not the next one.

A move to the future could include the right blend of commoditized building blocks with service- and theater-specific customization whose development costs could be shared between the government and providers.

AN EVOLVED PROCUREMENT MODEL

We want our procurement models to be fair while making sure what they actually produce is the deployment of formidable, responsive tools that give our nation’s analysts and warfighters a massive advantage in a complex and dangerous world.

In the military arena, time to market and cost have urgent implications for all of us.

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