A House panel is calling on the Pentagon to help maintain the industrial base, improve communication with industry, and revamp its acquisition processes.
These and other recommendations from the House Armed Services Committee (HASC) Panel on Business Challenges in the Defense Industry are intended to help smaller firms work with the Pentagon. The seven-lawmaker panel spent the past seven months investigating barriers small and mid-sized businesses face entering and competing in the defense industry. It released a five-part report Tuesday night full of recommended legislation.
“This report provides several recommendations that the panel believes will improve the defense business environment, reduce barriers to entry, spur innovation, increase competition, and aid in getting critical technology into the hands of the Warfighter,” the 114-page document says.
One of the more significant proposals calls for the defense secretary to develop a long-term strategy for “maintaining a robust and effective defense industrial base.”
“Developing a long-term strategy I think is essential to support the defense-industrial base,” Panel Chairman Bill Shuster (R-Pa.) said during a media roundtable with reporters on Capitol Hill yesterday. “This is not a market-driven industry. (There’s) one customer. The customer regulates it….So I think there has to be a different approach.”
Shuster said he doesn’t think having such a strategy “has really been a focus” at the Pentagon.
“When we see these (Pentagon budget) cuts coming down the road, there are going to be a lot of these small businesses that are going to be gone,” he said. He noted that large firms like Lockheed Martin and Boeing use such small businesses for their innovative ideas and production capacity.
Panel Ranking Member Rep. Rick Larsen (D-Wash.) added he thinks “without some longer-term vision on the defense-industrial base out of the Pentagon, given the future restrictions on the budget, that we could face a period where you’re going to start seeing this defense-industrial base on the small and medium-sized business side begin to wither away.”
“These businesses may not go away, they’ll just go do something else and lose their capability to deal with the Pentagon because it’s just too much work,” Larsen said. “So then the Pentagon loses that capability.”
Shuster and Larsen told reporters they hope recommended legislative fixes in the report that are under the HASC’s purview will be included in the fiscal year 2013 defense authorization bill the committee will begin marking up next month. Some issues cited in the report, such as export-control reform, are outside of the HASC’s jurisdiction.
Larsen also noted the report doesn’t only call for changes in the Pentagon. Its recommendations are a “mix of things that we’d like to see that we don’t think the Pentagon’s doing well enough, and some of those things are reflection of support for what the Pentagon is doing,” he said. Pentagon officials had seen and provided feedback on aspects of the report while it was being written, but have not commented yet on the final version, congressional aides said.
The report is broken into five parts, with corresponding recommendationss. The sections are titled: The Defense Industrial Base; The Use of Incentives and Mandates to Shape the Defense Business Environment; Department of Defense Acquisition Environment; Barriers to Transitioning Technology; and Navigating the Defense Acquisition System.
Recommendations include requiring the defense secretary to craft “policies and mechanisms” for improving communication with defense companies, to help them focus their internal research and development work.
The report also tackles the at-times daunting Pentagon acquisition process, calling for the Pentagon to conduct a comprehensive review of acquisition laws and regulations and changing or killing those that are outdated or “have had unintended consequences that outweigh the original intent of the regulation.”
It also wants the Pentagon to:
– give lawmakers a semi-annual update on its sector-by-sector, tier-by-tier review of the defense industry;
– continue rebuilding the acquisition workforce;
– ensure work reserved for small-business performance is indeed done by small firms;
– and examine changes to the Defense Contract Audit Agency and Defense Contract Management Agency.
The report recommends that Congress examine new alternatives for providing auditing, accounting, and advisory services for contracts. It suggests lawmakers “examine the feasibility of using such alternatives” for the defense-industrial base “to potentially reduce or eliminate” many of the Pentagon’s internal audit organizations.