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Defense Department Needs New Business Model for Acquisition

February 13, 2014
By Robert K. Ackerman
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Competition is counterproductive, say industry leaders.

The U.S. Defense Department needs a new acquisition model to speed systems to warfighters while maintaining an effective industrial base, said industry leaders. The current model, based on competition, actually is counterproductive for what the government hopes to accomplish for procurement.

Three industry leaders outlined this and other problems during the Thursday morning keynote panel at West 2014 in San Diego. They expressed concerns over both short- and long-term consequences, with the government customer ultimately suffering from the well-intended but misguided policies.

Jeffrey T. Napoliello, vice president, strategy and business development, Lockheed Martin Mission Systems and Training, declared that greater competition is a business model, not a catalyst for greater innovation. The current model forces companies to ship more resources to proposal writing than to solutions.

“We need a business model that delivers more to the customer than reducing overhead,” he said. “As we look ahead, if we continue to use the same levels and methods to drive down costs, we will find we are doing less development.”

Mike Petters, president and chief executive officer, Huntington Ingalls Industries, offered that competition in a low volume environment actually adds cost. “We are competing toward monopoly,” he said, pointing out that a supply chain for submarines features 80 percent sole source purchases.

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