The current driving force in the military and defense environment is to keep legacy systems operating longer, or the replacement of legacy systems with new systems that emulate one or more legacy systems with commercial-off-the-shelf (COTS) technology. However, there is insufficient budget to fund development of these COTS systems, and the burden of development falls upon private industry. The current sequestration environment adds another burden on industry to perform to the needs of the military, but without the benefit of nonrecurring engineering (NRE) costs being reimbursed. Programs although already funded (but not the NRE, as it is not initially funded) are being put on hold, cancelled, or are in a state of non-deterministic outcome.
Military and defense program managers and private industry face an uphill battle to find the intersection of needs, available resources and the expenditure of development costs. Small companies are at a distinct disadvantage when they develop technology to support the replacement of legacy systems when they are forced to use their own development resources without compensation and are not awarded a contract for production.
Whether a fixed-price, cost-plus, or IDIQ contract, the above scenario is increasingly commonplace in the face of budget constraints and sequestration. The burden on small companies doesn’t stop there; military program managers are also demanding engineering support without compensation for engineering-sustaining efforts, again without the presence of a production contract.
Although many systems are characterized as COTS, there are demands on the developer to perform military environment qualification testing, again without funding and no guarantee of a production contract.