What’s Hot in Charleston? SPAWAR seeks to help industry understand how to serve a $3.5B market, but issues remain…

July 19, 2013
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What’s Hot in Charleston?  While the outside temperature reached a comfortable 90 humid degrees, almost 500 defense contractors steamed like a boiling pot at the 29th Small Business and Industry Outreach (SBIOI) held 18 July.  No amount of southern charm could hide the frustration these folks are feeling.

Charleston Defense Contractors Association (CDCA) puts on this outstanding forum once a quarter in conjunction with SPAWAR Systems Center Atlantic (SSC LANT) to present a one-stop-shop Industry and Technology forum to companies interested in doing business with SSC LANT. There are a lot of companies interested!  Last year, SSC LANT paid out over $3.5 BILLION dollars to defense contractors to perform high-end C5ISR work. CDCA works hard to dispel any notions that Charleston is a “closed” community. I don’t know of any other defense related town that makes such regular and open disclosure of opportunities!

Like everything that CDCA does, it’s expertly presented. The forum (Trident Technical College) provides plenty of parking and room to collaborate, and CDCA puts out a great spread of coffee, breakfast and lunch. And it’s even FREE to EVERYONE (whether you are a member or not).

At this SBIOI, Chris Miller, the Technical Director (the conductor of the SSC LANT orchestra of engineers) was hard-pressed to answer the questions lobbed at him by a disgruntled audience. Mostly questions like this: “Why are the new processes that you put into place so broken!  My company cannot survive much longer. You must fix this ASAP or you will break the back of the companies that support you.”

Chris Miller moved to Charleston five years ago to assume this important position (previously he was PEO C4I).  He has made MANY changes in the past five years, the effects of which are just now being felt. Not everyone is happy with the results. (Truthfully, I can’t find ANYONE who is happy with the results!)

Previously, SSC LANT cranked out contracts in a rapid-fire manner to respond to incoming requirements. As a Working Capital Funded organization, SSC LANT is provided almost no mission funding, but receives work from DoD customers that need the highly technical C5ISR solutions his organization provides.

In an effort to consolidate all these disparate contracts, he created a system of “Pillar Contracts” which were aligned to his functional organization. The idea is this:  if a DoD customer (the operator) needs a particular technology fielded, the SSC LANT engineers oversee contracts to accomplish these goals. Instead of preparing a one-for-one contract, they are now supposed to reach into the Pillar for the work required.

Sounds good. Should have been good.  But:

  • It took them over one year to WRITE the pillars (a year longer than they projected).
  • It took them over one year to AWARD the pillars (a year later than they projected).
  • The process to award a Task Order under the pillar (the way you actually get any MONEY from the pillar) is still in flux – DESPITE the fact that Industry identified the Task Order process as extremely important three years ago.

Meanwhile, your basic Defense Contractor interested in work from SSC LANT worked diligently to prepare for this sliding-schedule of Pillar awards. The (expensive) teams they stood up to assist them in preparing their proposals nicked away at their profit margins. Imagine their shock and distress when the long-awaited awards were finally made and there were 12+ winners!  Industry was initially told that there would be 3-4 winners for each pillar, however any company that was “technically acceptable” appears to have received an award.

Industry struggles to survive in this scenario. Their share of the pie now has 12+ slices, not 3-4! And then of course, we add in the recent budget cuts, sequestration, reduced defense posture, etc. (admittedly not the fault of SSC LANT). This SMALLER thinly sliced pie is starving the industry.

Most of these companies are already doing work for SSC LANT under previous contracts. As these contracts expire, their work will be folded into the pillars, where 12+ competitors will bid on the work. That is fair enough (we all want the best deal for the government). BUT, these companies with established expertise have no control over which pillar their work is moved to. If they didn’t happen to bid on (or win) a seat under the new pillar their work is moving to, they can’t even compete. The different functional areas of the pillars are so near similar that most of us can’t really tell one from another. The arbitrariness of this is tough to take.

Then consider the case of a new company, trying to do work in Charleston. If they aren’t on an existing pillar (as a prime or a sub), adding them into any task order proposal will automatically hit a “trip-wire” and require a painful scrutiny that most primes are not willing to risk. Therefore: new companies are locked out until the pillars run their course (which with dwindling dollars might take longer than expected). Some of the new companies trying to get into the market have some great technologies that could improve C5ISR for DoD!  What a shame to exclude them.

Under the new pillar strategy, work allotted by Task Order will be fielded through a capability called SEAPORT O. In an attempt to get task orders out quickly, the turnarounds are brutally short: 3-5 business days for RFI’s and 1-15 business days for RFPs. Each prime has to keep an alert team ready to respond quickly.  Those “alert teams” cost a bundle!

Finally, there is no visibility under the SEAPORT O system for future work. There is no task order forecasting. Only the Primes on each pillar can see what work is offered. Some are good at sharing the information, but many are not. We have transitioned from a very transparent system where anyone could see what the upcoming work was, to a very closed system. This seems completely counter to what we should have done.

It’s hard for large companies. It’s killing small companies. To date: only SEVEN task orders have been awarded on these pillars and they all add up to $3 Million dollars total.  Those pie slices are mighty small!