Acquisition Talk

NatSec News: June 22, 2022 by Eric Lofgren

I was pleased to have Amanda Bresler and Alex Bresler back on the podcast to discuss their newest Naval Postgraduate School symposium paper on the composition of small businesses in the defense industry. Amanda is the Chief Strategy Officer at PW Communications, and Alex is the Chief Data Officer. They found that small business funding grew 68 percent between 2015 to 2021, but at the same time the total number of small businesses shrank 23 percent. That can only mean the small business players are, on average, getting bigger. Indeed, the number of small businesses receiving more than $100 million per year in defense prime contracts grew three-fold over those six years (from 26 to 84). By comparison, the number of small businesses with less than $1 million fell 32 percent (from 34,205 to 23,337). This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

Eric Lofgren and Matt MacGregor chat about the week's newsworthy headlines the world of military acquisition. This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

Eric Lofgren and Matt MacGregor chat about the week's newsworthy headlines the world of military acquisition. This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

Babak Siavoshy joined me on the Acquisition Talk podcast to discuss opportunities for improving intellectual property and software data rights practices in defense contracts. He is Vice President and General Counsel of Anduril Industries, and has recently written an excellent article on one of the least understood aspects of the acquisition world. Babak extends the argument that software is “eating the world,” or comprising an increasingly larger share of the value being generated by firms today. Even for the physical products Anduril is developing like UAVs, sensor towers, drone interceptors, and submarines, the software backbone is what makes them game changing. Government, however, has struggled to value software and compensate for private investment. These issues show up in its templatized data rights practices. This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

In this episode of the Acquisition Talk podcast, I host an amazing panel on contracting practices for modern software with Florence Kasule (Director of Procurement, US Digital Service), Col. Eric Obergfell (Director of Contracts, Air Force Research Lab), and Caitlin Dohrman (President/GM, Improbable US National Security and Defense). The conversation hits a wide range of important topics that jump off of Mason GovCon's recent Acquisition Next report, including: - How defense contracts can align with agile/devops principles - Whether fixed-price contracts work for modular efforts - The role of leadership and training in business transformation - The potential for the "as a service" model - Tradeoffs between multiple award IDIQs and Commercial Solutions Openings This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

Eric Lofgren and Matt MacGregor chat about the week's newsworthy headlines the world of military acquisition. This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

Andrea Garrity joined me on the Acquisition Talk podcast to discuss how the government can build relationships with nontraditional companies. She is the Chief Growth Officer at goTenna, a company that offers mesh networking for off-grid devices and decentralized communications. Before that she was vice president at In-Q-Tel and client executive at IBM. In the episode, we discuss an article Andrea recently wrote about bringing startups and government together. She argues that the procurement maze and multi-year timelines creates a capital requirement that is difficult for companies to burden in advance of contract awards. "I think it's hard to ask these companies to take on that burden right away," Andrea says. "Startups are beholden to their board, and the board wants to see market fit and revenue. They're not willing to invest in a contract specialist or a GSA person without first seeing that fit." As a result, many startups focus on the commercial sector first before deciding whether they have the resources to start expanding into the government market. Even then, many new technologies are cross-cutting and delivered "as a service." Andrea describes the difficulty of selling a mesh networking capability to the DoD, where money and attention are inwardly focused on platform stovepipes like bombers, submarines, combat vehicles, and satellites. "How many people can I talk to? How many people can I demo for? And then. When we do those demos, we see people get excited and then they say, Hey, we've got to pull in this other group, figuring out how to engage at a level where we're able to do the demonstration once, instead of 250 times would be great. And I say that as somebody who feels like I'm a veteran at engaging with the government." There is no single "program of record" for many commercial technologies, meaning companies have to try to get a foothold anywhere they can. Selling a product "as a service" is another challenge, where pricing is based on usage rates, like cloud computing or uber rides. These pricing models are entirely different from anything government has used in the past. "The government looks at it and says, 'we cant budget for that.'" Luckily for goTenna, their mesh networking offering is based on a small hardware device and can be sold by the unit. Each unit can send short-burst data like position, text, sensor data, etc., between 8 and 15 miles -- up to 145 miles from an air asset -- and relay that information up to six devices away in a daisy-chain fashion. Yet all this capability, and much of the value, is enabled by software. Here's Andrea: "On the one hand I always say we need to talk about ourselves as a software company. On the other hand, I'm so glad that we get to price it by device because you're absolutely right, software pricing and enterprise software pricing is really challenging." This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com.

Eric Lofgren and Matt MacGregor chat about the week's newsworthy headlines the world of military acquisition. This podcast was produced by Eric Lofgren. You can follow me on Twitter @AcqTalk and find more information at https://AcquisitionTalk.com

In this episode of #AcquisitionTalk, we listen in on a Twitter spaces discussion hosted by Andrew Kirima and Pablo Felgueres as part of their series on American industrial dynamism. Check out industrialdynamism.com and @morefactories. Tons of great speakers join, including Liz Stein, Jake Bullock, Jake Chapman, Griffin Barnicutt, John Dulin, AJ Piplica, and Eric Lofgren. Excerpts: "I'm pretty sure if the future of defense is AI, the future of AI is also in defense. And so that's why we do a lot of really ambitious AI research at Modern AI." "You'll often see, tech crunch articles about, name your defense company, and the billion dollar contract they signed because they got an IDIQ. What the article won't tell you is that they're not actually getting a billion dollars and that contract might have 50 people on it." "Are you a commoditized product, as in another piece of software or a certain parts maker that someone else can 3d print for cheaper? Or are you something that they literally can't replicate, which is hopefully where a lot of this American industrialism and dynamism will end up." "The reason a program of record as a word is meaningful is there are so many moving pieces in government acquisitions as it's done today... What you're trying to do is cobble together those three people and acquisitions officer, a user, and then a funder together." "You can raise a seed round with a deck but to get to Series A most of the VCs, and anybody feel free to correct me if you want, but most of them need to see a production contract. It's really hard to get there on the timeline that you could in any other sort of industry." "A big reason that we encourage our portfolio companies to definitely pursue a commercial product first and find products that are 10x better than what's in the government, 10x cheaper. So frankly, a Herculean task, but that really is sometimes the bar." "My pessimistic take on this is that if you're relying on the DOD to fundamentally change, how requires technologies in order for what you're building to be successful? I think it's a fool's errand." "The way that you're going to have to write your proposal will lock you in to a very defined waterfall process that ultimately leads to bad products." "The entire industry doesn't want to shift to horizontal platforms because that will cause new incumbents to emerge and it will effectively erode the power that these primes have." "If you look at the new ULA and Amazon partnership, even with satellites, it's give or take a couple of billion dollars. I will put a lot of money that half of it will be subcontracted out and will generally go to startups." "One of the most beneficial things out of that consortium model is being able to have the conversations with the end users. And that happens so rarely because of fairness in the procurement process." "A lot of us on the outside have been a little bit weary about getting our hands dirty and playing the game the way it's played. Frankly, that's what's required in order to work within a system that's been entrenched for decades."