Creating and Sustaining and Effective Government-Defense Industry Partnership


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Author: Steve Mills, Scott Fouse, and Allen Green

U.S. history is replete with enterprises that succeeded due to effective partnerships. Today, the nation’s most complex partnership is the joint pursuit of the world’s best combat capabilities by the U.S. Department of Defense and the defense industry. These two complex enterprises, on behalf of the nation and its allies, are actively developing, producing, fielding, and sustaining combat systems for joint warfighters that are second to none. Does this shared interaction form an effective partnership? In this article, the authors analyze private industry’s perception of the challenges/opportunities that exist in the shared relationships with their government counterparts. Their findings pinpoint five focus areas, with corresponding actions, which can improve the partnership between government and the defense industry.


In 1803, President Thomas Jefferson was diligently searching for the best qualified individual to lead the first expedition into the wilderness of the recently acquired Louisiana Territory. Defying conventional wisdom, he would eventually choose two complementary leaders.

U.S. Army Captains Meriwether Lewis and William Clark jointly led the Corps of Discovery from St. Louis, Missouri, to the Pacific coast of the United States. Both men held many key traits in common. Both possessed strengths the other lacked. Their partnership provided leadership that helped to ensure a successful and comprehensive survey of the land’s majesty.

U.S. history is replete with enterprises that succeeded due to effective partnerships. Today, one of the most complex and demanding relationships may be found in the development, production, fielding, and sustainment of combat capabilities to the United States and its allies. The U.S. Department of Defense (DoD) and the defense industry are both engaged in this pursuit, but does this shared interaction form an effective partnership? Several indicators seem to suggest this relationship could be improved. A September 2008 report published by the U.S. Government Accountability Office (GAO) stated:

To better ensure Warfighter capabilities are delivered when needed and as promised, incentives must encourage a disciplined, knowledge-based approach, and a true partnership with shared goals must be developed among the department, the military services, the Congress, and the defense industry. (GAO, 2008)

Since WWII, the need for a true government–defense industry partnership has been clearly established. The U.S. military’s global dominance can be directly attributed to the technological superiority gained through a true partnership between these two complex enterprises. As noted by the Center for Defense Information (CDI) (1987), “It is often forgotten that the miracles of the ‘Arsenal of Democracy’ were the product of a government-industry partnership” (CDI, p. 36). The phrase “Arsenal of Democracy” was originated by President Franklin D. Roosevelt in December 1940 regarding a promise of assistance to the British and the Russians, then at war with Germany, by providing them with military supplies. The phrase also spoke to the ability of the United States to rapidly convert its automotive manufacturing capability to produce military weapons in great quantity during World War II.

In this article, we provide a discussion on the current state of the shared partnership between the U.S. DoD materiel acquisition management community and the private defense industry. We cite findings from one study and one survey—a study of program managers (PMs) serving in the DoD and a survey of PMs working in private industry. We identify and discuss what we believe to be five important facets to any partnership and what the data suggest about the relationship between the DoD and its industry partners. Finally, we offer recommendations on how to strengthen and improve existing partnerships and advice on how the Defense Acquisition University (DAU) and the Project Management Institute (PMI) can support such efforts.

Current State of the Government–Defense Industry Partnership

Under Secretary of Defense for Acquisition, Technology and Logistics Dr. Ashton Carter recognizes the critical importance of the relationship between the government and private industry counterparts in materiel acquisition programs. He recently commented:
I have said many times…that I really do believe in the partnership between government, the Department of Defense and the defense industry. The reality is that we don’t, in the Government, build the weapons systems upon which our security depends. We contract for them with the private sector, and that creates a situation of partnership. (Carter, 2009)
Dr. Carter’s comments underscore the genuine need for a true government–defense industry partnership to exist between government and industry in the execution of defense materiel acquisition programs. However, the results of one study and one survey conducted by the DAU suggest that DoD and the defense industry do not have a strong relationship built on a true sense of partnership. Clearly, the DoD and defense industry must interface, but our research reveals that something is clearly lacking.

Office of the Secretary of Defense Study on PM Training and Experience

In July 2009, DAU published the findings from a study commissioned by the Director, Portfolio Systems Acquisition David Ahern, on behalf of the Office of the Secretary of Defense (OSD). The study was based on responses from PMs working in Acquisition Category I and II programs. Its proponents sought to determine if DoD was providing appropriate and relevant instruction to its managers and to identify any opportunities to improve the proficiency of such individuals (DAU, 2009, p. 3). The study included findings in three areas: training topics, training methods, and acquisition experience and careers. The paramount finding listed under the title “Topics of Training” was that “program managers need additional training in industry practices, including factors that motivate contractors and ways in which program managers can use incentives to achieve better program performance for the government customer” (DAU, 2009, Appendix A, p. 13). Given decades of government–defense industry partnership in developing, producing, and fielding war­fighter systems, why is this a major area of concern for top-level government PMs? We believe these findings indicate that while government PMs understand the inherent value in creating effective partnerships with industry, the current state of the relationship between these two enterprises is not conducive to the greater levels of understanding and partnership that government PMs desire.

DAU Survey of Defense Industry PMs

In early 2010, DAU conducted a survey of PMs employed by private firms. The purpose was to develop an appreciation for private industry’s perception of the challenges and opportunities that exist in the shared relationships with their government counterparts. The DAU approach involved a broad array of PMs from five major defense industry companies. The results provided data regarding the level of genuine partnership that currently exists between DoD and industry PMs. The findings from this survey fell into five broad categories: respect, money, communication, processes, and leadership. These five categories identify what we believe to be the crucial relationship elements necessary for establishing and sustaining any effective and stable partnership, including the shared and mutually beneficial government–defense industry partnership.

Respect

Mutual respect is vital to any successful partnership. While the OSD study of government PMs yielded no concerns in this area, the DAU survey of industry PMs pinpointed respect as a key issue. Many respondents identified what they perceived to be a commonly held attitude among mid-career government employees: Mid-career government employees do not see industry agencies as valued partners. Instead, these government employees see industry as merely uncommitted vendors, motivated only by profit; as a result, industry must be managed harshly (Mills, 2010a). Whether real or perceived, the “we versus they” mindset exists in nearly all activities involving the government and industry, and is a major barrier to successful partnering.

Timing of the release of solicitation documents is another area of concern cited by survey respondents. These government-generated Requests for Information/Requests for Proposal (RFIs/RFPs) are top-priority documents for private defense firms. Each RFI/RFP represents a significant investment of company time, talent, and monetary resources to provide a timely and competitive response. A considerable number of the industry PMs surveyed identified the government’s recurring habit of releasing RFPs prior to a major holiday, along with a comparatively short deadline (60 days or less) for proposal submission. While this situation might be required for some programs, the consensus among the industry respondents is that this is an all too common practice. Industry PMs felt that these practices are indicative of the government–defense industry relationship. Moreover, this practice reveals an inconsiderate attitude toward industry partners.

Money

Differing expectations, attitudes, and purposes for money are all potential sources of strife between partners. One senior-level industry PM responded with the following analysis concerning the importance of monetary resources for private industry:

Industry has three primary concerns when it comes to dollars and cents:

  • Acquisitions. This is the deep fight. Future business in the pipeline. This is where our business development process occurs, including capture and positioning for future defense acquisition programs.
  • Sales. This is the current fight. Here we are concerned with Return on Sales and the amount of effort expended over a specified time to deliver the products.
  • Margin. This is the second element of the current fight. We address the question, “How do we drive more profit into the existing product? Margin can be improved through continuous improvement and new technologies to drive down the overall product cost on the products being delivered. (Mills, 2010a)

The manner and efficiency with which industry manages its money and achieves acquisition, sales, and margin determine its ultimate success. The findings from the DAU survey demonstrate that industry PMs believe perspectives regarding money are very different from those of their government counterparts. In general, the survey indicates industry PMs believe government program personnel do not have an appreciation for the real-world dynamics with which private firms contend in their effort to meet acquisition, sales, and margin demands. Industry PMs expressed some specific frustrations such as, “Government does not understand the importance or role of reasonable profit in industry” (Mills, 2010a), and “Government acquisition personnel are generally not aware of the real cost of goods and services provided by industry.” One industry respondent noted, “Government has a very shallow understanding of industry and money, overhead rates, wrap rates, fully burdened costs, etc.” (Mills, 2010a).

Communication

The ability to communicate effectively at all levels of a partnership is crucial for overall success. Industry respondents provided different assessments of government communication skills. Their major concerns in this area were focused around two primary areas: the poor quality management of government solicitation documents and the instability of customer requirements.

One industry employee interviewed stated, “Government RFPs are most often poorly written. Many are merely cut and paste efforts from earlier RFPs, making them completely inaccurate and unclear” (Mills, 2010a). Another industry employee noted that the “government tends to focus on improvising the RFP writing process. Government expertise in this area is very low” (Mills, 2010a).

Perhaps related to the alleged poor quality of government-issued RFPs are the numerous challenges involving requirements definition and requirements growth—sometimes called requirements “creep.” One industry respondent cited this as a particularly bothersome issue saying, “Requirements/scope management and managing changes is the number one challenge/problem for the government” (Mills, 2010a). Many PMs expressed that scope and requirements changes make a direct, negative impact on their company’s ability to meet the cost and schedule terms of their contracts with the government. One PM said that the “government has a complete lack of appreciation for the impact/cost of changes to the program scope, budget, and schedule” (Mills, 2010a).

Requirements management challenges have negative effects for both industry and other government agencies. The Office of the Director of Operational Test and Evaluation (DOT&E) stated in its 2009 annual report:

The department’s experience indicates that unless programs start with clear, sensible, and rationalized requirements, the program and its testing suffer tremendously and to the detriment of our fighting forces. The DOT&E experience has been that no amount of testing can compensate or correct for unjustified or unrealistic performance expectations. (Gilmore, 2009, p. iii)

The two primary components of requirements management are defining the requirement and stabilizing the requirement. Both components must be effectively managed to minimize “requirements creep” and achieve favorable program results. DoD can better partner with industry in this area through better leveraging industry’s Independent Research and Development (IRAD) efforts. IRAD in industry represents each company’s efforts to develop their technology innovation and market discrimination. According to Blakey (2010), this presents a critical opportunity for DoD to shape and leverage technology development and the acquisition process.

DoD must identify future technology requirements so that industry can plan its IRAD investments. Requirements for new systems must be based on well-understood technologies and stable product rates, to allow industry to develop and build systems efficiently with the right contract type. For example, one company recently consolidated its shipbuilding operations and is considering selling the unit outright in response to its vision of the future business environment. (p. 68)

This approach, when implemented effectively, provides industry with much needed and desired stability. Clearly defined and stable requirements remain critical to program success.

Processes

Another important facet in establishing effective partnerships is an understanding of and deference to the key processes of one’s partner. As cited earlier, government PMs acknowledge the benefit of better understanding industry practices and processes. Likewise, industry PMs interviewed identified a need for an improved understanding of government materiel acquisition management processes. “Industry,” one respondent said, “needs to better understand the government [DoD Instruction] 5000.02 processes in order to work more effectively with the government” (Mills, 2010a). Another industry PM provided this insight:
Some companies have strong PM culture and PM training programs. Industry standard credentials [PMI Project Management Professional, for example] bring PM skills to the table, but industry needs to understand the DoDI 5000.02 process in order to work more effectively with government. (Mills, 2010a, p.6)

Industry PMs strongly believe that mutual training opportunities represent the best avenue to better understand and improve the shared processes of government and industry. Specifically, some respondents noted that DAU courses have the ability to overcome the shortcomings of both government and industry in understanding the acquisition process.

What prevents reciprocal training among employees of the government and the defense industry? One challenge is that industry often does not incentivize personnel to attend classes because career progression is not tied to the training and experience afforded by government courses. Classes of this type are usually deducted from the company’s “overhead” funds, which are generally very limited. Finally, government acquisition personnel have priority for admittance in government courses, thus limiting the ability of private employees to participate. This is especially important in light of the increased Defense Acquisition Workforce employee population projected for the near- to mid-term.

Leadership

Leadership is the most crucial component needed for establishing effective partnerships. Leadership can be described as the art of influencing people. Leadership is necessary for the application and management of all essential facets for the creation of genuine partnerships.
Respondents to both the OSD study and the DAU survey identified leadership as a key focus area. According to the OSD study, in the areas of acquisition, experience, and careers, “PMs need mentors and senior advisory teams to assist them in dealing with particularly complex challenges on major acquisition problems” (DAU, 2009, p. 24). In this area, one government PM stated specifically, “The best preparation for a future program manager is working with extraordinary leaders–mentors” (DAU, 2009, p. 24).

In the DAU survey of industry PMs, respondents stated that the government leadership at the executive levels was sound, but they expressed concern about junior employees. “Although the PM leadership and competency tends to be good, this is not so at the lower levels” (Mills, 2010a). Interestingly, industry PMs perceive a cultural shift occurring within the government acquisition community. One PM observed “a younger, more aggressive crowd that lacks understanding and experience [is emerging] in acquisition. For these younger personnel, failure is frightening” (Mills, 2010a). These new members of the Defense Acquisition Workforce are generally very talented, but recognize that their lack of experience is a challenge that must be overcome. The OSD study and the DAU industry survey reveal that deliberate, proactive engagement between more seasoned government acquisition professionals and their younger, less experienced colleagues would improve overall partnerships shared by the government and industry.

Solutions and Recommendations

An effective DoD–defense industry partnership is not only attainable, but will improve overall acquisition outcomes. The Figure represents a proposed model for the creation of effective partnerships between government program offices and private defense firms. Collective experience and observation demonstrate that the primary desire and expectation of industry firms from government program offices is flexibility. In other words, government PMs look for private industry to provide required capability as close to the original schedule and cost estimates as possible, regardless of unforeseen events and changes. Private firms seek stability from their government partners. In other words, private industry seeks a measure of confidence with regard to the level of current and future work they will be employed to perform for the government. Stability enables industry to manage subcontract relationships, adjust personnel staffing levels, and forecast company performance for the benefit of their investors.
Complete flexibility for the government and complete stability for industry are not attainable. Each entity must help achieve the other’s requirements for the partnership to be effective. We suggest that the previously discussed five components for an effective partnership serve as the center of mass through which government and industry should seek to interface.

Figure. Effective Partnership Between Government and Industry

DAU Support

Within DAU, government and industry PMs have at their disposal an extensive program management and acquisition management tool. While the primary focus of DAU training assets is to enable success in managing DoD acquisition programs, we believe the university could also provide direct support in the effort to establish and sustain effective partnerships.

High-quality acquisition training is available in all of the functional areas that support DoD materiel acquisition programs. DAU’s resources extend well beyond the classroom and include a significant online presence. A quick review of the DAU website (http://www.dau.mil) and its related learning resources reveals a large number of educational opportunities targeted to both government and industry employees. The Defense Acquisition Guidebook (DAG) is a great example of a valuable resource available to industry and government acquisition personnel at any time. The DAG (https://dag.dau.mil/Pages/Default.aspx) provides a graphical and user-friendly portal of DoD acquisition best business practices, acquisition policy, and lessons learned. Another excellent source of acquisition training for both DoD and industry personnel is DAUs Continuous Learning website (http://www.dau.mil/clc/default.aspx), which hosts over 175 Continuous Learning Modules covering critical topics that support all of the 12 Acquisition Workforce functional areas. These learning assets are also available to both DoD and industry personnel 24 hours a day.

Project Management Institute Support

The Project Management Institute (PMI) also offers training and certification opportunities to government and industry personnel. Like DAU-sponsored training, we believe this training would be very effective in the creation and management of partnerships between the two enterprises. This is particularly true since PMI’s suite of globally recognized processes will significantly affect the worldwide defense industry in the future.

The field of program management in private industry is guided by both doctrine and best practices. PMI’s Project Management Body of Knowledge (PMBOK®), as embodied in the PMBOK® Guide, serves as the repository for both industry-developed doctrine and best practices in program management (PMI, 2008). The PMBOK is the industry standard for program management doctrine and best practices. It represents the PM approach embraced by our industry partners. PMI plays a key role by serving as the granting authority for several American National Standards Institute-based credentials. These include:

  • Certified Associate in Project Management (CAPM®)—for integrated product team leaders and members
  • Project Management Professional (PMP®)—for project/program managers
  • Program Management Professional (PgMP®)—for program/portfolio managers
  • Risk Management Professional (PMI-RMP®)—for risk managers
  • Scheduling Professional (PMI-SP®)—for scheduling managers

Significant commonality exists between the PMBOK® and government acquisition management doctrine. Like Lewis and Clark, each body of knowledge complements the other. This commonality provides an opportunity for government acquisition professionals to bridge the knowledge gap through the study and accreditation of PMI-sponsored, PMBOK®-based credentials. Government PMs who obtain PMI credentials gain a better understanding/perspective of industry program management processes and best practices.

The process of promoting industry standard credentials as a career progression option for Defense Acquisition Workforce employees would accomplish multiple objectives. First, it would help create a better channel of communication between government and industry personnel by creating a common understanding. By focusing on and understanding the industry standard for project management, a common context for project management discussions would exist. The use of earned value management provides a good example of a common process or understanding. Second, PMI’s Aerospace and Defense Specific Interest Group (A&D SIG) could supplement, to some degree, DAU’s workforce training at large, given the capacity limitations discussed earlier. Lastly, promoting the value of industry standards for project management would demonstrate a commitment from an organization’s leadership to the professional development of the individual. The most important resource required for attaining success in government acquisition programs is a well-trained and well-led workforce, composed of both government and industry employees.

Recommended Areas for Consideration

Along with the contributions to effective partnership available through DAU and PMI training, we recommend consideration of the following measures:

Recommendation No. 1—Training With Industry (TWI)

Currently, limited TWI opportunities are afforded DoD acquisition personnel. The OSD study found that “adopt[ing] the training with industry program more widely…[would] be important in improving management of acquisition programs” (DAU, 2009, Comment E61C). We agree with this assessment and recommend that OSD and the defense industry PM offices collaborate to increase the number of TWI offerings made available each year to acquisition professionals.

Recommendation No. 2—Incentivize DAU Course Attendance

In an effort to increase opportunities and funding for contractor attendance at DAU courses, we recommend that government program offices request industry partners, in their contract proposals to the government, provide the names and cost estimates for a finite number of their personnel to complete DAU training. Specifically, these would be industry personnel working in support of the government contract. This arrangement would allow the contractor firm to directly charge for the training of their personnel, thus eliminating the concern of overextending vital overhead funds. In return, the government project office would be supported by personnel equipped with better knowledge of the DoD materiel acquisition processes. Government project offices could secure the necessary funding via the annual DoD planning, programming, budgeting, and execution process.

Recommendation No. 3—Update DAU Course Content

Providing DAU students with a better appreciation for the realities of private defense industry funding challenges would greatly assist with efforts to facilitate effective partnerships among government and industry. The DAU-South Region has already developed a new section for its Intermediate Systems Acquisition (ACQ 201B) course curriculum, in which students are presented the basic instruction on direct, indirect, and loaded rate personnel charges. This is a line of teaching that can and should be incorporated into other DAU courses in all functional areas.

Recommendation No. 4—Develop New Industry-Specific Course Content

DAU recently developed a new course titled, “Understanding Industry.” This course was successfully piloted with the Senior Service College Fellowship students at the DAU South Region campus in September 2010. The focus of this new DAU offering is to provide the Defense Acquisition Workforce significant insight into how our industry partners function and support DoD materiel acquisition programs. This course is a comprehensive 2.5 day offering that educates students on the key aspects of our industry partner’s business processes and challenges them with a Capstone exercise as well. Overall results of the initial pilot offering were very favorable. Additional course refinement continues.

Recommendation No. 5—Increased DAU Engagement of Industry

In addition, DAU could provide regular engagement opportunities with the employees and leadership of private defense industry organizations to help them better understand the DoDI 5000.02 and associated processes (DoD, 2008). DAU already provides annual seminars to the National Defense Industry Association and its member organizations. Regular affiliations of this sort between DAU and industry would be of significant value to the overall effort to establish and maintain effective government–defense industry partnerships.

Conclusions

Like Lewis and Clark, the government and defense industry need to foster a true and sustained partnership. Other leaders in the DoD acquisition management community agree. Marine Colonel Michael Micucci, project manager for Light Armored Vehicles, noted in the Marine Corps Systems Command News (Johnson-Miles, 2009):

Cost, schedule, and performance requirements are definitely important, and meeting them is key to program success; however, they really represent the lowest common denominator in the professional partnership formed by the defense acquisition professionals and industry…with this in mind, we should explore establishing expectations for industry as a full partner in every success. (p. 1)

Dr. Carter also emphasized the importance of the government–defense industry relationship. “I am not a believer that the defense industry is the enemy; they are our partners. We can’t arm and defend the country without private industry” (Mills, 2010b). Concerted efforts by both government and industry to engage the five facets identified in this discourse will improve both the flexibility industry can provide to the government and the stability government can provide to industry. This “win-win” arrangement will certainly be beneficial for government operations and for industry bottom lines. Even more important than these benefits, effective partnerships between government and industry will provide U.S. and allied warfighters with better capabilities delivered in a more timely and cost-effective manner.


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Author Biographies

Professor Stephen J MillsProfessor Stephen J. Mills is a professor of Acquisition Program Management at the DAU South Region campus in Huntsville, Alabama. Prior to joining the DAU faculty, Professor Mills served as a program manager for Northrop Grumman Corporation where he managed several Army Command and Control projects. His education includes a BS and MS in Criminal Justice and an MA in National Security and Strategic Studies from the U.S. Naval War College.

(E-mail address: steve.mills@dau.mil)

Professor Scott FouseProfessor Scott D. Fouse joined the DAU faculty as a professor of Acquisition Program Management in September 2009. He previously served as a Product Manager in the U.S. Army’s Stryker Brigade Combat Team Project Management Office. Upon retirement from the Army after 21 years of service, Professor Fouse worked for two years in the defense industry for SAIC, Inc. He holds a bachelors’ in Business-Finance from Cameron University and an MBA from Drury University.

(E-mail address: scott.fouse@dau.mil)

Mr Allen GreenMr. Allen Green currently works for SAIC, Inc., supporting several DoD efforts. Mr. Green is both an engineer and program manager. He holds Project Management Professional (PMP) and Program Management Professional (PgMP) credentials from the Project Management Institute (PMI). Mr. Green also serves as the president, PMI–North Alabama Chapter, in Huntsville.

(E-mail address: allen.r.green@saic.com)


References

Blakey, M. (2010, September 13). Answering the call: How to improve DoD-industry partnership. Defense News, p. 68.

Carter, Ashton B. (2009, October 5). A conversation with Ashton B. Carter/Interviewer: L. E. Davis [Transcript]. Council on Foreign Relations. Retrieved from http://www.cfr.org/publication/20355/conversation_with_ashton_b_carter.html

Center for Defense Information. (1987). There’s no business like war business. Business and Society Review, 87(61), 35–39.

Defense Acquisition University. (2009). OSD study of program manager training and experience. Alexandria, VA: Author.

Department of Defense. (2008). Operation of the Defense Acquisition System (DoD Instruction 5000.02). Washington, DC: Author.

Gilmore, J. M. (2009). Director, operational test and evaluation FY 2009 annual report. Retrieved from http://pogoarchives.org/m/ns/dote-fy09annualreport-dod.pdf

Johnson-Miles, B. (2009, October 10). Do industry partners truly understand program needs? Marine Corps System Command News. Retrieved from https://www.marcorsyscom.usmc.mil/news/syscomnews.nsf/StoriesDisplayExt/26002CEF599E7DFA8525759B004CC895?OpenDocument

Mills, S. (2010a). [DAU Survey of Industry Program Manager Training and Experience]. Unpublished raw data.

Mills, S. (2010b). We don’t dance well: Government and industry defense materiel acquisition. Defense AT&L Magazine, 39(2), 28–33.

Project Management Institute. (2008). A Guide to the Project Management Body of Knowledge (PMBOK®) (4th ed.). Newton Square, PA: Author.

U.S. Government Accountability Office. (2008). Defense acquisitions: Fundamental changes are needed to improve weapon program outcomes. Retrieved from http://www.gao.gov/new.items/d081159t.pdf

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