Reforming Military Procurement Requires More Than Baby Steps
On June 24, the Washington Post’s Editorial Board ran an opinion piece entitled, “Egregious Pentagon delays reflect problem the military is just starting to solve.” In this article, the Editorial Board highlighted myriad military programs and projects that have gone over budget and fallen behind schedule, noting that: “Program after weapons program has fallen behind its production schedule, which means cascading costs for taxpayers and declining readiness for the military.”
This is a problem that the Defense Industrial Base (DIB) has witnessed for years, and it was refreshing to see the Post acknowledging it and giving voice to something that often is ignored for fear of not wanting to upset military decision-makers or seeming unpatriotic. Unfortunately, this has been a major source of frustration for those in the small and mid-sized defense space. In fact, the way large prime contractors have been wasting tax dollars should be a source of frustration to every taxpayer.
While the editors singled out the large prime contractors and their lack of competition as a primary cause of delays and cost overruns, they failed to mention another large problem. This handful of companies frequently insist upon incorporating proprietary software and hardware to retain business.
Addressing something as seemingly mundane as procurement reform would go a long way to address the concerns that President Eisenhower predicted and that have come to fruition.
The insistence on proprietary solutions and systems drastically limits the use of off-the-shelf components, locking in the prime contractor as the sole source of repairs, replacements, and upgrades. This is perhaps one of the reasons why Boeing held the contract for the “Doomsday” plane for 50 years while ultimately producing unacceptable results for the warfighter and the military. I say “held” since they were surprisingly eliminated from the competition to build the replacement aircraft for the U.S. Air Force.
While much blame falls on the large primes, the government acquisition process bears some responsibility. Every branch has different program offices with specific responsibilities — a program office to procure communications, a program office to procure compute capabilities, a program office to procure cloud services, etc. They may not talk to each other very often and frequently fail to determine whether what they are procuring works with what the other offices are procuring.
This doesn’t all fall on the program offices, however. That kind of oversight is supposed to be part of the role of the prime that won the overall contract. But the big primes have lost sight of serving their customers.
Large contractors see their first responsibility as fiduciary — to meet their shareholders’ expectations. The companies happen to generate revenue by working with the DoD. While the large primes are happy to produce commercials and billboards touting their commitment to the DoD, there is a lack of internal accountability to deliver to their customers.
The insistence on proprietary solutions and systems drastically limits the use of off-the-shelf components, locking in the prime contractor as the sole source of repairs, replacements, and upgrades.
Throughout the DIB, the concept of comparative advantage highlights the strengths and roles of different sized companies.
Small companies often excel in innovation, leveraging their agility and specialized expertise to develop cutting-edge solutions quickly. Large companies possess the resources and infrastructure to scale these innovations, ensuring they can be deployed across vast, complex defense networks. Medium-sized companies play a critical role in bridging the gap between innovation and scale, providing the necessary flexibility and capacity to integrate new technologies into broader applications.
This dynamic ecosystem raises an intriguing question: Why are the large primes increasingly focusing on innovation—an area traditionally dominated by smaller firms? It’s their pursuit of greater market share and investor value. Even when these large primes win smaller contracts for innovative programs and systems, they often are put on the back burner for larger-scale programs that are more profitable.
Ultimately, these large primes are sacrificing quality, value, and innovation by trying to play the role of smaller, more innovative companies. The ones who suffer are the warfighter and the taxpayer.
So, what is the answer?
Medium-sized government contractors need to play a much bigger role in identifying and nurturing small companies and their innovations.
Why are the large primes increasingly focusing on innovation—an area traditionally dominated by smaller firms? It’s their pursuit of greater market share and investor value.
Medium-sized companies have managed to jump the scale hurdle, at least enough to qualify for contracts in their own right rather than relying on major primes. The DOD’s procurement offices could play a much bigger role in this, as well, by enlisting mid-sized contractors to assist the small players in transitioning their innovative solutions.
In 1961, Dwight D. Eisenhower, former General of the United States and two-term president, warned against the establishment of a military-industrial complex. “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex,” he said. Eisenhower was concerned that “[t]he potential for the disastrous rise of misplaced power exists and will persist.”
Addressing something as seemingly mundane as procurement reform would go a long way to address the concerns that President Eisenhower predicted and that have come to fruition.
Matt Jones is the President and Chief Executive Officer of Sigma Defense Solutions. Click here to read his series on meeting the military’s CJADC2 requirements.
