Non-Traditional Commercial Defense Contractors

Abstract

The DoD's ability to exclusively rely on a defense-unique industrial base is rapidly coming to an end. While the potential ramifications of this unfolding reality have been debated since the 1986 Packard Commission, the business processes of the acquisition bureaucracy have not reflected nor adequately addressed this radical change in circumstances. The DoD has a choice. It can continue to use its declining budget to replicate advances already made in the commercial marketplace at a significant cost both from a budgetary and lost innovation perspective. Or it can embrace that market and implement policies and business practices that support the goal of achieving what then Under Secretary of Defense Kaminski described in 1995: The military advantage goes to the nation who has the best cycle time to capture technologies that are commercially available; incorporate them in weapon systems; and get them fielded first. At one time, the federal government and the DoD dominated research and development (R&D) spending. For example, in 1964, the federal government provided 67% of R&D funding and served as the driver of innovation in the economy. Today, the private sector provides over 60% of U.S. R&D funding and accounts for over 70% of its performance advances. As the trend toward private sector R&D intensified in the 1980s and 1990s, defense policy-makers began to focus on how to access this emerging commercial source of innovation, especially as commercial products began to prove cheaper and, often, more reliable. The result was a monumental acquisition reform effort in the early 1990s that paved the way for the incorporation of these commercial technologies and business practices into DoD systems. The introduction of commercial advances from the information technology industry enabled the 1990s net-centric revolution in military affairs and military advances to be on the cusp of an unmanned vehicle and robotics revolution that is based on many of these same commercial technologies.