Defense acquisition system called 'unfriendly' to contractors

The Defense Department's acquisition process is "unfriendly" to commercial suppliers, the president of the Electronic Industries Association said Wednesday.

"The commercial sector is very suspicious of government," David McCurdy told Defense officials and contractors at an American Institute of Aeronautics and Astronautics event.

He said the focus on homeland security has prompted the government to seek new technologies, but he suggested that more outreach is needed to help the commercial sector overcome its skepticism about contracting with the government. One way that is happening is through In-Q-Tel, the CIA's venture-capital arm, of which McCurdy is a board member.

McCurdy called electronics the "key enabler" of the digitally networked world. He acknowledged that the nature of private-sector contracts with Defense is reorienting in favor of larger firms but added, "There are good companies that will experience growth even in a consolidating market."

On the prospects for congressional backing of a $10 billion Defense contingency fund proposed by the Bush administration, McCurdy, a former House member, said it should be sent to the Hill along with the proposal for homeland security funding. But he recommended that Congress specifically designate how the contingency money could be spent.

"I don't know if there's an 'axis of evil' contingency," he added in a reference to President Bush's State of the Union declaration that Iraq, Iran and North Korea form an "axis of evil."

Also at the event, William Schneider, chairman of the Defense Science Board, said flexibility in sourcing will be key to successful acquisition of science and technology for Defense because most technologies do not originate in Defense. In fact, many do not originate in the United States or even with its principal allies, he said.

John Douglass, president and CEO of the Aerospace Industries Association, was optimistic about change at Defense. "We are at one of those 'magic moments' when conditions are right for change," he said, because the new administration is "solid," the president is committed to increase defense spending, and there is public support for such spending.

Douglass said the commitment to Defense transformation makes developing new models acceptable. The commitment is shown in the president's fiscal 2003 budget, particularly by the request for a $48 billion increase, he said.

He noted that there are still gaps in long-term funding, and that the notion of homeland security is still in an "embryonic state."

In a later panel on workforce issues, David Walker, the General Accounting Office's comptroller general, said a "human capital crisis" has beset government because much of the workforce will be eligible to retire in the next five years, and government is struggling to attract top talent, especially in information technology. "It is a clear and present danger that needs to be addressed," he said.

He warned Defense that it will face competing pressures for money in the long term and must reduce waste and delays.