Dr. James Galvin, Acting Director of the Department of Defense (DoD) Office of Small Business Programs, delivered the small business keynote address at the Defense Logistics Agency Land and Maritime Supplier Conference in Columbus, Ohio, on June 20, 2018. His speech is included below.
Thanks to Coleen McCormick and her DLA Land and Maritime Government Small Business colleagues for inviting me here. And my thanks also goes to Chris Young the newly appointed DLA Small Business Director who advises General Williams at the headquarters. Finally, I appreciate the role of NDIA as a connector among all of us in industry, government and on occasion academia. Thanks to NDIA and all the sponsors of this event.
We’ve already received a great deal of thoughtful and useful information here at the DLA Land and Maritime Supplier Conference. I’ll attempt to continue to add value by providing a perspective from my vantage point in the Pentagon. I provided similar remarks up in Cleveland a short while ago. There will be some thematic consistency with the other speakers we’ve heard from yesterday and today. But first, I’d like to share a quick story from other events I experienced recently.
New Sputnik Moment
The story started about 60 years ago, when an event occurred that would impact the United States and some individuals from Ohio in particular. On October 4th, 1957, the Russian satellite Sputnik began orbiting the earth for three weeks. This was the first human-developed object to orbit our planet. We know that Sputnik awakened the nation and led to the formation of NASA and the space race.
Recently I heard one prominent former DoD official say and I read an editorial written by a university president that stated that the U.S. is facing a new Sputnik moment. However, they each cited different technologies that should prompt us to act.
The university president described quantum computing, which can vastly increase the speed of data processing by manipulating atoms and subatomic particles instead of using the slower on/off switches of today’s transistors. He said the U.S. invests a few hundred million dollars in this technology while the Chinese government is building a $10 billion National Laboratory for Quantum Information Sciences. He claimed that, “Whoever gets this technology first will be able to cripple traditional defenses and power grids and manipulate the global economy. The surest way to deter such behavior is to win this race.”
Earlier that same week, I was at an event where a former DoD official described the need for a national AI Agency — an organization to address Artificial Intelligence. He said AI and autonomy, the technology in things like driverless cars, are the two most important technology races we must win. He quoted Putin, who stated in September 2017, “Whoever becomes the leader in this sphere will become the ruler of the world.”
DoD Technological Priorities
If you’ve had a chance to read or hear statements from the new USD(R&E), Dr. Michael Griffin, a former NASA Administrator, he puts hypersonics as his number-one technological priority for DoD. Hypersonics is a term to describe missiles that can travel 5 to 10 times the speed of sound and can penetrate both anti-aircraft and anti-missile defenses. DoD is seeking to develop both offensive and defensive hypersonic capabilities. You may have heard news reports several weeks ago where the Russians claim to have offensive hypersonic capabilities.
In his talks, Dr Griffin goes even further, he lists technology priorities for DoD that starts with hypersonics and includes artificial intelligence and quantum computing, as I mentioned earlier, as well as other technologies such as microelectronics, cybersecurity, lasers and robotics.
National Defense Strategy
So what’s going on here? Why should we be concerned about these technologies? To answer these questions, we need to look no further than a seminal document published last February by the Secretary of Defense.
Having been around DoD for almost 35 years, I remember times when we didn’t have a timely and clearly documented strategy to guide our actions. The department has always been good about setting direction and priority, but the National Defense Strategy published this past February is an excellent articulation of where we are and where we’re going. Being aware of the simple but powerful priorities articulated in the National Defense Strategy will help anyone improve their ability to supply products or services to the department.
The National Defense Strategy story begins with the challenges we face with China, Russia, North Korea, Iran and non-state actors like ISIS. For the past couple of decades, the United States put a great amount of energy and focus on the latter — terrorism and its sponsors like ISIS. Meanwhile, we paid less attention to the former, particularly Russia and China. During that time, they significantly improved their high-intensity warfare capabilities and expanded in other areas such as cyberspace. Russia aggressively seized Crimea and parts of Ukraine. China militarized islands in the South China Sea. The new National Defense Strategy makes us reassess the threats we face and clearly articulates that we need to make a strategic shift from combating terrorism to competing with other great powers.
The playing field for this great powers competition is a very complex security environment. It’s characterized by rapid technological change and challenges from adversaries across all the contested domains: air, land, sea, space and cyberspace. We step onto this playing field with a somewhat weary force, challenged to be fully ready because of years of deployments and limited investments in sustainment and modernization. Nevertheless, there is no time for complacency, and DoD is experiencing an injection of resources that will help build a more lethal, resilient and adaptable Joint Force. The strategic objective is to preserve peace through strength. The objective among my government colleagues and me is to ensure we help small businesses contribute to our military strength.
The Secretary of Defense outlined three priorities for DoD to build our military strength. First, we are to build a more lethal force by prioritizing military preparedness for war and modernizing key capabilities, like nuclear forces, space, cyberspace, C4ISR, Missile Defense, artificial intelligence and agile logistics. A particularly relevant statement from the strategy applies to us here: “The Department will also continue to explore streamlined, non-traditional pathways to bring critical skills into service, expanding access to outside expertise, and devising new public-private partnerships to work with small companies, start-ups and universities.” This means we must look for new ways to develop and access the industrial base, especially the small business industrial base. We need to give you reasonable pathways to work with DoD.
Second, we will strengthen alliances and attract new partners. Working with allies and partners strengthens our military forces by providing reinforcing and complementary capabilities, expanding local access to and understanding of regions across the globe, and, deterring aggression and supporting stability that leads to economic growth. Although Federal Acquisition Regulation,(FAR) Part 19; which addresses small business procurement; is not mandatory for most overseas procurement, U.S. small businesses provide about 10 percent of the available full-and-open DoD overseas procurement. I recently met with the Small Business Association of International Contractors that work primarily with the Department of State and U.S. Agency for International Development. The SBAIC contractors perform some DoD work and are hungry for more. Those of you who seek the challenge of overseas contracts could benefit by getting to know associations that can help you orient properly. We can strengthen our military by using small businesses to build partnerships across federal agencies and even other nations.
Third, we will reform the department for greater performance and affordability. This third priority reflects a growing frustration, perhaps even exasperation, experienced by many who too often see a culture of bureaucratic risk aversion characterized by exacting thoroughness that is unresponsive to DoD’s needs. Success in the great powers competition goes to the nation that integrates and adapts its way of fighting fastest, not the country that develops the new technology first. Defense acquisition leaders describe this as, “delivering performance at the speed of relevance.” This means we have to avoid getting it perfect, but late. Instead, we must leverage the small business industrial base to prioritize speed of delivery, continuous adaptation and modular upgrades. Ideally, we’ll help the small business industrial base deliver excellent products and services on time or ahead of schedule. This may mean that we have to change the way we’re organized or the way we operate. In fact, the National Defense Strategy states, “We will continue to streamline processes so that new entrants and small-scale vendors can provide cutting edge technologies.”
Ohio Defense Contracts
I’ve described the high-end technology needs of DoD and the rationale for pursuing these capabilities. What if you’re new to federal procurement and want to break into the market?
From our analysis of the numbers in the Federal Procurement Data System (FPDS), 4,279 Ohio-based businesses received $4.4 billion in contracts from DoD in Fiscal Year 2017. Of that business population, 2,988 were small businesses. For both small and other than small businesses, the contracts included, from highest to lowest spend: $1.4 billion for Professional Services, to progressively lower amounts of spending for Research and Development, Information Technology, Facilities Maintenance and Construction, Industrial Products and Services, Electronic and Communication Equipment, Sustainment Services & Equipment, Transportation and Logistics Services, Medical Supplies and Services; Clothing, Textiles and Subsistence; Office Management, Weapons and Ammunition, and finally about $10 million for Security and Protection. There are several smaller categories of spend as well.
Target Buyers
The point is that DoD buys a wide variety of products and services. Your challenge is to find the buyers who seek your products and services. To find buyers, you need to do the following:
- Know what DoD needs.
- Identify the DoD markets you can support.
- Convey your capabilities in terms of what the DoD customer needs.
- Take care of all the administrative requirements, such as registering in the System for Award Management (SAM) and getting a DUNS number.
- Respond to Sources Sought published in FedBizOps.gov. This enables Contracting Officers to do some market research to determine if players in the market are interested in a procurement and leads to decisions to set-aside full or partial procurements for small businesses.
Tap into Small Business Resources
Those of you who received government contracts also know that developing relationships is key to success. There are a variety of ways to meet the right people. Start with the PTACs. If you’re new to the government market, find your nearest Procurement Technical Assistance Center (PTAC), like the one at Ohio University (they have a booth on the trade show floor), or an SBA Small Business Development Center (SBDC). They offer free or minimum-cost sources of advice about government processes and relationships.
Also find DoD Small Business Professionals who represent the 25 major defense organizations that have procurement authority. These range from the Military Services; the Army, Navy and Air Force; to the defense agencies, such as the Defense Logistics Agency, the Defense Health Agency, the Missile Defense Agency and the Defense Information Systems Agency; to the Special Operations Command and the U.S. Transportation Command.
The government Small Business Professionals work internally with the government team to shape acquisition strategies based on their market research of the small business industrial base. Those are some of the folks you want to get to know if you’re a small business trying to find government opportunities. They are exceptional team members who help to create opportunities for small businesses to work with DoD.
A network of 700 DoD Small Business Professionals can help you identify what their organization buys, when they anticipate needing products and services, specific opportunities for small businesses and advice about subcontracting. In some cases, if you have a compelling offering, they may be able to arrange for a meeting with the government buyer. In Ohio, you’ll find DoD Small Business Professionals at Wright-Patterson Air Force Base in Dayton and with our host the Defense Logistics Agency Land and Maritime Supply Center here in Columbus.
Proposal Tips
When you prepare a proposal for a DoD contract, consider the following:
- Carefully read and follow the solicitation.
- Price is always important; offer pricing that is fair and competitive.
- Understand the agency’s needs and outline how to solve the problem or fill the need.
- Answer all of the questions and meet the established deadlines.
- Prior to submitting a proposal: network, ask questions and cultivate working relationships with program managers and experienced contracting professionals to learn more about the procurement process. Do this before and after the contract award.
- Participate in any post-award conference to learn how to improve your proposals.
Subcontracting Tips
If you seek work as a subcontractor, here are some tips to build good relationships with Prime Contractors:
- View subcontracting as a great way to combine the adaptability and innovation of small businesses with the sustained performance and infrastructure of large businesses.
- Explain your accomplishments and past performance.
- Describe your strengths and core capabilities.
- List your certifications — ISO certified, TS Facility, etc.
- Know your customer ratings.
- Describe your employees — computer engineers, TS clearances.
- List your awards — Small Business of the year.
- Describe what differentiates your firm from competitors.
- Describe your company’s values.
- Have a concise capabilities statement — a brand.
- Convey your messages through multiple means — published articles, presentations, elevator speech, website, etc.
DoD OSBP Programs
The department has several Small Business programs that may be suitable for you. If you’re a small business looking for assistance from a more experienced firm, look into DoD’s Mentor-Protégé program. If you want to propose a new innovative technology, check out the Small Business Innovation Research (SBIR) program. If you have an innovative solution that could quickly move into an existing program to enhance a military capability or reduce technical risk, look into the Rapid Innovation Fund (RIF). These are some of the portfolio of small business programs available to you. You can learn more about them at business.defense.gov.
Cybersecurity Resources
At business.defense.gov you can also find information about an important concern DoD now includes in all Contracts: Cybersecurity. There is a DFARS clause, 252.204-7012, that requires contractors and subcontractors to safeguard Covered Defense Information on their networks and report cyber incidents related to this information. What this means is that DoD contractors and subcontractors subject to the DFARS clause must implement practices like dual-factor authentication on their business computers, which is like the government CAC and Pin system. This applies when you’re dealing with information that could compromise government missions or interests, such as controlled technical information, personally identifiable information or operational information designated as Controlled Unclassified Information.
Contractors will have to comply with a number of requirements, such as auditing their systems, providing continuous monitoring and training their people in good cyber hygiene. And if they’re hacked, they have to report the breach to DoD. These rules went into effect at the beginning of 2018. Some of the larger prime contractors are helping small business subcontractors understand and comply with the cybersecurity regulations. Hackers will probe the supply chain until they find a weak point to exploit. That’s why the cybersecurity clause flows down to subcontractors. Potential challenges with implementation of the cybersecurity regulations are that contractors self-report their compliance and the government has little ability to inspect contractor networks. Nevertheless, there is an active effort by DoD to educate contractors and to internally train the government contracting workforce about the cybersecurity requirements.
Category Management
Another emerging activity you should be aware of is the federal government’s implementation of a procurement practice called Category Management. David Loines from the SBA briefly mentioned this topic earlier. Category Management is a strategic practice where federal contracting for common goods and services is managed by categories of spending across the government and supported by teams of experts. The Office of Management and Budget (OMB) and the General Services Administration (GSA) in particular view Category Management as an effective business practice for reducing duplication in contracting, better leveraging the government’s buying power and promoting the use of best-in-class solutions government-wide. Among the 10 government-wide categories are: Professional Services, Facilities and Construction, Transportation and Logistics and Information Technology.
What this means to those of you who want to sell to the government is that you have to go beyond just identifying what capabilities the government is seeking and who is actually doing the buying for the government. You have to also know what contract vehicle they will be using. And, if it’s a government- wide vehicle, you have to figure out if you want to put the effort into getting on the vehicle as a supplier and what requirements the vehicle may expect you to achieve, such as certifications or past performance.
What this means to the government buyer is that their industrial base may shift. If your government customer must use or shift to a government-wide best-in-class contract vehicle, the local businesses outside of their facility may not be available for prime contracting as they have been in the past.
My federal colleagues and I in the government small business community are providing feedback to OMB about the impact of Category Management on the small business industrial base. Although best-in-class contracts include small business goals, we’re concerned the playing field will shrink substantially as a limited number of small businesses will be available for prime contracting. We requested and received membership on the government teams that will manage the categories.
We intend to help shape the categories to ensure that, when appropriate, they are set aside for small business, have a partial set aside or have the proper level of subcontracting in the full-and-open portion. We’ll monitor and influence how high the government may set the bar to get onto a category management vehicle, how the government sets the timing and criteria for “on and off ramps” and how the government may set a bridge from the small business set aside to the full-and-open contracts.
Other Transaction Authority
I’ve been describing the standard approaches to DoD acquisition. Realistically, most DoD procurement will involve standard contracts for routine products and services. It’s important for most businesses to know and understand these processes.
Now, there are other forces at play to create business relationships between DoD and the private sector to achieve the innovative capabilities that have been the primary topics of discussion at many acquisition gatherings.
The Department has a new approach to rapidly meet warfighter requirements that can result in awards for prototype solutions within a timeline of 60 days or less. The Commercial Solutions Opening (CSO) approach is available throughout the Department and is a merit-based solicitation and source-selection procedure that can be used to acquire emerging technology, particularly from non-traditional commercial sources, beginning with prototypes acquired under an Other Transaction Authority or (OTA).
The concept is similar to that of broad agency announcements (BAAs), which are used by the science and technology community to acquire basic and applied research. OTAs use merit-based selection approaches to address a particular problem the department needs to solve. DoD is using OTAs to acquire prototypes based on innovative technologies that are maturing into commercial applications.
If you’re interested in playing in the OTA space, here are some tips:
- Identify the prototype needs for which you can compete to fulfill.
- The competition occurs at the prototype phase, which may be earlier than you’re used to, so you have to put your best foot forward early.
- OTAs are not subject to the Federal Acquisition Regulation. While they have long been used to develop technologies through consortia, a model where DoD contracts with a consortia manager to essentially issue subcontracts for innovative technologies, DOD has the authority to use OTAs as awards for individual projects.
- The law lets the department use OTAs for any prototyping project relevant to defense, and if DoD competitively awarded the initial prototyping phase and the technology proved successful, DOD can transition the project to a production agreement without any further competition.
- The use of OTAs increased since the Fiscal Year 2016 National Defense Authorization Act went into law from just over $50 million in Fiscal Year 2015 to nearly $250 million in Fiscal Year 2016 and $412 million in OTA spending in Fiscal Year 2017.
Sputnik Challenge
It’s an exciting and challenging time to be involved in defense procurement. I’d like close with two examples of the technology DoD seeks, which will also require logistical support and sustainment strategies.
The first is Project Maven. In order to process through huge volumes of video collected from UASs, DoD contracted with a Silicon Valley firm through a broad agency announcement to implement artificial intelligence practices to sort through big data. The technology helps military analysts find threats in video streams similar to the way Facebook automatically tags the image of someone’s face in a photo.
The second is the Close Combat Lethality Task Force. The Task Force seeks to find capabilities that will allow a small infantry unit to overmatch any opposing foe. At a recent demonstration in the Pentagon courtyard, I observed efforts to advance biometric sensor technologies to enable real-time readings of the physical performance of individual squad members. Leaders would be able to assess the micro-readiness of each team member. There was even a technology to measure brainwaves and provide electrical stimulations to improve mental awareness.
These are two small examples of the types of advances DoD seeks. Small businesses often provide these capabilities. And, as I mentioned, they will need innovative support through agile logistics. I hope my remarks stimulated you to better understand DoD’s needs and how you can play a part. Because, as I described in the beginning, we face a Sputnik challenge that will take the efforts of our entire nation.
It’s been great to be part of this event and to share my perspective with you.
Thank you.
Dr. Galvin
Dr. Galvin leads a network of 700 full- and part-time Small Business Professionals across DoD. He ensures they leverage DoD’s small business industrial base to contribute to military readiness, introduce innovation to build a more lethal force and provide timely and cost-effective products and services. The work of DoD’s Small Business Professional workforce annually results in more than $50 billion in prime-contract spending and over $40 billion of subcontract spending for small businesses.
Prior to joining DoD OSBP, Dr. Galvin was on detail to DoD from the Department of Energy National Renewable Energy Laboratory (NREL) as a Program Manager for more than 110 energy and water projects on military installations. He worked closely with numerous small businesses to help them demonstrate and commercialize their innovative technologies while improving energy security on DoD facilities. He also served as an adjunct professor at The George Washington University, teaching graduate students in the School of Engineering and Applied Sciences. At NREL he led a program to help the State of Hawaii achieve its clean-energy goals.
Prior to working at NREL, Dr. Galvin retired from the Army as a Colonel after serving in a variety of Aviation and Operations Research assignments. He served in the 11th Armored Cavalry Regiment and the 18th Airborne Corps in various roles as a pilot (AH-1, OH-58 and UH-60), commander and staff officer. He also served on the Army Staff at the U.S. Southern Command Headquarters and the Army’s Combined Arms Center in positions involving program analysis, legislative liaison, organizational transformation and knowledge management. He received the Legion of Merit and other awards for his military service. He was the 2012 recipient of the Chairman’s Award from NREL for his support to DoD. In addition to being a Senior Army Aviator, he is Airborne, Ranger and Air Assault qualified.
Dr. Galvin earned his Ph.D. in Industrial and Systems Engineering from Virginia Tech, an MS in Operations Research from the Naval Postgraduate School and is a graduate of the U.S. Military Academy at West Point. He currently serves in the federal government’s Senior Executive Service.
Subscribe
We are the DoD Office of Small Business Programs (OSBP). We implement and oversee policies that help generate new procurement suppliers for DoD, resulting in a stronger industrial base, increased competition and higher-quality goods and services provided at lower costs for taxpayers. Email osd.business.defense@mail.mil with “subscribe” in the subject line to receive important policy updates from DoD OSBP.
