Anxious, but Doubling Down: Industry Reacts to Uncertainty in Defense

This past week, the Association of the United States Army gathered in Washington, D.C. for their annual meeting and exposition with the theme: “The Strength of the Nation”. Every star and luminary of the Army attended as did every major defense contractor, innovative technologist and U.S. Government office with a need to see and be seen. From tiny Power Breezer off in a far corner to the giants like Northrop Grumman and Lockheed Martin, the show filled all of the massive Washington Convention Center. In a time when one would have thought that the industry would be conserving resources, they appear to be doubling down. I was interested to see how energy would be reflected in products on display so I hit the floor and started asking question.

One of the areas I asked about was the impact of the energy on acquisition decisions. The requirement to use the fully burdened cost of energy in the Analysis of Alternatives process and to consider energy as a Key Performance Parameter have been in place for some time, but to what affect? I spoke with folks from corporations with interest in the ongoing Joint Light Tactical Vehicle Program, one of the pilot technologies for evaluating the efficacy of FBCE. When I asked how energy efficiency had impacted their considerations in developing their prototype, the vendor said it was a major consideration, but at this time it was kind of like asking if you preferred the portholes opened or closed on the Titanic.

According to a Congressional Research Service report on the JLTV, “once testing was to be completed and technology requirements established, a full and open competition was expected to be conducted in the late summer, 2011 for the Engineering and Manufacturing Development (EMD) Phase and the Department of Defense (DOD) planned to award two contracts for the EMD phase, which was scheduled to last 24 months”. However, in February 2011, the Army announced that the award of the EMD contract would be delayed until January 2012 because the Army changed requirements for the JLTV. The change in this program, at a time when programs across DOD were being cut or eliminated, sent shockwaves through the industry. Another blow to industry confidence came with the establishment of the Joint Select Committee on Deficit Reduction as a provision of the Budget Control Act.

If the Select Committee legislative process fails to result in a law, that will trigger $1.2 Trillion across-the-board spending cuts in discretionary spending, Medicare, farm subsidies, and a few smaller entitlements. It is anticipated that DOD would take about half of these cuts. Recent speeches by the C, JCS, the CSA and other DOD senior leadership have been to remind Congress of the history of drastically reducing defense at the end of conflicts. I heard this theme echoed from industry across the board. Nobody was sweating, but nobody was particularly ebullient.

Even the Army Energy panel echoed these topics. Capo di tutti Capo for Army energy Katherine Hammack assembled an impressive collection of uniformed leadership. Her battle buddy, LTG Rick Lynch was not in attendance, but Installation Management Command was ably represented by Deputy CG, MG Al Aycock. For the first time, the Army Staff and Operational Units were represented by the soon to be G4, MG(P) Ray Mason and current 1^st Armored Division Commanding General, MG Dana Pittard. In another first, the Acquisition Community was well represented by the exceedingly handsome MG Nick Justice, Commanding General of the Army Research, Development and Engineering Command (pictured above). Each speaker focused on their roles in providing for the three elements of energy concern: Basing, Soldiers and Vehicles. I took copious notes, only to find that they had already posted ALL the slides. They are here for your perusal. Worth taking the time to read.

In general, what we heard was that the Army would invest in energy efforts that had immediate, tactical impacts, but when it came to large, scale renewable energy what the Army wants to hear is, “I got the money, honey, if you got the……land”. The theme of third party finance resonated through every discussion of installation energy security. In another cost savings measure, the Army Energy Initiatives Office Task Force became the Army Energy Initiatives Task Force and announced an Army Energy Initiatives Task Force Summit for four hours on 3 November 2011. Registration is open until 21 October 2011, but when I attempted to register, the website informed me that they were at capacity and that I would be placed on a waiting list. I would have supposed that if I were hoping to do outreach, I would have it in a facility that could accommodate the potential crowd. Perhaps a web link so we can participate? We have the demand; are they out of land? Dan Nolan