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Home News Archive Defense Industrial Capability

Defense Industrial Capability

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Each year the Department of Defense issues a report to Congress analyzing the defense industrial base. Here is a link to the 2017 report, released in April 2018. What does the report tell us?

Workforce

61% of the aerospace/defense workforce is over the age of 45. About half the workforce is at traditional retirement age. However, “there is incredible competition to find qualified candidates with the required skills in engineering, manufacturing, and other STEM proficiencies in the market. A&D companies are being faced with a shortage of qualified workers to meet current demands as well as needing to integrate a younger workforce with the ‘right skills, aptitude, experience, and interest to step into the jobs vacated by senior-level engineers and skilled technicians’ as they exit the workforce.” Despite those challenges, the DoD continues to put unreasonable caps on the amount of compensation contractor employees may be paid.

Sector Analysis

The report addressed 10 industrial sectors. We summarize the report into a stoplight chart, based on our interpretation of the sector analyses.

Aircraft Primes: GREEN Lower-Tiers: YELLOW

C4 Primes: GREEN Lower-Tiers: GREEN

ElectronicsPrimes: GREEN Lower-Tiers: N/A

Ground VehiclesPrimes: YELLOW Lower-Tiers: YELLOW

MaterialsPrimes: GREEN Lower-Tiers: N/A

Munitions and MissilesPrimes: RED Lower-Tiers: RED

Radar and Electronic WarfarePrimes: YELLOW Lower-Tiers: RED

ShipbuildingPrimes: GREEN Lower-Tiers: GREEN

SpacePrimes: YELLOW Lower-Tiers: YELLOW

Organic IndustryPrimes: RED Lower-Tiers: N/A

Details can be found in the report (Section 8).

S2T2

We were interested (but not surprised) to note that the Sector-by-Sector, Tier-by-Tier (S2T2) analytical framework has been dropped from the annual report. Once touted as a breakthrough analytical approach, it appears that S2T2 has been relegated to the trash heap of failed bureaucratic initiatives.

Conclusion

If this annual report were not issued, would anything change? We think not.

 

Newsflash

In March 2009, Nick Sanders’ article “Surviving Government Audits: Have the Rules of Engagement Changed?” was published in Government Contract Costs, Pricing & Accounting Reports (4 No. 2 GCCPAR P. 11). Apogee Consulting, Inc. is proud to announce that Mr. Sanders’ article was selected for reprint and publication in Thomson West’s The New Landscape of Government Contracting.  Mr. Sanders, Apogee Consulting’s Principal Consultant, joins such distinguished contributors as Professors Steven Schooner and Christopher Yukins, Luis Victorino and John Chierachella, Joseph West and Karen Manos, Joseph Barsalona and Philip Koos and Richard Meene, and several others.  The text covers a lot of ground, ranging from the American Recovery and Reinvestment Act (ARRA) to Business Ethics and Corporate Compliance, and includes several articles on the False Claim Act and the Foreign Corrupt Practices Act.  In addition, the text includes the full text of many statutory and regulatory matters affecting Government contract compliance.

 

The book may be found here.