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Gold Coast Conference

Today's Defense Department focusing on small business

The government has never paid as much attention to small business as it is now, according to Frank Kendall, under secretary of Defense for Acquisition, Technology and Logistics.

He spoke Wednesday at the 24th annual Navy Gold Coast Small Business Procurement Event, simply known as Gold Coast, at the San Diego Convention Center.

He's been in government service since 1966, graduating from West Point, becoming a civil servant, working in the Pentagon, as well as in the industry for a major firm and doing consulting work.

“Through all this I've watched the administrations come and go ... and policies and what they have done," he said. "I've never seen so much emphasis on small business as we do today. I've never seen as much concern and action. We have tremendous leadership and commitment right now to the small-business world.”

Senate-confirmed in May 2012, Kendall is the leader of the Department of Defense’s efforts to increase the department’s buying power and improve the performance of the defense acquisition enterprise.

The San Diego chapter of the National Defense Industrial Association and its co-host, the Navy Office of Small Business Programs, held the Gold Coast Conference Monday through Wednesday at the San Diego Convention Center.

Since its inception, Gold Coast is co-hosted on a rotating basis by NAVSEA, NAVFAC, SPAWAR, NAVSUP, NAVAIR and the U.S. Marine Corps. The purpose of Gold Coast is to provide a forum to educate, guide and assist businesses, especially small businesses, in working with the government, primarily the Department of Defense.

Kendall previously served as the principal deputy under secretary and also as the acting under secretary.

“We have to continue the war on terror,” he said. “Al-Qaida has bowed, but they're not out. There are a lot of other extremist groups that are a threat to us.”

Before 9/11, there was a growing concern about the rising powers in the Pacific, including North Korea. That shift of focus has been a long time coming, he said, and more resources will be placed in that region to ramp up security.

“A central element of the strategy is rebalancing toward the Pacific,” he said.

Another strategy is taking care of the troops.

“Our men and women were at war for 10 years, and their families made sacrifices,” he said. “We still have a couple years of major deployments in Afghanistan.”

As production and research and development slides, a key strategy over the next five years is to remain mobile.

“We want to emphasize science and technology and preserve our technology superiority,” he said. “We don't want to give anyone a fair fight with us.”

That can be achieved through training people and making investments in technology, he said.

The administration has been receptive of that strategy, and his emphasis on cultural change is expected to take shape over the next few years. His first and foremost priority is to finish the war in Afghanistan and support the war on extremist groups.

“The logistics part of my job, the technology and acquisition part are important there,” he said.

Another priority is creating affordable programs.

“The DOD has a long history of starting things, investing money in them, and waking up and realizing they couldn't afford them,” he said. “The department needs to make adjustments beforehand.”

Some of the programs that have been canceled over the past few years include the U.S. Navy's DDG 1000, a next-generation, multi-mission, naval destroyer, which was canceled in 2008, and the U.S. Marine Corps Expeditionary Fighting Vehicle, a landing craft halted last year after it hit cost overruns and delays.

Proper affordability analyses will predict how much the government has in the future to pay for the product.

“We have to live within our means,” he said. “The question is how efficiently we are doing that.”

The culture of cost consciousness throughout the acquisition world also needs to change.

“There's entitlement about our budget comps,” he said. “We need to value that money and work hard to get as much as we can for that money.”

He calls the latest downturn a “correction” and not as dramatic as the end of the Cold War.

“It's going from a period of growth to modest decline,” he said.

He said one area of improvement is strengthening the industrial work force in the government.

“We have to be good customers for industry," he said. "A good business deal works on both sides. It makes no sense to squeeze the industry where they are driven away from the DOD. They have to make a profit.”

He's had experience working for large companies and partnering on the small-business side.

“I understand that profits aren't optional,” he said. “We are happy to pay good profit margins [for] good results.”

Protecting the future is a key part of his job, and he vocalizes his concerns during meetings at the Pentagon.

“I'm the guy, more than any other in the room, who is thinking 10 or 20 years down the stream,” he said. “Most are worried about five years down the road or in case they have to fight tomorrow.”

His worries include the technology superiority the United States will have in 15 years and the effectiveness of its acquisitions work force and industry.

“Protecting that future in an era of declining budgets is very important to me — prioritizing acquisitions to make sure we get the things most important to us for warfighting dominance,” he said.

That leadership starts in the White House, he said, and he's attended a number of quarterly meetings at President Barack Obama's quarters to focus on what the government is doing for small businesses.

“A number of things come out of that, to give you greater opportunities and make it easier for you to work with us and a chance to compete,” he said.

Community-based outreach efforts, like roundtables with informal groups of 30 small-business leaders, help the administration understand concerns.

There's an ongoing effort to expedite the flow of cash to small businesses by knocking 14 days off of the payment periods.

“Everyone who is a small-business manager understands the importance of cash flow,” he said.

The effort is now government-wide, and there's a push to get prime contractors on board.

“Money is flowing more quickly than it has in the past,” he said.

That statement spurred applause from the crowd, which was made up of manufacturers and service contractors.

He suggests taking advantage of small-business offices and a number of assistance centers to get information on doing things with the government, as well as trawling FedBizOpps.

“You don't have to feel confined. Look across the country for opportunities. Try to understand the requirements as early as you can to be prepared for the bid,” he said, adding that understanding each department and customer is key.

With service contracting, the DOD has noticed that if it writes requirements down in detail and gives enough time to respond, it gets a lot more industry reaction and more competition.

“We are doing everything we can to make it easier to work with the government,” he said.

As far as sequestration — a dark word in defense circles that would spark severe cuts starting at the beginning of 2013 — he said to keep reaching out to local leaders in Congress and letting them know the job cuts that could come to their districts as a result of sequestration.

“That seems to be getting their attention more than anything else right now,” he said.

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