Wednesday, March 9, 2016

Winging It Think Tank Onion Skin Paper: Too critical To Fail Part I


Often the term too big to fail is used by government thinkers when describing the next big bail out. It could be GM, Chrysler or the Financial Markets. They can’t fail because it represent too much of the America’s economy. In another arena is the defense industry, when old thinking will put America at risk and the same notion by government is applied to military acquisition models where it assumes it needs a competition for the best military capability in the world. 

The US government has assumed the role being the Military Industrial Complex’s (MIC) Maestro. In fact, they have weighed its decision-making based on how a losing bid may be affected and incentivize others keeping them from not participating into future competitions, or securing a prospective bidder so it may not drop out from making any future bid submissions.

The Defense Department may lose its objectivity towards selecting new weapons systems, ignoring what would work best. A lost bid participant would become a victim from the Maestro’s nullification process for optimizing MIC while maintaining a bidder's continuos participation. 

Therefore, the natural process of survival of the fittest is no longer a determiner, but instead becomes dependent of the Maestro’s selection process. This weakens the whole MIC process into a Jell-O like state.

Boeing lost the F-35 fight to Lockheed-Martin. Boeing lost the LRSB-21 fight to Northrop, and GE lost several fights to Pratt and Whitney in Both the F-35 and LRSB-21 programs. However, the Government has a concern about both Boeing and GE as the “losing bidders”, but it refers back to the acquisition process as the culprit for these MIC loss bid participants. 

Boeing is moving towards a Jell-O state when it comes military ventures. The commercial side has become its profitable mechanism. 

The Maestro has a difficult time making everyone satisfied.
The balancing action for preserving the flying selection process may cloud Maestro objectivity going forward, as it nurtured ignored subcontractors along, rather than defend America to the best of its ability. Boeing protested the LRSB-21 and the F-35 as the complaining participant. They have a whole Department of Complaints stocked with lawyers and subject matter experts for this function.

It’s part of the cost the Maestro must endure for every award. The LRSB award will have a taxpayer costs associated with Boeing’s protest, albeit it became a no contest unfolding from the Maestro decision making. It’s part of the acquisition process and is expected. In fact Boeing beat in receiving a favorable decision from the Government for its KC-46 tanker project. The Maestro biffed the award process through inappropriate valuations points towards Airbus, a foreign bidder for an American war fighting machine.

When the US was seeking a “Hummer” pre Gulf wars, it went with a homespun machine maker, and did not go with somebody like Mercedes Benz of Germany. The lesson learned from the KC-46 bid award s that the Maestro must use American offerings when it comes to making its war machines, and it will rely on a balanced award process equalizing the bidder reward so they won't disappear from the government’s manipulations.

The lesson here is that each MIC participant is too big to fail while each bidder must have an equally capable offering with any other bid, allowing the government for keeping the way for the MIC to remain in balance. 

Fortunately, Boeing and GE had an extremely strong private sector businesses with its commercial aviation, and that allowed the government consecutive awards for Lockheed Martin, Pratt & Whitney and Northrop issuing its two richest bid awards without starving out Boeing or GE. The LRSB-21 and F-35 programs were billions, but the 787 and its engines were billions too. The Maestro put MIC on the couch and balanced its complex.

Part II Link: