Innovation: Attracting and Retaining the Best of the Private Sector.

摘要

This report looks at innovation. Specifically, the Department of Defense ( DoD or the Department ) has asked two questions: first, whether the Department is successfully attracting the most innovative ideas and offerings from the private sector outside of its traditional supplier base?; and second, whether the Department is losing, or running the risk of losing, some of its most innovative traditional suppliers? The conclusions of this report are that the DoD is not attracting the most innovative offerings of the private sector, and that it is losing some of its traditional suppliers. This report identifies some of the primary causes of these trends, and notes a number of specific actions that the Department can take to address the core issues and reverse the trends. For commercial industry (defined in this report as industry that is not part of the traditional Defense Industrial Base) the DoD represents, at best, an adjacent market. To recognize this reality is to recognize that if DoD wants to engage these companies it is the DoD that must change its ways. Commercial industry is not oriented around or familiar with Federal Acquisition Regulations (FAR), government Cost Accounting Standards, lengthy procurement cycles, and other unique U.S. Government processes and it will not play by these rules and regulations if it has more attractive market alternatives. Commercial sectors that fund their own research and development (R&D), invest for competitive advantage, and price-to-market their offerings will not change their basic business models to do business with a Department that imposes significant costs that are unique to its acquisition system and which is committed to cost-based pricing, regulated or otherwise restricted returns on investment, and lengthy and expensive decision-making and review processes. The DoD must change its approach to attract commercial industry beyond its traditional suppliers within the Defense Industrial Base.